ExpertEasy2 marksMultiple Choice
ACCA · Question 08 · Cost Accounting Techniques
Section A
SiliconForge, a tech hardware manufacturer, uses Activity-Based Costing (ABC). The total cost of the 'Quality Testing' cost pool is $120,000. The cost driver is the number of test runs. Product X requires 400 test runs, and Product Y requires 600 test runs. How much of the Quality Testing cost should be apportioned to Product X?
Section A
SiliconForge, a tech hardware manufacturer, uses Activity-Based Costing (ABC). The total cost of the 'Quality Testing' cost pool is $120,000. The cost driver is the number of test runs. Product X requires 400 test runs, and Product Y requires 600 test runs. How much of the Quality Testing cost should be apportioned to Product X?
Answer options:
A.
$60,000
B.
$48,000
C.
$72,000
D.
$40,000
How to approach this question
Calculate the total number of cost drivers (400 + 600). Find the cost per driver ($120,000 / 1,000). Multiply by Product X's usage (400).
Full Answer
B.$48,000✓ Correct
Under ABC, costs are apportioned based on cost driver usage. Total drivers = 1,000 test runs. Cost per driver = $120,000 / 1,000 = $120/run. Product X cost = 400 runs * $120 = $48,000.
Common mistakes
Calculating the cost for the wrong product (Product Y) or splitting costs evenly.
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