Sweet And Sour Ltd Finance Assingment Help With Solution

Sweet And Sour Ltd Finance Assingment Help With Solution

Costing Methods Exercises
Exercise 1: Activity Based Costing
Sweet & Sour Ltd has done a cost analysis for its production of heaters.

The following activities and cost drivers have been developed:


Cost Formula

Maintenance $5,000 + $8 per machine hour
Machining $25,000 + $4 per machine hour
Inspection $90,000 + $1,000 per batch
Setups $5,000 per batch
Purchasing $100,000 + $100 per purchase order


  1. List cost drivers for each activity.
  2. Prepare activity based reports for the following;
  3. 60,000 units (10,000 machine hours, 30 batches and 20,000 purchase orders)
  4. 100,000 units (18,000 machine hours, 40 batches and 30,000 purchase orders)
  5. Discuss some of the benefits of ABC system when compared to traditional costing systems.
  6. Discuss some of the drawbacks of ABC system.


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Exercise 2: Absorption And Variable Costing
Cost Busters Ltd began operations on 1 January. The company sells a single product for $100 per unit. During the year, 12,000 units were produced and 9,000 units were sold. There was no work-in-process inventory at 31 December.

The company uses an actual cost system for product costing, and actual costs for the year were as follows:

Fixed costs

Variable costs

Direct materials 0 $24.00 per unit produced
Direct labour 0 $30.00 per unit produced
Manufacturing overheads $192,000 $6.00 per unit produced
Selling and administrative expenses $40,000 $4.00 per unit sold


  1. Determine the cost per unit using absorption costing.
  2. Determine the cost per unit using variable costing.
  3. Determine the finished goods inventory cost on 31 December using absorption costing.
  4. Determine the finished goods inventory cost on 31 December using variable costing.
  5. Explain why absorption costing and variable costing amounts differ

Product Code :Fin214

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