BCA electronics produces electronic subcomponents for the export market. The cost accountant of the firm has classified all the costs based on their cost behavior. 

i. Explain the differences between fixed and variable costs with appropriate examples. 

ii. An organization has the following total costs at two activity levels: Month 1 Month 2 Activity level ( units) 2000 4000 Total costs ($) 17,000 24,000 Variable cost per unit and total fixed cost is constant within this range. 

Compute the following: 

a. Variable cost per unit 

b. Fixed cost per month 

c. the total cost at an activity level of 3500 units and 7600 units. 

b. BCA electronics company uses a job–order costing system in which predetermined overhead rates are used to apply manufacturing overhead costs to jobs. The finished products goes through two processes machining and assembly. The predetermined overhead in the assembly department is based on labor hours and the machining department is based on machine hours. The following estimates were made at the beginning of the year: Department Machining Assembly Direct labour hours 4,000 60,000 Machine hours 45,000 2000 Direct materials cost $650,000 $400,000 Direct labour cost $360,000 $300,000 Manufacturing overhead cost $135,000 $270,000 

Required: 

i. Compute the predetermined overhead rate used during the year in the Machining and Assembly department. 

ii. At the end of the year the actual cost and operating data for all jobs done during the year: Department Machining Assembly Machine hours 42,000 3,200 Direct labor hours 5,500 64,000 Direct materials cost $600,000 $440,000 Direct labor cost $390,000 $280,000 Manufacturing overhead cost $130,000 $280,000 Compute the amount of overapplied or underapplied in each department. 

iii. List any three expenses that can be classified as overheads for this manufacturing firm.

Answer rating: 100% (QA)

Answer A 1 Difference between fixed and variable cost Fi... View the full answer