Cost Accounting

Cost Accounting

Fall 2013

Test # 2

Due 11/12/13

Name: _________________________

Problem Possible Points Points Earned

Multiple Choice 45

Problem 1 – Job Costing 20

Problem 2 – Process Costing 15

Problem 3 – Activity Based Costing 25

Total Points 100

Extra Credit – Process Costing (fifo) 10

Problem 1 Problem 1 Problem 1 Problem 1 –––– Job Job Job Job Order CostingOrder CostingOrder CostingOrder Costing Carver Test Systems manufactures automated test systems that perform quality inspections during and at the completion of the manufacturing process. As most manufacturing processes are unique, Carver's test equipment is designed to customer specifications, and each system has a selling price in excess of $300,000. The company uses a job-order cost system based on the full absorption of actual costs and applies overhead on the basis of machine hours using a predetermined overhead rate. For the fiscal year ended November 30 budgeted manufacturing overhead was $1,960,000, and the expected activity level was 98,000 machine hours. Data regarding several jobs at Carver are presented below. By the end of November all jobs but RX-115 were completed, and all completed jobs had been delivered to customers with the exception of SL-205.

Required:Required:Required:Required: (a) Determine the balance in the Finished Goods Inventory on November 30. (b) Compute the cost of goods manufactured for November. (c) Compute the Cost of Goods Sold for November. (d) Determine the balance in Work-In-Process Inventory on November 30. A couple of hints: 1) the balance at 10/31 represents the beginning wip. 2) you will need to compute an overhead rate to determine how much overhead to apply to the jobs. 3) cost of goods manufactured represents the total costs of jobs that were completed during the period (not just the current period costs of those jobs).

ProbProbProbProblem 2 lem 2 lem 2 lem 2 Process Costing Process Costing Process Costing Process Costing –––– Weighted Weighted Weighted Weighted AverageAverageAverageAverage Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Required: Required: Required: Required: Prepare a production cost report for Bisson Furntiture, assuming a weighted average system is used . The production cost report should include the following items: a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.

Problem 3 Problem 3 Problem 3 Problem 3 –––– Activity Activity Activity Activity Based Costing Based Costing Based Costing Based Costing –––– 25 25 25 25 PointsPointsPointsPoints Sports Products manufactures and distributes three types of golf clubs: beginners, intermediate, and advanced. The materials used in these clubs increases in each level and allows for more precise balancing and longer wear. Production is highly automated for the beginners' clubs, whereas the intermediate and advanced clubs require a varying degree of labor, depending on the intricacy of the balancing process. Platt applies all indirect costs according to a predetermined rate based on direct labor hours. A consultant recently suggested that Platt switch to an activity-based costing (ABC) system, and identified the following cost breakdown for the upcoming year:

In addition, management estimates 50,000 direct labor hours will be used in the upcoming year at a rate of $14 per hour. Assume that the following activity took place in the first month of the upcoming year:

Required:Required:Required:Required: a. Prepare a schedule to compute the production costs for each product in the first month of the upcoming year using machine hours as the allocation base. b. Compute the production costs for each product in the first month of the upcoming year using activity-based costing.

Extra Credit Extra Credit Extra Credit Extra Credit –––– Process Process Process Process Costing (FIFO) Costing (FIFO) Costing (FIFO) Costing (FIFO) –––– 10 10 10 10 possible pointspossible pointspossible pointspossible points Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Required: Required: Required: Required: Prepare a production cost report for Bisson Furntiture, assuming a FIFO system is used . The production cost report should include the following items:

a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.