1.How would you classify the following in terms of (A) Prime Costs, (B) Production Overhead, (C) Administration Overhead, (D) Selling Overhead, and (E) Distribution Overhead?

(1)

Production manager's salary

(16)

Time-keeper's wages

(2)

Depreciation (machinery)

(17)

Lubricating oil (works)

(3)

Boiler fuel

(18)

Travelling expenses

(4)

Insurance (finished stock)

(19)

Toilet supplies (office)

(5)

Assemblers' wages

(20)

Toilet supplies (works)

(6)

Foremen's salaries

(21)

Travelling expenses of salesmen

(7)

Repairs to machinery

(22)

Accommodation expenses of salesmen

(8)

Office salaries

(23)

Entertainment expenses of salesmen

(9)

Chief Accountant's salary

(24)

Carriage-inwards on raw materials

(10)

Advertising

(25)

Royalty per unit of production

(11)

Raw materials used

(26)

Expenses on factory canteen

(12)

Electric power

(27)

Wages of crane driver in factory

(13)

Hire of computer

(28)

Wages of crane driver in haulage company

(14)

Delivery expenses

(29)

Wages of office boy in general office

(15)

Bad debts

(30)

Wages of store clerks

2.How would you classify the following in terms of fixed, variable or semi-variable costs ?

(a)Depreciation (straight line method)

(b)Depreciation (units of use method)

(c)Direct materials

(d)Insurance on factory building

(e)Direct labour

(f)Insurance on plant and machinery

(g)Heat, light and power

(h)Repairs and maintenance

(i)Rent for factory

(j)Costs of milk in making ice-cream

(k)Inspectors' salaries.

Activity Level(units)

Total Costs(RM)

2,000

10,000

9,000

25,000

3.Using the High-Low Method, resolve the following semi-variable costs into its variable and fixed components.

4.Draw a graph to show the total costs line using information from the table given below:

Volume(units)

Variable Costs(RM)

Fixed Costs(RM)

100

300

200

600

300

300

5.The costs and production volume of a certain department making a single product during the months of January to March Year 5 are given below.Efficiency of the department remained consistent during the period.

Month

Prime Cost(RM 000)

Production Overhead(RM 000)

Total Cost(RM 000)

Production Volume(000 units)

Year 5

Jan

Feb

Mar

120

140

180

130

140

160

250

280

340

30

35

45

REQUIRED:

(a)Analyse the costs according to their behaviour.

(b)Predict the costs for the month of April when 55,000 units were produced.

6.Values of four costs are shown below at two activity levels.

Types of Costs

10,000 units

(RM)

15,000 units

(RM)

A

B

C

D

32,500

21,200

73,000

52,300

48,750

30,800

105,500

52,300

(a)What type of costs are they and what are their characteristics?

(b)Estimate the total cost for next month if expected activity is 18,000 units.