Differentiate with suitable examples the traditional costing systems and activity-based costing.

Assignment Question(s): (Marks 15)

Q1. Differentiate with suitable examples the traditional costing systems and activity-based costing. Explain how ABC is used in manufacturing by providing a numerical example. (3 Marks)

Q2. RCR has two support departments, X1 and X2, and two operating departments, Z1 and Z2. RCR has decided to use the direct method and allocate variable X1 dept. costs based on the number of transactions and fixed X1 dept. costs based on the number of employees. X2 dept. variable costs will be allocated based on the number of service requests and fixed costs will be allocated based on the number of computers.  The following information is provided:  (Week 9, Chapter 8)  (4 Marks)

	Support Departments		Operating Departments
	X1	X2	Z1	Z2
Total Department variable costs	12,500	15,000	95,000	52,500
Total department fixed costs	14,500	27,500	105,000	45,000
Number of transactions	38	45	175	112
Number of employees	14	18	38	30
Number of service requests	30	18	38	25
Number of computers	15	20	25	30

 

You are required to allocate the variable and fixed costs.

Q3. Provide a numerical example of special order decisions and make or buy decisions and explain how these decisions are backed by quantitative and qualitative considerations. (4 Marks)

Q4. K&C Ltd. is working on a budget for the current year. The following information is linked to budget preparation (4Marks)

Budgeted selling price per unit       =      SAR 450 per unit

Total fixed costs                             =      SAR 275,000

Variable costs                                 =      SAR 150 per unit

Required:

You are required to prepare a flexible budget for 1,000, 1,500, 2,000, and 2,500 units