Cost Accounting (Quiz 1) Chapter 2 Norma De Leon Guide for Accountacy Students PDF

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Mark Ramah D. Milambiling BSA-Quiz No. 1 Kyrie Company produces different sizes of basketballs. The following costs were incurred during the year. Materials 120,000 (15,000 is indirect) Labor 85,000 (20,000 is indirect) Factory Overhead 90,000 (including indirect materials and indirect labor) Genera...

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Mark Ramah D. Milambiling

BSA-1

Quiz No. 1 1. Kyrie Company produces different sizes of basketballs. The following costs were incurred during the year. Materials Labor Factory Overhead indirect labor) General and admin expenses Office salaries

120,000 (15,000 is indirect) 85,000 (20,000 is indirect) 90,000 (including indirect materials and 3,500 16,000

There were no work in process at the end of the year, 4,000 units were produced, and 95% of the units produced were sold. Required: a) Compute the prime costs b) Compute the conversion costs c) Compute the total product costs d) Compute the total period costs e) If the selling price is P45, how much is the net income.

Answers and Solution: a) Prime Cost= Direct Materials + Direct Labor  Direct Materials Materials Less: Indirect Materials Direct Materials

120,000 (15,000) 105,000

 Direct Labor Labor Less: Indirect Labor Direct Labor

85,000 (20,000) 65,00



Prime Cost Direct Materials Direct Labor Prime Cost

105,000 65,000 170,000

b) Conversion Cost= Direct Labor + Factory Overhead 

Conversion Cost Direct Labor Factory Overhead Conversion Cost

65,000 90,000 155,000

c) Total Product Cost= Direct Materials + Direct Labor + Factory Overhead 

Total Product Cost Direct Materials Direct Labor Factory Overhead Total Product Cost

105,000 65,000 90,000 260,000

d) Total Period Cost= General/Administrative Expense + Selling Expense In this problem, there are no selling expense given. Instead, I assumed office salaries function as marketing or selling department. 

Total Period Cost General and Admin Expense Office salaries Total Period Cost

3,500 16,000 19,500

e) Net Income= Revenue – Expenses  Revenue Selling Price Per Unit Units Sold (95% of 4000) Revenue

45 ×3,800 171,000

Before proceeding in getting the Expense, I instead compute for the Cost per Unit to come up with the Cost of Goods Sold. Cost of Goods Sold and the Operating expenses(total period cost as known in all types of business) are needed to get the total Expense.  Cost Per Unit Total Product Cost 260,000 Unit Produced ÷4,000 Cost Per Unit 65  Cost of Goods Sold Cost Per Unit Units Sold Cost Of Goods Sold

65 ×3,800 247,000

 Expense Cost of Goods Sold Total Period Cost Expense 

Net Income/ Net Loss Revenue Less: Expenses Net Loss

247,000 19,500 266,500

171,000 (266,500) 95,500

2. Using the least square method, compute for the following: a) Value of b b) Value of a c) Equation of least square line

a) Value of b By Substitution: Equation 2 Ʃy (25 Equation 3

Ʃxy 88 Equation 2(×3)75 13 b b

= na + bƩx = 5a + b15) 3 (15/5) = Ʃxa + bƩx2 = 15a + b55 = 15a + b45 (Minus) =0 b 10 = 13/10 = 1.3

b) Value of a Substituting the value for Equation 2, we can compute for a as follows Equation 2 Ʃy = na + bƩx 25 = 5a + (1.3)(15) 25 = 5a + 19.5 5a = 25 – 19.5 a = 5.5/5 a = 1.1

c) Equation of least square line Y = a + bx = 1.1 + 1.3x

3. Compute for the following: Sales price Fixed costs: Marketing and Administrative Manufacturing overhead Variable costs: Marketing and administrative Manufacturing overhead Direct labor Direct materials Units produced and sold

P 180 per unit 30,000 per period 35,000 per period 5 per unit 8 per unit 35 per unit 40 per unit 1,400 per period

Required: a) Variable manufacturing cost per unit b) Variable cost per unit c) Full manufacturing cost per unit d) Full cost to make and sell per unit a) Variable manufacturing cost per unit Manufacturing overhead Direct labor Direct materials Variable manufacturing cost per unit

8 per unit 35 per unit 40 per unit 83 per unit

b) Variable cost per unit Marketing and administrative Manufacturing overhead Direct labor Direct materials Variable cost per unit

5 per unit 8 per unit 35 per unit 40 per unit 88 per unit

c) Full manufacturing cost per unit First, get the Fixed manufacturing cost per unit Fixed Manufacturing Costs per period or Fixed Manufacturing overhead ÷ Units Produce and Sold per period

By Substitution:  Fixed Manufacturing cost per unit Fixed Costs: Manufacturing Overhead Units produced and sold Fixed Manufacturing cost per unit

35,000 ÷1,400 25 per unit

c) Full manufacturing cost per unit Fixed Manufacturing cost per unit Variable manufacturing cost per unit Full manufacturing cost per unit

25 per unit 83 per unit 108 per unit

d) Full cost to make and sell per unit First, get the fixed cost per unit. To get the fixed cost per unit just add all the fixed cost and divide by the total number of units produce per period By Substitution:  Fixed cost per period Fixed marketing and administrative 30,000 Fixed manufacturing overhead 35,000 Fixed cost per period 65,000  Fixed cost per unit Fixed cost per period Units produced and sold Fixed cost per unit

65,000 ÷1,400 46.42 or 46 per unit...