Cost Accounting Past FInal
January 10,800 February 1 5,600 March 12,200 April 10,400 May 9,800 The inventory of finished products at the end of each month is to be equal to 25% of the sales estimate for the next month.On January 1, there were 2,700 units of product on hand.No work is in process at the end of any month.
Each unit of product requires two types of materials in the following quantities: Material A-4 units Material B- 5 units Materials equal to one half of the next month’s production are to be on hand at the end of each month.
This requirement will be met on December 31st, 2012. REQUIRED: a) Prepare a budget showing the quantities of each type of material to be purchased each month for the first quarter of 2013 Question Two (20 marks) KILL Industries use weighted-average process costing to determine the cost of goods manufactured. The firm began the current year with 20,000 units in process, 75% complete. Work was begun on an additional 90,000 units during the period. The period ended with 8,000 units in process, 40% complete.
Materials are added at the beginning of the process, labor when the units are 50% complete, and overhead is re sold for scrap at $0. 10 each. Normally, 2% of the units inspected are expected to be rejected. Costs attached to beginning work-in-process were $80,000 for materials, $120,000 for labor, and $150,000 for overhead. Current costs for the period were $371,000 for materials, $475,000 for labor and $865,280 for overhead. One hundred thousand good units were completed and transferred out during the period. ) Prepare a cost of production report for this department using weighted average process costing using the vertical format (as taught in class, not in the text) b) Prepare Journal entries to record the activities for the month Question Three (22 marks) Pfizer-Plow Pharmaceuticals is a major seller of cold remedies. Its product line consists of aspirin, cough lozenges, cold capsules and a nasal spray. The firm manufactures only the cold capsules in Puerco Ricoh.
The other products are purchased from firms which specialize in the manufacture of those products: For the first quarter of 2012, management of Pfizer-Plow prepared the following master budget: Sales Aspirin 10,000 cases Lozenges 20,000 cases Capsules 20,000 cases Spray 5,000 cases Total Sales Aspirin Lozenges Spray Manufacturing Costs: Caffeine 40,000 grams 400,000 Antihistamine 60,000 grams 300,000 Aspirin concentrate 100,000 grams 350,000 Direct labor 40,000 hours Overhead (all fixed) 500,000 Total Costs Net Income Through excellent SIT inventory control, the firm was able to keep purchases and production exactly equal to unit sales.
The firm uses actual process costing for its manufacturing operation. A summary of the actual results for the first quarter of 2012 follow: Cost of purchases 1 ZOO cases 20,000 cases $200. 00 a case Capsules 2000 cases $310. 00 a case ,000 cases $390. 00 a case Actual Manufacturing costs incurred during the period were: Caffeine 45,000 grams $427,500 Antihistamine 64,000 grams $384,000 Aspirin Concentrate 1 1 5,000 grams 414,000 Direct labor 43,000 hours Overhead 482,000 a) Determine actual cost net income b) Calculate I.
Sales quantity variance it. Sales mix variance iii. Sales Price variances ‘v. Material yield variance v. Material mix variance v’. Material price variances c) Reconcile actual net income to the master budget in a single statement, including any other appropriate variances Question Four (12 marks) revived more Buts of heat per cord of wood than any other wood burning fireplace insert or stove. One model, the Heatproof, sells for $1,800, and a new model, the Heat Queen, sells for $1,200.
A traditional costing system ‘. The BBC system b) Which system would most likely do a better Job of measuring costs for this product emphasis/keep or drop decision? Explain. C) Franklins controller points out that the BBC information could also be used to identify and eliminate non-value added activities. Explain how BBC and BAM can be used for this purpose. Question Five (18 marks) The steam-generating department of the Sotto Company provides the power necessary to run the machines in two production departments, Pl and UP.
Based upon past experience, it has been determined that the total costs of operating the team generating equipment contains a fixed element of $30,000 per year and a variable element of $2. 00 per 1,000 cubic meters of steam. In addition to any allocated overhead costs, Pl has direct fixed overhead of $20,000 per year and UP has direct fixed overhead of $10,000 per year. Direct variable overhead in Pl is $1. 00 per machine hour. Direct variable overhead in UP is $2 per machine hour.
Each machine hour in Pl requires the use of 1,000 cubic meters of steam. Each machine hour in UP requires the use of 250 cubic meters of steam. Maximum yearly machine hours in Pl and UP are 20,000 and 30,000, respectively. Under current economic conditions, management expects to utilize 10,000 machine hours in Pl and 30,000 machine hours in UP during 2013. A) Determine the expected 2013 operating costs of the steam-generating department.