FACULTY OF COMMERCE & LAW

DEPARTMENT OF ACCOUNTING & AUDITING

BACC309: COST ACCOUNTING
ASSIGNMENT 1
AUGUST – DECEMBER 2019
QUESTION 1
For twelve consecutive months a factory manager recorded the number of items produced by the
factory and the total cost of their production. The following table summarizes the manager’s
data.

Number of items (x) 000’s Production cost (y) 000’s

18 37
36 54
45 63
22 42
69 84
72 91
13 33
33 49
59 79
79 98
10 32
53 71

Required
a) Draw a scatter diagram for the data (5)
b) Give a reason to support the use of the regression line y = a + bx as a suitable model for
the data. (3)
c) Obtain the regression equation for y on x in the above form. (12)
d) Give a practical interpretation of the values of a and b. (5)

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Question 2
Machingura Pvt Ltd has the following budgeted sales information for three of its products.
PRODUCT A B C
Standard Selling Price $10 $20 $30
Standard cost $8 $15 $26
Budgeted sales quantity 1000 1000 500

The actual results were as follows

Product A 900 units @ $9
Product B 1100 units @ $19
Product C 600 units @ $28

Required
Calculate the following variances
a) Total sales margin variance (5)
b) Sales margin price variance (5)
c) Sales margin quantity variance (5)
d) Sales margin mix variance (5)
e) Sales margin volume variance (5) (25marks)

Question 3
A firm has three production departments and 2 service departments. The overheads allocated to
the department during a certain period were as follows:
Production department $
A 24 000
B 19 200
C 12 000

Service departments:1 $4 560

2 $3 000

Technical assessment for the appointment of service department overheads shows the following
percentages:
A B C 1 2
Service Department 1 40% 20% 30% - 10%
Service Department 2 45% 32% 7% 16% -

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Required
Calculate the total overheads to be charged to the production department using:
i) The simultaneous equation method (10)
ii) The repeated distribution method (15)

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