Question

1. The following data relate to the overhead expenditure of a contract cleaner at two activity levels. For 13 500m2, total overheads are R84 865. For 15 950m2, total overheads are R97850. What is the estimate of the overheads if 18 300 square metres are to be cleaned?

2. A company had opening inventory of 48 500 units and closing inventory of 45 500 units. Profits based on marginal costing were R315 250 and on absorption costing were R288 250. What is the fixed overhead absorption rate per unit?

3. What is the profit if 900 units are made and sold where the selling price is R25 per unit and the marginal cost is R15 per unit? Fixed overheads are expected to be R5 000 for the period. (Use the marginal costing method):

4. A company which uses marginal costing has a profit of R37 500 for a period. Opening inventory was 100 units and closing inventory was 350 units. The fixed production overhead absorption rate is R4 per unit. What is the profit under absorption costing

Answer 1