1. Brown Leaves Ltd lease an office in London. The rent is 20,000 per quarter, and the service charge is 5,000 per quarter. The lease runs until 31^st December 2028. On leaving the premises they will need to pay 15,000 dilapidations. In addition, they pay business rates of 20,000 per annum, which are payable only for as long as the office is in use. The lease includes an option to terminate the agreement early 31^st December 2024.

Brown Leaves Ltd are relocating to Manchester 1^st January 2029 with moving costs of 80,000 expected. They are considering moving to Manchester early, entering into a lease with the exact same terms as the current London office. If they decide to move early, they will relocate 1^st January 2024. What are the total relevant costs for this decision to move earlier?

[3 marks]

2. Overheads for product New Wood are absorbed at 8 per machine hour. It takes 1 machine hour to make each unit of New Wood and closing inventory levels for the last two months were;

November 50 units

December 60 units

How would the profits for New Wood differ in December if using marginal costing instead vs absorption costing?

[3 marks]

3. Brown Bag Ltd anticipate the following production costs in production:

Dept One Dept Two

Direct materials 65 12

Direct labour hours 4 3

Direct labour rate per hour 15.00 13.00

Production overhead per direct labour hour 8.00 12.00

Administration and other overhead 20% of full production cost

Profit margin expected is 40%

What should the selling price to the customer be (rounded to the nearest 1)?

[3 marks]

4. Green Bag Ltd makes garden tables and one of the cost drivers relates to the set-up of the machines before production of the tables start. Each set up is budgeted to cost 90.

For a product called the Rainy Dinner Table there will be 1 set ups each month with a total of 660 units being produced in the year. Green Bag Ltd uses activity based costing.

Using this cost driver data calculate the set-up cost per unit for Rainy Dinner Table ( to the nearest penny)

[3 marks]

5. Bright Ltd makes lamps using a Just-in-Time approach and uses backflush accounting to record costs.

In May Bright Ltd made and sold 2,000 lamps. Each lamp has a standard cost of 4.00 which includes raw materials of 2.75. Green Glass Ltd incurred total conversion costs of 3,000 during May.

What is the value of the cost of goods sold in May (rounded to the nearest )?

[3 marks]

6. Sussex Distillers Ltd manufactures hand sanitiser using alcohol derived from surplus cows milk. It uses a process costing system and has provided the following information for the month of June:

4,500 litres of milk were put into the process

Normal Loss is 90% of input.

There are no opening or closing inventories.

Output of sanitiser is 435 litres.

How many litres are there of abnormal loss or gain?

[3 marks]