How often Nature and behaviour of costs; cost estimation is asked

Where it was asked

What costs marks here

The questions

1. Oct/Nov 2015, Q4.52 marks · multiple choice

   For Question 4, answer each multiple-choice item by writing down the sub-question number together with the letter of the correct alternative (for example, 1.a). Note that when rounding is required you may need to choose the option closest to your calculated answer. Identify what a manufacturing department is most likely to be classified as.

2. Oct/Nov 2014, Q1.12.5 marks · multiple choice

   Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Blue Sky Industries Limited's freight and logistics division, run by Sam Smith, only despatches standard recorded parcels ordered online. Over several months the following units-posted and total-cost figures were recorded: 35 000 units cost R10 005 000; 40 000 units cost R11 380 000; 45 000 units cost R12 755 000; 48 000 units cost R13 580 000; 55 000 units cost R15 575 000; and 57 000 units cost R16 125 000. Using this information, determine the fixed cost component at the activity level of 40 000 units.

3. Oct/Nov 2014, Q1.22.5 marks · multiple choice

   Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Using the same units-posted and total-cost data for Blue Sky Industries Limited's freight and logistics division (35 000 units at R10 005 000; 40 000 units at R11 380 000; 45 000 units at R12 755 000; 48 000 units at R13 580 000; 55 000 units at R15 575 000; and 57 000 units at R16 125 000), calculate the fixed cost at the activity level of 57 000 units.

4. Oct/Nov 2014, Q1.32.5 marks · multiple choice

   Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Sam Sales is the marketing executive responsible for the FOX Sat FXS1 decoders. Each decoder, imported from the PRC, has a landed cost of R300. Sam wants to earn a gross profit on sales of 37,5%. Calculate the mark-up on cost, expressed in Rand.

5. Oct/Nov 2013, Q1.72 marks · multiple choice

   Question 1 is a multiple-choice section made up of ten short questions, numbered 1.1 to 1.10, each worth 2 marks. For each one you must write down the question number together with the letter (A, B, C or D) of the option you consider correct. Questions 1.7 and 1.8 relate to budgeted and actual figures taken from the records of Phala (Pty) Ltd. At a budgeted level of 8 000 units: sales are R5 400 000, variable manufacturing costs are R1 936 000, and semi-variable selling and administrative costs are R2 195 200. At a budgeted level of 12 000 units: sales are R8 100 000, variable manufacturing costs are R2 904 000, and semi-variable selling and administrative costs are R2 917 200. The actual results for 10 500 units were: sales of R7 035 000, variable manufacturing costs of R2 625 000, and semi-variable selling and administrative costs of R2 326 800. Jim Mathoho, the chief operating officer, remarked after observing how expected sales and production volumes differed from the fixed budget, 'As soon as the fixed budget was approved, it was out of date.' Based on this information, what is the budgeted variable cost per unit? A. R422,50; B. R180,50; C. R242,00; D. R274,00.

6. Oct/Nov 2013, Q7(a)3 marks

   The following figures were extracted from the accounting records of Buda Manufacturers for the six months ending June 2013, showing the number of units produced and the corresponding semi-variable manufacturing overhead costs incurred each month: January - 1 200 units, overheads of R4 560; February - 1 272 units, overheads of R4 932; March - 1 080 units, overheads of R4 202; April - 1 320 units, overheads of R5 364; May - 1 392 units, overheads of R5 520; June - 1 592 units, overheads of R5 994. Using Buda Manufacturers' six-month data for January to June 2013 (units produced and semi-variable manufacturing overheads as given in the introduction), apply the high-low method to calculate the total costs that should be expected in July if 1 530 units are manufactured.

7. Oct/Nov 2013, Q7(b)7 marks

   The following figures were extracted from the accounting records of Buda Manufacturers for the six months ending June 2013, showing the number of units produced and the corresponding semi-variable manufacturing overhead costs incurred each month: January - 1 200 units, overheads of R4 560; February - 1 272 units, overheads of R4 932; March - 1 080 units, overheads of R4 202; April - 1 320 units, overheads of R5 364; May - 1 392 units, overheads of R5 520; June - 1 592 units, overheads of R5 994. Using the same six months of data for Buda Manufacturers (January to June 2013, units produced and semi-variable manufacturing overheads as given in the introduction), apply the least squares (regression) method to calculate the variable cost per unit and the total fixed costs for the financial year. Use the two simultaneous equations Sigma(xy) = a*Sigma(x) + b*Sigma(x^2) and Sigma(y) = a*n + b*Sigma(x), and round off your final answers for both the variable cost per unit and the total fixed costs to two decimal places.

8. May/Jun 2013, Q5.1a3 marks

   This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Ebhayi Transport Services runs a fleet of delivery trucks within the Port Elizabeth metropolitan area. The company's cost accountant established that when a truck covers 145 000 km in a year, the average semi-variable operating cost works out to R15,50 per km, whereas if only 98 000 km are covered in a year, the average semi-variable operating cost rises to R19,50 per km. Apply the high-low method to work out the variable cost per kilometre, rounded to two decimal places, as well as the total fixed costs, rounded to the nearest hundred rand.

9. May/Jun 2013, Q5.1b1 mark

   This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Using the same Ebhayi Transport Services data (145 000 km at an average semi-variable cost of R15,50 per km, and 98 000 km at R19,50 per km), formulate a linear equation that explains and predicts the cost behaviour of the semi-variable operating costs.

10. May/Jun 2013, Q5.1c1 mark

    This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Based on the linear cost equation derived for Ebhayi Transport Services, forecast the total operating costs if a truck is estimated to travel 115 000 km during a year.

11. May/Jun 2013, Q5.2a2 marks

    This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. MUSIKA (Pty) Ltd is a small entertainment company operating from downtown Johannesburg. It sells a single product, the BIN10 music player. For the year ended 31 March 2013, during which 16 000 units were manufactured and sold, the following figures apply: total sales of R560 000 (R35,00 per unit), total direct material cost of R148 000 (R9,25 per unit), total direct labour cost of R120 000 (R7,50 per unit), total conversion costs of R215 000, and fixed manufacturing overheads of R55 000. There was no inventory on hand at the start or end of the year, and variable manufacturing overheads are based on production. Calculate the total variable manufacturing overheads for the year.

12. May/Jun 2013, Q5.2b2 marks

    This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Using the same MUSIKA (Pty) Ltd figures for the year ended 31 March 2013 (16 000 BIN10 units manufactured and sold, sales of R560 000, direct material R148 000, direct labour R120 000, conversion costs R215 000, fixed manufacturing overheads R55 000), calculate the total contribution and the contribution ratio, rounding your workings to two decimal places.

13. May/Jun 2013, Q5.2c3 marks

    This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Still using the MUSIKA (Pty) Ltd cost and sales data given for the year ended 31 March 2013, prepare a contribution-format statement of comprehensive income assuming that 20 000 BIN10 units are manufactured and sold instead of 16 000.

14. May/Jun 2013, Q5.2d3 marks

    This question is made up of two independent parts, Part A and Part B, each dealing with the nature and behaviour of costs. Using the same assumptions as in the previous part (20 000 BIN10 units manufactured and sold), calculate the net profit for MUSIKA (Pty) Ltd if the selling price is increased by R5 per unit, total fixed costs increase by R5 000, and the sales volume decreases by 10%.