This question has three (3) parts

PART A ( 4 marks)

Within a management accounting system, costs can be classified and reported in a number of different ways. Define the following cost concepts and provide one example of each cost.

a) Product Costs

b) Manufacturing Overhead

c) Period Costs

d) Conversion Costs

PART B (9 marks)

Nina Spade makes custom made leather handbags which she sells at local markets. Each bag sells for $500 and the variable costs to make each bag are 40% of the selling price. In 2020 Ninas total fixed costs were $60,000 and her target profit was $31,500.

Required:

Calculate the following showing all workings.

a) Contribution margin ratio (3 marks).

b) Annual break-even point in sales dollars (2 marks).

c) The sales in units for Nina to earn the target profit for the year 2020. (3 marks). d) Explain to Nina how she may interpret your calculation of the Contribution Margin Ratio calculated in part a) above. (1 mark)

PART C (7 marks)

The Pear Company manufactures personal computers and incurred the following costs for the month of January 2022.

Cost Items	Amount $
Wages of assembly line workers	20,000
Depreciation of factory equipment	13,000
Insurance on sales office	5,100
Memory board and chips used to assemble the computers	42,000
Wages of night security guards for the factory building	11,300
Depreciation of Delivery trucks	3,500
Factory Electricity costs	8,000

Required:

Calculate the following costs for January 2022 showing all your workings.

a) Prime Costs (2 marks)

b) Manufacturing Overhead (3 marks)

c) Period Costs (2 marks)