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Which of these statements regarding Marginal costing is NOT true?
A. Marginal costing is easy to calculate
B. Marginal costing is easy to communicate
C. Marginal costing is easy to understand
D. Marginal costing is easy to value stock by adding overheads to unit costs
and
Which of the following BEST describes target costing?
A. Setting a cost by subtracting a desired profit margin from a competitive market price
B. Setting a price by adding a desired profit margin to a production cost
C. Setting a fixed cost for the use in the calculation of variances
D. Setting a ROCE target for the company to aim for in the long run
and
In Activity Based Costing (ABC), a cost driver is:
A. An overhead cost that is incurred as a direct consequence of unit output
B. Any direct cost element in a product’s cost
C. Any production items for which costs are incurred
D. A resource consuming activity that incurs overhead costs
answer me and explain please i need to understand that 🙂
thanks lots,
johnWhy are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations.
First question: D (we only add variable production overheads)
Second question: A (that is what target costing is, as I explain in my free lectures).
Third question: D (again, I explain this in my free lectures)
A company uses a standard absorption costing system and uses a fixed overhead absorption rate based on machine hours. In order to calculate the fixed overhead volume variance which of the following do you need to know:
the budgeted fixed overheads
the budgeted machine hours and budgeted units produced
the actual fixed overheads incurred
the actual units produced
the variance of incurred machine overhead costs for the output producedand
MX1uses absorption costing for the recovery of overheads based on budgeted machine hours. It produces one type of product only. The budget and actual performance for the month of May was as follows.
Budget Actual
Overheads £2,400,000 £2,480,000
Labour Hours 85,000 83,000
Machine Hours 40,000 42,000
Output in Units 60,000 62,000
What was the total Fixed Overhead Variance for May?
A.
£0.00B.
£28.23C.
£72.60D.
£63.50thanks in advance for your help 🙂
In future, please start a new thread when asking about a different topic.
Again, why are you attempting questions for which you do not have an answer (and have you watched my free lectures on both absorption costing and on variances)?
The absorption rate is $2,400,000 / 60,000 = $40 per unit.
Therefore the total variance = (2,480,000 – (62,000 x $40)) = $0
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