Cost accounting techniques

A drone manufacturing plant has two production departments (Assembly and Testing) and two service departments (Maintenance and IT). Maintenance provides 20% of its services to IT. IT provides 10% of its services to Maintenance. Which method of overhead reapportionment fully recognizes this mutual service provision?

A hospital uses Activity-Based Costing (ABC). The 'Patient Admission' cost pool has total overheads of $150,000. The cost drivers identified are the number of admissions. During the period, there were 3,000 routine admissions and 1,000 emergency admissions. Emergency admissions require twice as much administrative effort as routine admissions. What is the cost per routine admission?

A rare metals refinery uses 10,000 kg of a specific ore annually. The cost of placing an order is $200. The holding cost per kg per year is $4. Calculate the Economic Order Quantity (EOQ). (Enter the number only)

In a period of consistently rising commodity prices, a company is considering switching its inventory valuation method from AVCO (Average Cost) to FIFO (First-In, First-Out). What will be the impact on reported profit and closing inventory valuation?

A chemical plant uses the weighted average method of process costing. Opening work-in-progress (WIP) was 2,000 units (60% complete as to conversion). During the period, 8,000 units were started. Closing WIP was 3,000 units (40% complete as to conversion). There were no normal or abnormal losses. What are the equivalent units for conversion costs?

A chemical processing facility produces two joint products, Alpha and Beta, from a single process. Joint costs are $100,000. Alpha produces 5,000 liters, selling for $10/liter after further processing costs of $2/liter. Beta produces 10,000 liters, selling for $6/liter after further processing costs of $1/liter. Using the Net Realizable Value (NRV) method, how much joint cost is apportioned to Alpha?

A tech company is developing a new smartwatch. The competitive market price is expected to be $250. The company requires a profit margin of 20% on the selling price. The current estimated cost to manufacture the watch is $215. What is the target cost gap?

A factory uses throughput accounting. Product X sells for $120. Material costs are $40 per unit. The bottleneck resource is machine time, and Product X takes 2 hours on the bottleneck machine. Total factory costs (excluding materials) are $100,000 per week, and the bottleneck machine is available for 4,000 hours per week. What is the Throughput Accounting Ratio (TPAR) for 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?

Section A GreenAcres Farm produces two joint products, Alpha-Crop and Beta-Crop, from a single harvesting process. The joint costs incurred up to the split-off point total $50,000. At the split-off point, 2,000 kg of Alpha-Crop (sales value $20/kg) and 3,000 kg of Beta-Crop (sales value $10/kg) are produced. If joint costs are apportioned based on sales value at the split-off point, what is the joint cost allocated to Beta-Crop?

Section A CityGrid Utilities operates a water purification process. In May, 10,000 liters of raw water were input at a cost of $15,000. Conversion costs were $8,000. Normal loss is expected to be 5% of input, and these losses have a scrap value of $0.50 per liter. Actual output was 9,200 liters. What is the cost per expected liter of output (rounded to two decimal places)?

Section A HopeFoundation, an NGO, wants to introduce a new community meal program. The local government will grant a fixed funding of $5.00 per meal provided. The NGO requires a 20% 'surplus' margin on the funding received to cover central administrative overheads. The current estimated cost to produce one meal is $4.30. What is the target cost gap per meal?

Section A ProConsult, a service firm, uses job costing. For Job #802, direct consultant labor is $4,000 and direct expenses are $500. Production overheads are absorbed at 150% of direct labor cost. Non-production overheads are added at 20% of total production cost. What is the total cost of Job #802?

Section A SteelWorks Manufacturing requires 10,000 units of a specific alloy per year. The cost to place a single order is $50. The holding cost per unit per year is $4. Using the Economic Order Quantity (EOQ) formula, calculate the optimal order quantity. Enter the exact number only.

Section A AppDev Co, a tech startup, produced 5,000 software licenses and sold 4,500 in its first month. Fixed production overheads were $20,000. The company reported a profit of $50,000 using marginal costing. What would the profit be if the company used absorption costing?

A software development firm is transitioning from traditional absorption costing to Activity-Based Costing (ABC). They have identified 'Quality Testing' as a major cost pool. Which of the following would be the most appropriate cost driver for this cost pool?

A chemical manufacturer produces two joint products, Alpha and Beta, incurring a joint cost of $50,000 before the split-off point. Alpha can be sold for $40,000 after further processing costs of $10,000. Beta can be sold for $60,000 after further processing costs of $10,000. Using the Net Realizable Value (NRV) method, calculate the amount of joint cost apportioned to Product Beta. (Enter numbers only)

A retail multinational sells 10,000 units of a specific electronic gadget annually. The cost of placing an order is $50. The purchase price per unit is $20, and the annual holding cost is 10% of the purchase price. Calculate the Economic Order Quantity (EOQ). Round to the nearest whole unit.

An aerospace manufacturer absorbs overheads based on direct labor hours. Budgeted overheads: $500,000 Budgeted labor hours: 25,000 hours Actual overheads incurred: $520,000 Actual labor hours worked: 27,000 hours What is the under- or over-absorption of overheads for the period?

An electric vehicle (EV) manufacturer is designing a new battery pack. The competitive market selling price is estimated at $50,000 per unit. The company requires a profit margin of 20% on the selling price. The current estimated production cost is $45,000 per unit. Calculate the target cost gap per unit. (Enter numbers only)

A pharmaceutical company is applying life-cycle costing to a new drug. Which TWO of the following costs are typically incurred heavily during the pre-production phase of the product life cycle?

A server hosting company uses throughput accounting. A specific hosting package sells for $100 and incurs $40 in totally variable material (licensing) costs. The package requires 2 hours on the bottleneck server. Total factory costs (operating expenses) for the period are $120,000, and total available bottleneck server hours are 6,000. Calculate the Throughput Accounting Ratio (TPAR) for this package. (Enter to one decimal place)

A mining corporation is implementing Environmental Management Accounting (EMA). They are using 'Material Flow Cost Accounting' (MFCA). What is the primary objective of this specific technique?

A bespoke furniture maker reports a profit of $50,000 using marginal costing. During the period, opening inventory was 1,000 units and closing inventory was 1,500 units. The fixed production overhead absorption rate is $10 per unit. Calculate the profit that would be reported using absorption costing. (Enter numbers only)

**Section A** A public utility company manufacturing solar panels produced 10,000 units but only sold 8,000 units during the period. Fixed production overheads are significant. How will the profit calculated under absorption costing compare to the profit under marginal costing?

**Section A** DataStream, a tech startup providing cloud hosting, is implementing Activity-Based Costing (ABC). They have identified 'Server Maintenance' and 'Data Transfer' as key cost pools. Which of the following would be appropriate cost drivers for these activities? (Select ALL that apply)

**Section A** ChemCo operates a chemical refinery using process costing. During the month, 10,000 liters of material were input. Normal loss is 5% of input. Actual output completed and transferred was 8,500 liters. Closing Work in Progress (WIP) was 1,000 liters, which were 100% complete for materials and 60% complete for conversion costs. Calculate the equivalent units for conversion costs for the period. *(Enter your answer as a whole number)*

**Section A** DairyCorp processes raw milk into two joint products: Cream and Skimmed Milk. The joint processing costs up to the split-off point must be apportioned between the two products. Which of the following is a widely accepted method for apportioning these joint costs?

**Section A** ArchDesign is a bespoke architecture firm that designs unique, custom homes for individual clients. Which costing method is most appropriate for ArchDesign to determine the cost of its services?

**Section A** A multinational tech company is developing a new budget smartphone for emerging markets. They have decided to use Target Costing. Which of the following best describes the Target Costing process?