QUESTION 1-
Jumbo Giant Limited manufactures three products, namely, Milk, Yoghurt and Ice-cream. The initial joint cost of production is $600,000 for the year. This cost results in an output of 2,000,000 litres.
Details relating to the 3 joint products are given below:
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Milk
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Yoghurt
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Ice-cream
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Quantity at split-off point
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1,000,000 litres
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400,000 litres
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600,000 litres
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Selling price at split-off point
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$ 1.00 per litre
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$ 2.00 per litre
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$ 3.00 per litre
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Separable cost
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$ 0.50 per litre
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$ 1.25 per litre
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$ 1.50 per litre
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Sales price of ultimate product
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$ 5.50 per litre
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$ 4.00 per litre
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$ 9.00 per litre
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REQUIRED:
1. Allocate the joint cost between Milk, Yoghurt and Ice Cream using:
a) The Physical Units Method.
b) The Relative Sales Value Method. Round percentage to 2 decimal places.
c) Net Realisable Value Method. Round percentage to 2 decimal places.
2. Jumbo Giant Limited has a request from a prospective customer to further process all its Ice Cream production into Gourmet Ice Cream which will then be bought by the customer for $12.00 per litre. This will increase the separable costs of ice cream per litre to $2.60.
Would you advise the company to accept the offer? Why or why not?
QUESTION 2-
Mighty Mouse Limited estimates the following information for October 2016:
Sales (Units): 22,000
Inventory - 1st October 2016: 9,000
Inventory - 31st October 2016: 7,500
The company's inventory policy requires ending inventory to be equal to 25% of the prior month's sales.
The company predicts sales to increase by 5% in November. December is a slow month and sales are estimated at 70% of November sales.
The cost price per unit is $5.00 and this expected to increase by 10% in December.
REQUIRED: Prepare a purchases budget in units and dollars for the quarter ending 30th December 2016.
QUESTION 3-
Fussy Hair Ltd has decided to prepare a cash budget for the quarter ending 30st September 2016. Services are provided on 30 day credit terms. As at 1 July 2016, the Cash at bank ledger account had a debit balance of $500,000.
The following estimates have been made for the next three months:
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July
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August
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September
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Sales
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200,000
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300,000
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400,000
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Cash purchases
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150,000
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140,000
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160,000
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Cash wages
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15,000
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20,000
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28,000
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Depreciation on plant
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80,000
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80,000
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80,000
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Electricity expenses
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10,000
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11,000
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11,500
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Insurance expenses
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36,200
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36,200
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37,000
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Loan repayment
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0
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20,000
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20,000
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All sales are on credit.
It is expected that debtors will pay their accounts as follows:
- 50 per cent in the month following the sale.
- 20 per cent in the second month following the sale.
- 30 per cent in the third month following the sale.
Actual sales for the previous three months were as follows:
- $300,000 in April 2016
- $290,500 in May 2016
- $320,000 in June 2016
Electricity expenses and insurance expenses are paid the following month after they are incurred. June expenses were as follows:
- Electricity expenses $8,000
- Insurance expenses $35,000
REQUIRED:
Part A: Prepare a schedule of cash receipts from debtors for the period ending 30th September 2016.
Part B: Prepare a Cash budget for the Quarter ending 30th September 2016.
QUESTION 4-
Terrific Tables Pty Ltd incurred the following costs to produce job number TB300, which consisted of 500 office desks.
Direct material:
1 June Requisition no. 520: 900 metres of timber @ 8.00 per metre
18 June Requisition no. 101: 600 metres of steel @ $0.20 per metre
Direct labour:
18 June Timesheet no. 72 500 hours@$14 per hour
Manufacturing overhead:
Applied on the basis of direct labour hours @$12 per hour
Additional information:
Job TB300 was completed on 18 June.
REQUIRED: Prepare a job cost sheet and record the information given above and also a cost summary for job TB300.