1. State three advantages and two disadvantages of the use of high and low method.

2. Production and cost data of Akoo Ltd have been recorded over two years thus:

Last year Current year

Production 60,000 units 64,000 units

Total costs (GH) 1,820,000 1,961,400

Between last year and the current year, there has been 5% cost inflation.

Required

i) Calculate the real fixed and variable costs

1. i) Estimate what total cost will be next year when it is expected that there will be a 4% cost push inflation and output will be 70,000 units. [9 marks]

c) Asetsenapa Ltd. presents the following information which relates to a week's work of three of its employees.

Employee Cynthia Augustine Adamu

Work issued (units) 400 600 120

Time Allowed (hrs. per unit) 0.2 0.1 0.4

Output Rejected (units) 60 90 40

The basic working week is 40 hours; the first 6 hours overtime are paid time plus 12 and the next

10 hours at time plus 3 /4. Hours worked by Cynthia, Augustine and Adamu were 52, 45 and 40 respectively. Adamu spent 8 hours on indirect work. These hours being included in the 40 hours worked by him. The three employees' basic hourly rates of pay were as follows: Cynthia GH30, Augustine GH40 and Adamu GH25.

Bonus is paid at 1/2 of the basic rate for all time saved. The high rate of rejection was considered abnormal due to faulty materials and it was agreed to credit all output for bonus purposes.

Required:

You are required to present in a tabular form for each employee:

(a) Number of bonus hours worked

(b) Basic wages including overtime

(c) Amount of bonus earned

(d) Gross wages

(e) Direct wages cost per unit accepted when overtime is worked:

(i) Regularly throughout the year as company policy due to labour shortages and

(ii) Specifically at the customer's request to expedite delivery.