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4 An engineering firm has surplus capacity and intents to secure a short-term contract to supply components. It has decided to bid for the contract
4 An engineering firm has surplus capacity and intents to secure a short-term contract to supply components. It has decided to bid for the contract at a price which will just cover all relevant costs. Which ONE of the following costs should be included in the calculation of the minimum price it can bid? (A) The cost of hiring a supervisor to oversee the contract's progress. The cost of a research project undertaken last year which has resulted in an improved method of manufacturing components. (C) The cost of labor which will be transferred to the contract from another production line where it is currently idle. The depreciation charge on existing machinery owned by the firm which will be used to manufacture the components. (D) 5. Which of the following statements are correct with regard to marginal costing? (i) Period costs are costs treated as expenses in the period incurred. (ii) Product costs can be identified with goods produced. (A) (B) C) (D) (iii) Unavoidable costs are relevant for decision making. (i) and (ii) only (i) and (iii) only (ii) and (iii) only (i), (ii) and (iii) 6 In a period, opening stocks were 12,600 units and closing stocks 14,100 units. The profit based on marginal costing was $50,400 and profit using absorption costing was $60,150. The fixed overhead absorption rate per unit is (A) $4.77. $6.50. $6.77. (C) (D) None of the above
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