BPP Q Bank Flashcards
What are types of costing?
P - process costing
A - absorption costing
M - marginal costing
Segmented cost
Conversion cost
Investigate
Complying with relevant laws and regs … which EP?
Professional behaviour
Segmented cost is…
The costs relating to a component of the business which generates revenue.
Staples when manufacturing chairs was treated as indirect
Explain was although could prob be identified with specific chair (making them direct) … the cost is insignificant and the expense of tracing does not usually justify the possible benefit from calculating more accurate direct costs.
Staples would therefore be treated as indirect to be included as part of OAR
(In the question the other multiple choice options were all more obviously Direct costs)
Need to look at graphs … BPP question bank chapter 2
.
We classify short term costs into fixed, variable, step-fixed or semi-variable.
In the long run all costs are…
Variable
For EOQ calculations watch out for…
Eg being given Storage cost in months … instead of annual
Q bank Task 4.6
Indirect wages are ‘collected’ where, for what…?
Collected in the Overhead Control Account for subsequent absorption into WIP
Q bank 4.7
Maintenance dept employee wages debited to Operating OHs
General admin dept employee wages debited to Non-Operating OHs.
.
Q bank 4.8
In a typical cost ledger, the double-entry for Direct Wages cost incurred is?
Dr WIP
Cr Wages control
Q bank 4.8
The direct costs of production (which includes direct wages) are Debited to WIP (Cr to Wages Control)
The full wages cost has been ‘collected’ in Wages Control before being analysed (split) into Direct and Indirect wages.
.
Watch out for detail - what did I do re OT premium ?
Divided £15 by 3 to get a 30% OT premium amount !!!
Absorption cost … what to include?
Direct materials. Direct labour. Variable OHs Fixed Manufacturing OHs Fixed Admin, Selling & Distribution costs.
All except Fixed Admin, selling & distribution costs
Characteristics of Service costing..
Difficult to identify many attributable direct costs.
Many costs must be treated as indirect and shared over several cost units therefore:
High levels of indirect costs as a proportion of total costs.
Cost units are intangible (eg haircut)
Use of composite cost units (passenger-mile ; bed-night)