Learning Outcomes being assessed:
1: Identify the major differences and similarities between financial and managerial accounting. LO2: Use basic managerial accounting terminology and vocabulary
2: Explain the cost behavior as the level of production changes.
3: Employ process costing system and find out cost per unit for the mass production industries.
Question No. 1 Falcon Manufacturing Co. had the following account balances for the month ending March31st 2016, unless otherwise noted: (All the figures in AED)
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Work-in-process inventory (1stMarch, 2016)
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28,080
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Work-in-process inventory (31st March, 2016)
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34,200
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Finished goods inventory (1st March, 2016)
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***
|
|
Finished goods inventory (31st March, 2016)
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102,000
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Direct materials used
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*
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|
Indirect materials used
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**
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|
Direct manufacturing labor
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****
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|
Indirect manufacturing labor
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37,200
|
|
Property taxes
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5,760
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Salespersons' company vehicle costs
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2,400
|
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Depreciation of manufacturing equipment
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52,800
|
|
Depreciation of office equipment
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24,720
|
|
Miscellaneous plant overhead
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27,000
|
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Plant utilities
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18,480
|
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General office expenses
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61,080
|
|
Marketing distribution costs
|
6,000
|
Required:
a) Prepare a cost of goods manufactured schedule for the period.
b) Prepare a cost of goods sold schedule for the period.
c) How does managerial accounting differ from financial accounting?
d) "A variable cost is a cost that varies per unit of product, whereas a fixed cost is constant per unit of product." Do you agree? Explain in detail with suitable illustration to justify your view.
* AED 70,000-79,000
** AED 15,000-17,500
*** AED90,000-97,000
**** AED85,000-95,000
Question No. 2 Honey butter, Inc., manufactures a product that goes through two departments prior to completion-the Mixing Department followed by the Packaging Department. The following information is available about work in the first department, the Mixing Department, during June.
Work in process, beginning:
Units in process 200
Completion with respect to materials................................. 100%
Completion with respect to conversion.............................. 20%
Costs in the beginning inventory:
Materials cost ...................................................................$2,000
Conversion cost.................................................................. $800
Units started into production during the period .................1,800
Costs added to production during the period:
Materials cost .................................................................$ *
Conversion cost ..............................................................$**
Work in process, ending:
Units in process. 100
Completion with respect to materials .................................. 100%
Completion with respect to conversion................................ # % Required:
Assume that the company uses the weighted-average method.
1. Determine the equivalent units for June for the Mixing Department.
2. Compute the costs per equivalent unit for June for the Mixing Department.
3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the Packaging Department.
4. Prepare a cost reconciliation report for the Mixing Department for June.
* $ 16,000 - $ 19,000
**$ 36,000- $ 40,000
# 25%-30%