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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  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 /cost Expected ( cost) $
Selling cost 45,000
Administration Cost 35,000
Manufacturing  overhead cost 108,000
Utilities cost [store] 12,000
Cost Drivers:  
Product X Machine Hours
Product Y Direct Labour Hours
Direct Labour Hours 12,000  hours
Machine Hours 18,000 hours

 

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

 

  Product X Product Y
Direct materials $4200 $2600
Direct Labor  Hour Rate $10.50 $16.50
Units completed 150 200
DLH (hours) 560 420
Machine hours 660 240
Actual Cost $ 3200 42100

 

 

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
YEAR PROJECT A PROJECT B
0 ($10300) (12,500)
1 1700 2870
2 1930 2450
3 2500 4700
4 2800 4575
5 4200 3450
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 Labour 125,000
 Supervisors salaries [factory 50,000
Marketing cost 45,000
Admin Salaries 80,000

 

 

  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  Overhead 76,000
Budgeted machine hours 21,000 hours
Actual machine hours 30,000 hours
Actual overhead 142,000

 

  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 ]