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hi john, for activity based costing and target costing, we take the cost of production only or is it the total cost of production!
And in absorption while doing overheads, was it cost of production and non-production costs were written off as period costs, so, why dont we apply that for abc as wellYou cannot possibly have watched my lectures on this (and I am not going to type out all my lectures here !!)
Obviously we always look at the total cost of production. Non-production costs are not relevant for costing.
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hi john.
i have difficulty solving this MCQ can you please tell me whats the answer and how did you came to thatGiven the following information, what is the target cost gap for product X?
Product X target selling price per unit $10
Target profit 25% on cost
Current cost $8.40 per unit
A $0.40
B $0.60
C $0.90
D $1.60Why on earth are you attempting questions for which you do not have the answer? (You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations!).
The target cost = 100/125 x $10 = $8
Therefore the cost gap = 8.40 – 8 = $0.40
(This is almost identical to the example that I work though in my lecture. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.)
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Thanks John, i will go through your lectures too. your answer helped me.
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