Part 1 Sample costing flow for a product 10 marks More readings: Accounting academic help Box D Finished

Part 1 – Sample costing flow for a product (10 marks)
More readings: Accounting academic help
Box D
Finished Goods:
Opening Balance
+ Transfers in
– Transfers out
Ending Balance
Box B
Sales
– Cost of Goods Sold
Gross Margin
– Corporate Overhead
Earnings before Taxes (operating profit)
– Taxes
Net Income
Box A
Materials:
Opening Balance
+ New work
– Transfers out
Ending Balance
Box C
Work In Process:
Opening Balance
+ Transfers in
+ Labour
+ Mfg Overhead
– Transfers out
Ending Balance
Questions:
1. What type of costing system is illustrated above on this page?
__________________________________________________________________________________
2. What is the correct ordering of the flow of boxes above (example: B to D to C to A)
Also read: Calculation and classification of cost
___________________________________________________________________________________
3. True and False questions – Mark with X.
Question
True
False
A. Inventory in “finished goods” is the end
of the production process.
B. Units transferred out from a department
will have material, labour and factory overhead in its cost and is considered
material in the next department.
C. Equivalent units of production are the
portion of whole units that are complete with respect to either materials or
conversion (direct labour and factory overhead) costs.
D. Process costing is used for custom
production.
E. Process costing and job costing assign
the same costs.
F. FIFO costing includes beginning inventory
costs in the equivalent per unit cost.
G. If material for 1000 products was added
to Work in Process but conversion costs are 75
% complete at month end, the
equivalent units for allocating conversion costs incurred in the month are A
= 1,000 or B = 750 units. Which is correct?
A
B
H. The Finished Goods in Box D received
$25,000 of costs (Transferred in). Opening inventory was $10,000 and ending
inventory was $5,000. Transferred out must be A = $25,000 or B = $30,000.
Which is correct?
A
B
Part 2 – Sample costing flows and pricing for three customers (10 marks)
Box A
Customer 1
+ Material
+ Labour
+ Mfg. Overhead
+ Corp Overhead
+ Mark up
= Floating Price
Box D
Customer 4
+ Material
+ Labour
+ Mfg. Overhead
+ Corp Overhead
+ Mark up
= Fixed Price
Box C Actual
Customer 2
+ Material to-date
+ Labour to date
+ Mfg. Overhead
+ Corp Overhead
Costs to date
Box C Forecast
Customer 2
+ Material
+ Labour
+ Mfg. Overhead
+ Corp Overhead
+ Mark up
= Fixed Price
Questions:
1. What type of costing system is illustrated above on this page?
__________________________________________________________________________________
2. What is a potential issue with Customer 2 if the overhead allocation is based on a budget and actual results mean the allocation should have been higher.
_________________________________________________________________________________________________
Question
True
False
A. Factory (Mfg) overhead includes all
manufacturing costs except direct materials and direct labour and is
allocated based on overall direct labour hours worked.
B. Labour in the Customer Boxes above (this
page) are based on specific labour rates and hours worked on the particular
job.
C. Materials are tracked through a
requisition system.
D. Factory overhead applied represents the
actual overhead costs incurred for the particular job. In Box A, this is the
actual Mfg overhead incurred.
E. Material, Labour Costs, and Mfg Overhead
in the Boxes above on this page would be recorded in Cost of Goods Sold when
a sale is realized.
F. A job costing system is not applicable
for a service company.
G. The mark-up (i.e., profit) in the Box D
is 20
% of costs. If the manufacturing costs are $75,000 and corporate
overhead is $25,000, the profit to the company is A = $20,000 or B = $15,000.
Which is correct?
A
B
H. Labour hours are tracked through a time
ticket system. If the labour component of costs in G just
above unexpectedly increased and manufacturing costs are now $80,000, the
company would A= increase its profits or B = decrease its profits. Which is
correct?
A
B
3. True and False questions – Mark with X.
Part 3 – Opinion questions
Part 3A – In a job order cost system, briefly state two important policies that would help the company produce customized products as desired by customers and would help the company control costs in setting prices for these products. This is particularly important for fixed price contracts. (4 marks)
1. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________2. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Part 3B – In a process cost system, briefly state two important methods of assigning costs to the beginning inventory in a department. (4 marks)
1. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
2. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Part 3C – Could a company use both the job and process costing methods in building products? Yes or No and Why. (2 marks)
__________________________________________________________________________________________________________________________________________________________________________________________________________________
Part 4 – Calculation Question (10 marks)
Use the worksheet below to assign costs to the inventory transferred out and the ending inventory using the weighted average method. The percentages indicate the amount of work completed.
Part 5 – Calculation Question (10 marks)
Use the worksheet below to assign costs to the inventory transferred out and the ending inventory using the FIFO method. The percentages indicate the amount of work completed.
Part 6 – Activity Based Cost (10 marks)
A company reports the following information about its indirect costs:
1. Total indirect costs of $3,000,000 for the next year.
2. There two products: Product A and Product B.
3. Direct labour hours for Product A is 40,000 and Product B is 60,000
4. The company’s accountant has suggested an alternative to the traditional allocation of indirect overhead based on direct labour hours. The accountant suggested the following:
a. Indirect costs can be broken down into supervisory wages $500,000, machine set up $250,000, machinery operating costs including depreciation $1,250,000, engineering changes $500,000, quality inspection costs $250,000, shipping costs $250,0000.
b. Activity drivers are supervisory wages (direct labour hours), machine set up (2,500 set up hours), machinery operating (12,500 machine hours), engineering changes (2,500 engineering hours), inspection (2,500 inspection hours), shipping (5,000 shipments)
Driver
Product A
Product B
DLH
40,000
60,000
Machine set up
750
1,750
Machine operating
3,500
9.000
Engineering changes
1,000
1,500
Inspections
500
2,000
Shipping Units
1,500
3,500
Questions:
A. Under the traditional allocation method, what is the amount of indirect cost allocated to Product A and Product B?
____________________________________________________________
B. Under the Activity Based Accounting (ACB) method, what is the amount of indirect cost allocated to Product A and Product B?
____________________________________________________________
C. Would the ABC method add value to the company, Yes or No and Why or Why Not?
____________________________________________________________
D. The accountant alternatively suggested a “standard costing system” for indirect costs. This would be a set / fixed amount for the year for each unit of Product A or Product B shipped. What is the standard cost per unit for Product A and Product B assuming a traditional cost allocation approach?
____________________________________________________________
Part 7 – Short answer – Fill in the right column with one example of the specified cost such as “labour to produce a product”. Only the first example will be considered for marks. (10 total marks, 1 mark for each item)
Cost Term
Indicate a good example of the Cost Term.
1. Indirect manufacturing cost
2. Direct cost
3. Cost object
4. Prime cost
5. Conversion cost
6. Variable cost
7. Product cost
8. Period cost
9. Direct labour cost
10.. Corporate cost
Weighted
Average
Method Units Dollars Direct
Material Conversion
Costs Direct
Material Conversion
Costs
Beginning
WIP 500



50,000


35,000




15,000





Started 600



70,000


40,000




30,000





1,100


120,000

75,000




45,000





Transfer
out 800



100
% 100
% A1 A2 Ending
WIP 300



100
% 50
% B1 B2
1,100


Per
Unit C D
Assigned
Costs Transfer
out Ending
WIP
Total
Weighted Average Method
UnitsDollarsDirect MaterialConversion Costs Direct MaterialConversion Costs
Beginning WIP 500 50,000 35,000 15,000
Started 600 70,000 40,000 30,000
1,100 120,000 75,000 45,000
Transfer out 800 100
% 100
%A1 A2
Ending WIP 300 100
% 50
%B1 B2
1,100
Per Unit
C D
Assigned Costs
Transfer out
Ending WIP
Total
FIFO
Method Units Dollars Direct
Material Conversion
Costs Direct
Material Conversion
Costs
Beginning
WIP 500



50,000


35,000




15,000





Started 600



70,000


40,000




30,000





1,100


120,000

75,000




45,000





Beginning
WIP 450



0
% 40
% A1 A2 Started
and
Completed 350



100
% 100
% B1 B2 Ending
WIP 300



100
% 50
% C1 C2
1,100


Per
Unit Assigned
Costs D E Beginning
WIP Added
to
Beginning
WIP
Transfer
from
Beg
WIP Started
and
Completed
Total
Transferred
Out Ending
WIP
Total
FIFO Method
UnitsDollarsDirect MaterialConversion Costs Direct MaterialConversion Costs
Beginning WIP 500 50,000 35,000 15,000
Started 600 70,000 40,000 30,000
1,100 120,000 75,000 45,000
Beginning WIP 450 0
% 40
%A1 A2
Started and Completed 350 100
% 100
%B1 B2
Ending WIP 300 100
% 50
%C1 C2
1,100
Per Unit
Assigned Costs D E
Beginning WIP
Added to Beginning WIP
Transfer from Beg WIP
Started and Completed
Total Transferred Out
Ending WIP
Total
For this module, you created an image of a Terra Cotta Warrior/Animal. You viewed the National Geographic documentary on the subject. Now, answer these questions.
· Who were the images of?
· What was the reason these images were built?
· Who requested (demanded) that they be built?
· What purpose did the figures serve?
· How many of these images were made?
· Would this have been an easy place to work? Why or why not?
· What was the process (details) in how these were constructed?
· What were the figures created with? (materials/medium)?
· Is the appearance of these figures the same as when they were buried?
· What is different or similar?
· What was problematic in creating and having them completed in one piece?
· Were all the images made in a mold?
· Were all the images identical? How is that proven?