Foundation Principles of Costing

Total marks: 100 Weighting 50%

Section A: Format: MCQ Questions (20 questions, 1 mark each),

Section B: Short essay (4 questions-five marks each, total 20 marks) and

Section C: Computation questions (20 marks each. Answer all four questions)

Topic for short essay and computational Questions -FBZ semester exam

 Unit 2 Type of Inventory valuation methods – explain – 5 marks

1. First in First Out (FIFO)

• The oldest stocks in store are sold off first.

• This is reflected in the cost of sales being valued at the earlier purchase price.

• The closing stock will be valued at the cost of the latest purchase price.

2. Last in First Out (LIFO)

• The newest stocks in store from the latest purchase are sold off first.

• This is reflected in the cost of sales being valued at the latest purchase price.

• The closing stock will be valued at the cost of the earlier purchase price

3. Weighted Average price

 This method has far more support than the simple average pricing method, because it is logical
that an average price should not only be affected by the different prices paid, but also by the
different quantities bought at each price.
 Weighted average price = total value of stock in store/ total quantity of stock in store
 Unit 3 Labour costing – reason for high turnover rate – 5 marks, resign and join

 a) Pay rate does not measure or reasonable with output hours or efforts made.
 b) Poor working condition like poor leadership and unsafe working conditions
 c) Health and personal issue hinder labour productivity at work, of which employees decided to
resign from the company.
 d) The job scope/tasks does not align with employee’s interests and skillsets.
 e) Competitor offering more benefits to their employee, not only in term of salaries but it also
refers to more flexible schedules and more on.

 Unit 2 Material costing Inventory valuation - Weighted Average Pricing – 15 marks

Question 4 (Revision 1)

Question 1 (Revision 2)

 Costing profit and loss account and WIP – 15 marks = similar to assignment questions

Question 11 (Revision 1)

Question 2 (Revision 2)

 Overhead -allocation and reapportionment – 15 marks

Question 2 (Revision 1)

Question 3 (Revision2)
 Joint product costing – 15 marks + briefly explain joint product costing

Question 9 (Revision1)

Question 4 (Revision 2)

DEFINITION: JOINT PRODUCTS-

2 or more products separated in the course of processing, each having a sufficiently high saleable value
to meet recognition as a main product

Since joint products are produced simultaneously from the same process, it becomes difficult to
determine with certainty what proportion of the joint costs have been incurred by each product up to
the point of separation.

Joint costs are total costs incurred up to the point of separation.

It becomes necessary, therefore, to find an equitable method, which must be consistently used, of
apportioning these costs up to the point of separation.