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BA2 Questions and Answers

Question # 1

A company operates a full cost system of pricing. Production overheads are absorbed using a pre-determined absorption rate of £3.50 per machine hour. The direct production cost of product A is £15 per unit and it utilises 6 machine hours per unit. The mark-up for non-production costs is 10% of total production cost. The company applies a 25% mark-up on total cost for all products.

The required selling price for Product A, to two decimal places, is:

Question # 2

A company operates an absorption costing system. Overheads are absorbed using a pre-determined absorption rate using labour hours. In the period actual labour hours were 10,600, 400 hours below budget. Actual overheads for the period were £234,680 and there was an under-absorption of overheads of £1,480.

What was the budgeted level of overheads?

A.

£242,000

B.

£233,200

C.

£245,072

D.

£224,720

Question # 3

Refer to the exhibit.

The budgeted contribution for last month was $53,600. The variances reported were as follows:

The actual contribution for last month was:

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