FINANCIAL ACCOUNTING AND COST ACCOUNTING
ASSIGNMENT
1. Give two examples of direct expenses.
2. Give an example of an administration overhead, a selling overhead and a distribution overhead.
3. What are functional costs?
4. What is the distinction between fixed and variable costs?
5. What are production costs and non-production costs?
6. What is a cost centre?
7. What is a cost unit?
8. What is a profit centre?
9. What is an investment centre?
10. The costs of operating the canteen at 'Eat a lot Company' for the past three months is as follows.
Month
Cost Employees
Employees
$
1
72,500
1,250
2
75,000
1,300
3
68,750
1,175
Calculate;
a. Variable cost (per employee per month)
b. Fixed cost per month
11. The cost of output at a factory is thought to depend on the number of units produced. Data have
been collected for the number of units produced each month in the last six months, and the associated
costs, as follows.
Month
Output
Cost
'000s of units
$'000
X
Y
1
2
9
2
3
11
3
1
7
4
4
13
5
3
11
6
5
15
Required:
a. Estimate the cost in month 7 and where output is expected to be 6,000 units using
i.
High low method
ii.
Simple linear regression technique
b. Which method provides a better forecast of cost? Why?