Task
The purpose of this assignment is to continue to develop skills in costing systems. The assignment emphasises the role of control in managing the production of goods and services efficiently in the workplace. Each question builds on the knowledge gained through the first assignment to develop the concepts of management accounting control through costing. Each question uses realistic data and the professional practices similar to that found in these workplaces.
QUESTION 1 Job costing
A. Create a spreadsheet solution to the following problem. Follow the template provided.
Play the Job cost podcasts and work through the example problem in those podcasts.
Design your spreadsheet to meet the assignment requirements set out above. In particular, check the spreadsheet requirements and the spreadsheet advice PDF.
| DATA INPUT |
|
| Ledger balances |
$
|
| Materials Control 31/18/X4 |
17,600
|
| Work-in-Process 1/8/X4 |
5,460
|
| Finished Goods 1/8/x4 |
7,600
|
| Accounts Payable 1/8/X4 |
1,290
|
Overhead is allocated by using a predetermined rate that is set at the beginning of each year by forecasting the years overhead and using forecast direct labour hours as a cost driver NI factory workers receive the same rate of pay
An Interview with the factory foreman revealed the following additional information.
| 1 Accounts Payable are for direct materials only The balance on 31 August was |
$500 |
| 2 Payments for Accounts Payable made during August were |
$3,700 |
| 3 A stocktake alter 0. Besets autopsy revealed only one unfinished job In the factory |
|
| 4 Source documents showed that the one unfinished job had direct labour |
$800 |
| 5 The direct tabour hours In the unfinished job was |
300 hours |
| 6 The direct material in the unfinished job was |
$6,000 |
| 7 The finished goods Inventory as at 31 August was |
517,000 |
| 8 The budget for 20X4 called for total direct labour hours of |
3,000 hours |
| 9 Budgeted factory overhead is |
$9,000 |
| 10 Jobs sold during August realised |
$12.00 |
| 11 Direct labour hours worked during August totalled |
3,700 hours |
| 12 Finished jobs are priced at a percentage mark-up on manufacturing cost. |
50% |
Required:
Given this incomplete information, complete the template below and calculate the beginning balance of the Direct Materials Control account
B. Distinguish between job costing and process costing. Give your own examples.
QUESTION 2 Process costing
Prepare a spreadsheet to solve the following process costing problem.
Review the four process costing videos provided in Interact Resources. Note that in the situation below there are two production departments.
Process Costing - Weighted Average
DATA INPUT
Barcelona Ltd. produces a single lacquer paint which passes through two production departments. The following information concerns the first of those production departments. Direct materials are added at the beginning of the production process and conversion costs are incurred uniformly throughout the process. Total conversion costs are computed as direct labour costs, plus 20% of direct labour costs, for the allocation of overhead costs
The following information is available for May: Opening Work in Process:
|
Number of units
|
4,500 |
|
Degree of completion
|
45% |
|
Material costs
|
$17,000 |
|
Conversion costs
|
$36,000 |
|
May Production:
|
|
|
Units started
|
33,400 |
|
Units completed and transferred to Process 2
|
27,000 |
|
Current material costs
|
$78,000 |
|
Current direct labour costs
|
$125,000 |
|
Closing Work In Process:
|
|
|
Degree of completion
|
40% |
The company uses weighted average costing. There is no spoilage or wastage in the production. process
Required:
a) Prepare a Production Cost Report for May, showing the allocation of costs to closing work in process and to production transferred to the next department
b) Prepare the Work in process T account for the first production department for May Solve using a spreadsheet showing calculations to two decimal places.
QUESTION 3 Joint costing - decision making
Create a spreadsheet to solve the following joint cost problem.
Joint cost allocation: additional processing beyond split-off point
In a certain production process 100 000 kg of a single raw material were processed at a cost of $250,000. At split-off two intermediate products, A and B emerged, weighed as 60,000 kg of A and 40,000 kg of B. A was processed further at a cost of $45,000 to produce C, and B was processed further at a cost of $25,000 to produce D. C sold for $4.50 per kg.
Required:
(a) If A was allocated $187,500 of the joint production costs under the net realisable value method, what was the selling price of D?
(b) Suppose the firm receives an offer to buy all of product A for $2 per kg at the split-off point. Would the firm be better off selling A or processing further to produce C? By how much?
Question 4 Variance analysis
Borg Ltd has set up the following standards for material and labour:
Materials: 10 kg @ $6
Direct labour: 1 hr @ $20
During a month 19,500 units were produced, 197,000 kg of material were used and 20,100 hours of labour were worked. 220,000 kg of materials were purchased for $1,364,000.
Required:
(a) Calculate the materials price variance (on purchase) and materials usage variance.
(b) If the total direct labour variance was $1,950 unfavourable, what was the actual direct labour rate per hour?
(c) Journal entries to record these facts.
A. Answer the requirements using a spreadsheet. Include the IF function to determine Favourable and Unfavourable variances.
B. Prepare a Business Report as if for senior management critically evaluating the purpose of variance analysis, why the materials price variance should be calculated on purchase, other areas in an organisation where variance analysis would be useful and the practical relevance of detailed overhead variance analysis. See the reading by Murray Wells. Search the CSU library for the ACC512 readings. Suggested word limit about 500 words. Ensure that your answer is in business report format. Read the following online references regarding business report writing.
https://bit.ly/FoBAcademic-Writing-Skills
and
https://unilearning.uow.edu.au/report/4b.html
QUESTION 5 Budgeting
A.
Budget
Data Input
The sales Budget for the nine months ended September 30 follows
|
Quarter Ended |
|
|
Nine -month Total |
|
31-Mar |
30-Jun |
30-Sep |
|
| Cash sales |
$30,000 |
52,890 |
43,456 |
126,346 |
| Credit sales |
$97,500 |
56,456 |
76,000 |
229,956 |
| Total sales |
S 127,500 |
109,346 |
109,346 |
356,302 |
In the past, the cost of goods sold has always been 60 % of the total sales. The director of marketing, the production manager. and the vice-president agree that and ending inventory should not go below $35,000 plus 30 % of cost of goods sold for the following quarter. Expected sales are $120,000 during the fourth quarter. Beginning inventory was $ 47,890
Required:
Prepare a budget showing purchases, cost of goods sold and inventory for the nine months ended 30 September.
B. Write a business report describing budgeting as a non-technical process. Refer to satisficing, budgeting as a political process and budget ploys. Give examples. About 500 words excluding references. Use the Internet as a reference AND refer to relevant academic research papers.