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Question 1: Function-based costing JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses/cost Expected (cost) Selling cost 55.000 Administration

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Question 1: Function-based costing JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses/cost Expected (cost) Selling cost 55.000 Administration Cost 35,000 Manufacturing overhead cost 38.000 Utilities cost factory 22.000 Cost Driver Ef actual transactions) Direct Labour Hours 3500 Machine Hours 9,000 The following is the cost of 2 products made by the company : Product X Product Y Direct materials S4200 S3600 Direct Labor Hour Rate $29.00 $14.00 Units completed 250 DLH (hours) 460 320 Machine hours 185 160 Actual Costs 1500 5100 210 REQUIRED 1. Calculate the Predetermined Rate (PR) for product X using machine hours and product Y using direct labour hours 2. What is the applied cost assigned to product X and product Y? 3. Calculate the total product cost using FBC for both products 4. Calculate the unit cost for each product 5. Is the applied cost for each product under or over-applied? 6. What are the disadvantages of FBC and what solution has been offered as alternative? [40 marks) Question 2 Project Selection Dragon Products Company is considering two projects. The projects' cash flows are as follows: Cash Flow PROJECTA 159 REQUIRED 1. Calculate the predetermined Rate (PR) for product using machine hours and product Y using direct labour hours 2. What is the applied cost assigned to product and product 3. Calculate the total product cost using FBC for both products 4. Calculate the unit cost for each product 5. Is the applied cost for cach product under er over-applied 6. What are the disadvantages of FBC and what solution has been offered as alternative? 140 marks Question 2 Project Selection Dragon Products Company is considering two projects. The projects' cash flows are as follows: Cash Flow 0 1 2 3 4 5 6 Discount Rate PROJECT A S9100 2500 1700 1500 2500 2200 4.29 REQUIRED 1. Find the Payback Period 2. What is the discounted PHP? 3. Calculate the Net Present Value of the project and? 4. What is the profitability index of 5. Calculate the IRR of the project using trial and error method. 6. Why is sunk cost not considered when deciding about selecting a project! Which cost is considered and why? [60 marks

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