Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours What is the applied cost assigned to product X and product Y? Calculate the total product cost using FBC for both products Calculate the unit cost for each product Is the applied cost for product X under or over-applied? What effect this will have on the cost of goods sold and the Net income ? Is the applied cost for product Y under or over-applied? What effect this will have on the cost of goods sold and the Net income

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Test 2

 

ACC 320

Hi students

Welcome to your Test 2 ACC 320. I am uploading the test you have till Wednesday night to submit. Make sure you

  1. Submit on time [as indicated on your system]
  2. Do not copy because when identified your marks will be very low.

3.Read the questions with care before answering

  1. All questions must be hand written [ typed answer gets very low marks]
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  3. Cleanliness or neatness will be rewarded.
  4. in theory questions you should provide your own examples not just copy from PPT.

If you follow these simple instructions you will score good marks. I am posting the question now but your attendance will depend on your submission of the test . If you are late for submission, I will consider you absent for the test and your paper will be marked on 80% not 100%

Wish you all the best and good luck. NEXT WEEK IS NORMAL CLASS

 

 

 

 

 

 

 

 

 

 

 

Costing Accounting

 

Answer all questions and show your workings

 

Question 1 : Function-based costing

 

JIM Ltd has identified the following overhead costs and cost drivers for next year

 

Expenses /costExpected ( cost) $
Selling cost45,000
Administration Cost35,000
Manufacturing  overhead cost108,000
Utilities cost [store]12,000
Cost Drivers: 
Product XMachine Hours
Product YDirect Labour Hours
Direct Labour Hours12,000  hours
Machine Hours18,000 hours

 

The following is the cost of 2 products made by the company:

 

 Product XProduct Y
Direct materials$4200$2600
Direct Labor  Hour Rate$10.50$16.50
Units completed150200
DLH (hours)560420
Machine hours660240
Actual Cost$ 320042100

 

 

REQUIRED

 

  1. Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours
  2. What is the applied cost assigned to product X and product Y?
  3. Calculate the total product cost using FBC for both products
  4. Calculate the unit cost for each product
  5. Is the applied cost for product X under or over-applied? What effect this will have on the cost of goods sold and the Net income ?
  6. Is the applied cost for product Y under or over-applied? What effect this will have on the cost of goods sold and the Net income

[30 marks]

 

Question 2

 

Project Selection

 

Dragon  Products Company is considering two projects. The projects’ cash flows are as follows:

 

 

                                                      EXPECTED NET CASH FLOWS
YEARPROJECT APROJECT B
0($10300)(12,500)
117002870
219302450
325004700
428004575
542003450
Discount Rate   for both pojects =  6.8%

 

 

 

REQUIRED

 

  1. Find the Payback Period [PBP] of both projects

 

  1. What is the Discounted PBP of both projects ?

 

 

  1. Calculate the Net Present Value of the two projects and decide which one is better?

 

  1. What is the profitability index of both products ? What is the function of PI in project selection?

 

 

  1. What are the IRR of the projects ? Which of the projects is the best using IRR as a criteria? Why?

 

  1. Why is sunk cost not considered when deciding about selecting a project? Which cost is considered and why?

 

 

[40 marks]

 

 

 

 

 

 

 

 

 

 

QUESTION 3

 

The G0-Magic company uses job-order costing system. The following data relate to the first quarter  of the company’s fiscal year

  1. Materials requisitioned for production cost $250,000 [ direct materials and indirect materials are proportioned by 6:2].
  2. Repairs costs incurred are $75,000
  3. Raw Materials purchased on cash $150,000

 

Salaries$
Direct Labour125,000
 Supervisors salaries [factory50,000
Marketing cost45,000
Admin Salaries80,000

 

 

  1. Selling commission cost incurred is $60,000
  2. Insurance for factory  $70,000. Admin insurance is 40% of the factory insurance
  3. Rent expense for the factory is $50,000 and the rent for the shop is $45,000
  4. Supplies expense for the factory incurred during the month is $15,000 [on account]
  5. Use the information below to find the Predetermined Rate using machine hours as the cost driver
 $
Estimated  Overhead76,000
Budgeted machine hours21,000 hours
Actual machine hours30,000 hours
Actual overhead142,000

 

  1. Journalize the applied cost used in section (i)
  2. Sold goods costing $400,000 for $650,000
  3. Depreciation for equipment of factory for the period was $16700
  4. Depreciation for the building [store] was $8,500
  5. $45,000 Cash was paid for the suppliers

REQUIRED

  1. Prepare Journal entries for the quarter

 

  1. Is production cost underallpied or overapplied?

[Marks  30 ]