MAC1501/101 QUESTION 3 (17 marks) (20 minutes) This question consists of two sep
ID: 2551995 • Letter: M
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MAC1501/101 QUESTION 3 (17 marks) (20 minutes) This question consists of two separate questions, both of which must be answered. PART 3.1 3.1.1 Explain the difference between product costs and period costs in a manufacturing 7 (5) One method to assign production costs to units of production is through direct tracing of the cost, for example the cost of direct materials are assigned to products through direct tracing. Name two methods that are used to assign production overhead costs to units of 3.1.2 PART 3.2 (10} Baboo Lall operates a hotdog stand in Brooklyn Mall, Pretoria. Each hotdog sells for R15. The total cost of direct materials (the bread roll, sausage, condiment and wrapper) is R4 per hotdog. Rental for the hotdog stand amounts to R12 000 per month. Fixed wages of employees amount to R16 000 per month. Other overhead costs and sales units for the last three months were as follows: Number of hotdogs sold Units 2 850 3 000 3 550 Total overhead cost January February March 5 550 5 800 6 390 Sales for April is expected to be 3 500 hotdogs. REQUIRED 3.2.1 Use the high-low method to calculate the fixed and variable costs of the other overhead (5) costs. Calculate the expected profit of Baboo's hotdog stand for April. Use the following format to answer this question: 3.2.2 Total sales Less: Variable costs Less: Fixed cost Profit 117]Explanation / Answer
As per Chegg policy, I am answering the first question :
Part 3.1:
3.1.1 :
3.1.2 Two methods on the basis which overhead costs can be assigned are:
1. Traditional method of using direct labor hours or machine hours
2. Activity Based Costing
S.No Product Costs Period Costs 1 They are manufacturing costs that are directly traceable to a particular cost centre. They indirect costs which cannot be attributed to a particular cost centre. 2 They are added to the product costs. They are not added to the product costs 3 They are the main costs incurred for the manufacturing of the expenses They are supporting costs necessary for manufacture.Related Questions
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