Explain the concepts of the following topics, demonstrate the working and solution for each illustration, detailed working is needed.

For concepts and theories explanation question, further marks will be granted if explanation with any suitable examples and illustration for guidance.

Q2: A company operates a normal costing system. For every unit of Product Jam requires $22 of direct materials and 2 hrs of direct labour work. Direct labour is paid at the rate of $12 per hour. Production overheads are absorbed at 60% of prime cost for every unit of Jam and non-production overheads are absorbed at a rate of 50% of Total production cost.

Requirement

a)What is that total costs for batch product of 200 units of Product Jam?

b) Explain the meaning of cost classification for Fixed cost and Variable cost.

Total 20 marks