The following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production overheads of GH¢40000, supervisors’ salary amounting to GH¢30000. The company also has a machine at cost of GH¢100000 to be used for ten years. The accountant identifies that one-third of supervisors’ salary varies with output levels whiles 60% of production overheads remains constant as output changes. Using the accounts classification method, the total variable and total fixed costs are A. GH¢570000 and GH¢45000 respectively B. GH¢526000 and GH¢45000 respectively C. GH¢526000 and GH¢54000 respectively D. GH¢570000 and GH¢40000 respectively

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CMA
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The following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production overheads of GH¢40000, supervisors’ salary amounting to GH¢30000. The company also has a machine at cost of GH¢100000 to be used for ten years. The accountant identifies that one-third of supervisors’ salary varies with output levels whiles 60% of production overheads remains constant as output changes. Using the accounts classification method, the total variable and total fixed costs are
A. GH¢570000 and GH¢45000 respectively
B. GH¢526000 and GH¢45000 respectively
C. GH¢526000 and GH¢54000 respectively
D. GH¢570000 and GH¢40000 respectively

The following information relates to a company selling 25000 pairs of shoes for a year; selling
price per unit- GH¢40, purchase cost per unit- GH¢25, fixed cost is made up of salariesGH¢100000, advertising- GH¢40000 and other fixed cost- GH¢100000. If a selling commission
of GH¢2 per pair was introduced, how many pairs should be sold to earn an after-tax profit of
GH¢12000 assuming a tax rate of 40%?
 A. 30000units
 B. 20000units
 C. 15000units
 D. 25000units

Consider the information below for a company whose products goes through two processes;
material cost
of GH¢100000 for a quantity of 10000kg, labour cost- GH¢50000 and overhead
cost as twice the cost of labour. The company expected an output of 9500kg from process 1 but
eventually obtained 9400kg. The actual output of 9400kg shows that A. There is an abnormal gain of 100kg
 B. There is an abnormal loss of GH¢2632
 C. Cannot determine without further details
 D. A normal loss

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