Accounting Assignment

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1 Which of the following is the best definition of product costs?
1 Product costs are the costs associated with unsold products retained in stock. 2 Product costs are those costs associated with goods or services purchased or produced for sale to customers.
3 Product costs are those costs that change with changes in the level of product activity, over a defined period of time.
4 Product costs are overhead costs that are allocated over a number of products of the business for which costs are to be determined.
2 Which of the following describes a fixed cost?
1 any overhead cost incurred in the factory of a manufacturing company
2 any selling, general or administrative cost incurred in a manufacturing company
3 a total cost that
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The cost per unit is R5. What is the amount of the purchases budget for the month?
1 R1 450
2 R1 550
3 R1 700
4 R1 750
Jenkins plans to sell a single product at R20 each. His expected volume of sales for the first two months in business from 1 March to 30 April in year 1 is as follows:
March April
Volume 300 units 250 units
He sells his product for both cash and on credit terms. He estimates that 30% of all sales will be for cash and the remainder will be on credit terms. Research has shown that, on average, 60% of trade debtors pay in the month following the month of sale, and 40% in the second month following the month of sale.
12 What would be the total cash inflow from customers in April?
1 R3 000
2 R3 600
3 R4 020
4 R5 700
Assignment 02
Part 2
Long questions 76 marks
Question 1 20 marks
A company produces three products that use the same manufacturing facilities. The details of the selling price and costs of each product are as follows:
Product X Product Y Product Z
Expected sales next year, in units 10 000 10 000 10 000
Direct labour hours per unit 2 3 4
Selling price per unit 36 51 65
Variable costs per unit 20 30 35
Allocated fixed costs based on the direct labour hours used 10 15 20
Profit per unit 6 6 10
The fixed overhead is forecast as R450 000. The fixed overhead cost rate is R5 per direct labour hour, calculated as R450 000/90 000 =
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