Exam (elaborations)
MAC3701 Assignment 1 Semester 1 2023
- Institution
- University Of South Africa
MAC3701 Assignment 1 Semester 1 2023 MAC3701 Assignment 1 Semester 1 2023 MAC3701 Assignment 1 Semester 1 2023
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MAC3701Assignment 1
Semester 1 2023
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MAC3701 Assignment 1 Semester 1 2023
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QUESTION 1
Which one of the following is not a characteristic of activity-based-costing (“ABC”)
system?
A. Because of the extensive number of cost drivers that must be identified and
measured, this costing system can be prohibitively expensive to implement and
operate.
B. The allocation basis is referred to as ‘cost driver’, as a cause-and-effect
relationship exists between cost and allocation basis.
C. Multiple overhead rates can be calculated, one per department or cost
centre.
D. Overhead costs are accumulated and assigned to products in accordance with
activities, based on the number of resources used by each product.
Multiple overhead rates are calculated: one per activity
QUESTION 2
Earth (Pty) Ltd (“Earth”) produces and sells chicken products and is based in
Bloemfontein in the Free State province. Earth’s production process is recognised as
a joint manufacturing process, and the related joint production costs are allocated to
the joint products based on the net realisable value (NRV) at split-off point method.
The company uses the direct costing method, and all its inventory items are valued
using the first-in-first-out (FIFO) method. Earth has a 31 December 2023 financial
year-end. The company operated for 30 days during January 2023.
The actual results for the month ended 31 January 2023 were as follows:
A total of 200 tons of broiler chickens were processed at the plant, this represents 90%
of the plant’s capacity. The actual yields at the split-off point were Chicken carcass
70%, Livers 25% and Feathers 5%.
The actual variable costs incurred in the slaughtering process were as follows:
Description R/ton
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