Indicate whether each of the following is a product cost or a period cost: ?3.1. Cost of flour in a cupcake shop = ?3.2. Costs of delivering finished boats to dealers = ?3.3. Cost o

 QUESTION 1 (15 Marks) 

1. There are two distinct types of cost accounting systems: job order costing systems and process costing systems. How does management decide whether to use a job order costing system or a process costing system in any given manufacturing situation? Explain briefly. 

QUESTION 2 (10 Marks) Product cost vs. period cost

 2. Briefly define the terms product cost and period cost. 

QUESTION 3 (18 Marks) Indicate whether each of the following is a product cost or a period cost:

 3.1. Cost of flour in a cupcake shop =

 3.2. Costs of delivering finished boats to dealers =

 3.3. Cost of a store detective in a retail establishment = 

3.4. Electricity for lighting purposes in a production facility = 

3.5. Cost of nuts to a sweets producer =

3.6. Depreciation of a coffee machine in an coffee beans facility= 

3.7. Salary of a pastry chef in a bakery = 

3.8. Salary of a sewing machine operator in a coat making factory = 

QUESTION 4 (20 Marks)

 4.1. Define and explain economies of scale. 

4.2. Provide an example of a company that illustrates good economies of scale 

QUESTION 5 (15 Marks)

 5.1. Provide a personal example in your own life of a fixed cost 

5.2. Provide a personal example in your own life of a variable cost 

QUESTION 6 (12 Marks) Under- and over-applied overhead

 6.1. What is meant by under-applied overhead?

 6.2. What is meant by over-applied overhead?

 QUESTION 7 ( 10 Marks)

 7.1. Why is it important to know each unit cost of an item, when you manufacture the item? 

7.2 What is margin of safety?