MAC2601 EXAM PACK
PAST QUESTIONS
AND
SOLUTIONSGR TUTORIALS
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1
MAC REVISION STUDY PACK
TOPIC 1: NATURE AND BEHAVIOUR OF COSTS
(1) Manufacturing cost/ Production cost
Manufacturing costs - costs incurred in the manufacturing process of a product.
Direct + Indirect cost = Manufacturing ...
Manufacturing costs - costs incurred in the manufacturing process of a product.
Direct + Indirect cost = Manufacturing cost
Direct cost = Direct Material + Direct Labour
Total Direct cost = Prime cost
Conversion cost = Direct Labour + Manufacturing overheads
Indirect cost = Indirect material + Indirect Labour
Total Indirect cost = Overheads
za
Direct cost – costs directly linked to the product.
Indirect cost – costs indirectly linked to the product
ria LS
o.
.c
to IA
Manufacturing ls
Total cost = variable cost + fixed cost
rtu R
Variable cost – costs that vary with production e.g. material costs
.g O
Fixed cost – costs that are constant throughout the manufacturing period e.g. Rent.
Semi variable cost – cost that have both elements variable element and fixed element
w UT
e.g. Telephone bill
w RT
Non Manufacturing cost / Period costs
Non Manufacturing cost – costs incurred after the manufacturing process
a. Marketing cost – costs related to the sale and distribution of the final product.
G
b. Administrative costs – costs incurred in directing and controlling the organization.
w
Splitting – fixed from variable cost
Methods used
High low method
Linear equation
Scatter diagram
Simple regression analysis / least squares methods
We will concentrate on the high low method
e.g.
Observations No. of Units Total overhead cost
1 800 105 000
2 650 95 000
3 750 95 000
4 900 120 000
1
,1 step - identify the two points highest level and the lowest level and calculated the differences.
High 900 120 000
Low 650 95 000
250 25 000
2. Calculate the variable rate
= = R100/m
Variable cost after producing 900 units and 900 x 100 = R90 000
za
120 000 = f x d cost + 90 000
120 000 – 90 000 = f x d COH
ria LS
o.
30 000 = FX d cost
.c
to IA
ls
rtu R
.g O
w UT
w RT
G
w
2
,
G
w RT
w
w UT
.g O
rtu R
to IA
ria LS
ls
.c
o.
za
3
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