[3] During the month of February, Allegri Plc. incurred 30,000, 40,000 and 20,000 of direct material, direct labour and manufacturing overhead costs respectively. If the cost of goods manufactured was 95,000 and the ending work in process inventory was 15,000, the beginning inventory of work in process must have been: [4] a) 10,000 b) 20,000 c) 15,000 d) 5,000 3 Marks Capello Ltd. bought a machine for 500 two years ago. They must now replace it, buying a new model for 700 or a used model for 650. They have decided to buy the used model. Capello Ltd. estimated that the total fixed costs for the production department are 10,000. They also estimated that the variable costs per unit are 10. Capello Ltd. also bought materials for 300 two years ago. These materials have simply been left in the inventory as they were not needed. A new customer now offers to buy a product that uses these materials. The conversion cost is 500 and the customer has offered to pay 650 for the product. Capello Ltd. decides to accept the offer. In this decision, Capello Ltd. would consider the sunk cost to be: a) 50 b) 650 c) 700 d) 500 1 Mark [5] Belfast International has 3 business units in the following countries, showing the following data: Selling price per unit Manufacturing cost France 35 4,000 per month plus 17 per unit Administrative expenses Sales commissions Advertising expenses 2,500 per month plus 2.50 per unit 15% of sales 2,000 per month Spain 38 3,500 per month plus 18 per unit 2,900 per month plus 2.90 per unit 16% of sales 3,000 per month | Italy 42 5,000 per month plus 20 per unit 3,500 per month plus 3.50 per unit 20% of sales 2,000 per month If the business unit in Italy expects to produce and sell 2,000 units next month, the total expected manufacturing cost is: a) 44,000 b) 49,000 c) 45,500 d) 45,000 3 Marks Cont'd