COST ACCOUNTING

EXAM #2 FALL 2011

NAME
Cost Estimation (3 points each)
The controller of Smith Co. has developed the following information about the
relationship between the number of units produced and total costs.
Units TglaLQpst
January
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^$54, 0002
February 2,100
$49,000
March
<f3,00CD 0$68,o6(p
April 2,700
$65,000
May
2,900 $70,000
June
2,800
$62,000
i
hi
zlh. D^ Using High Low, what is the estimate for xed costs?
I I' Using High Low, what is the estimate for variable costs?
Using regression, what is the estimate for xed costs?
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Using regression, what is the estimate for variable costs?
Using regression, estimate total costs if units produced are 4,500.
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Using regression, estimate units if total costs $70,000.
Process Costing (20 Points)
The Jones Co. has the following information available for the month of November.
Prepare a production summary using the FIFO method.
BWI P ( 50% DM; 25% C/ C) 10,000 units
Started 120,000 units
EWI P ( 40% DM; 30% C/ C) 30,000 units
BWIP Costs: Current Costs:
Ma t e r i a l s $ 1 2 , 0 0 0 Materials $ 194,000
C o n v e r s i o n 1 5 , 0 0 0 Conversion 289,500
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Given Information:
Costs Uni ts DM C/C
BWIP Mont h B W I P 1 0 , 0 0 0 50% 25%
Materi al s S 12,000 $ 194,000 C o m p l e t e d f ^ & O T x f
E W I P ' ' 3 0 , 0 0 6 Conversion Costs $ 15,000 $ 289,500 40% 30%
Production Summary-FIFO Method Production Summary-Weighted Avg
Mont h Mont h
Actual Units Actual Units
BWIP 10,000
B W I P \ / 10, 000
+Started 140,000 + S t a r t e d \ / 140, 000
Available 150,000 A v a i l a b l e \ 150,000
-Completed 120,000 - C o m p l e t e d \ 120,000
EWIP
2 Allocated:
30,000 E W I P V
( . Manuf act ur i ng Cost s t o be Al l ocat ed: /
30,000
1. Manufacturing Costs to b
B W I P D M $ 12,000
B W I P D M ^ 12,000
CC $ 15,000 $ 27,000 C C $ \ 15,000 $ 27,000
J u n e D M $ 194,000 J u n e D M $ V 194,000
CC $ 289,500 $ 483,500
C C $ \ 8 9 , 5 0 0 $ 483,500
$ 510,500
I I . E q u i v a l e n t U n i t s /
$ 510,500
II. Equivalent Units
DM
5,000
CC
7,500
D M \ CC
10,000 BWIP 1 2 0 , 0 0 0 C o m p l e t e d / 120,000^ 120,000
110,000 S&C 110,000 110,000 1 , 5 0 0 E W I P / 12,000 9,000
30,000 EWIP 12,000
127,000
9,000
126,500
132,000 \ 129,000
III. Unit Costs I I I . U n i t C o s t s /
DM $ 1.52756 D M / $ 1)56061
CC $ 2.28854 C C / $ 2.36047
Al l ocat ed:
$ 3.81610
IV. Manufacturing/Costs As Allocated
$ 3.92^07
IV. Manufacturing Costs As
BWIP $ 27,000
COGM (Cost of FyG) $ 470,529
Costs to Complete E W I P D M $ 18,727
DM $ 7,638 / c c $ 21,244 s 39,971
CC s 17,164 $ 24,802 $ 510,500
Cost of BWIP $ 51,802
S&C $ 419,771
COGM(Cost of FG) $ 471,572
EWIP
DM s 18,331
CC $ 20,597 $
$
38,928
510,500
Process Costing (20 Points)
The following information is available for the Dooley Co. for January. All materials are
added at the start of production. Prepare a production summary for January using
Weighted Average.
BWIP (80% CC)
8,000 units
EWIP (55% CC)
11,000 units
Completed
19,500 units
BWIP Costs:
Current Costs:
Materials
$ 10,800
Materials
$ 34,035
Conversion
9,000
Conversion
50,276
Trans-ln
11,000
Trans-ln
50,000
BWI P Dec D M ^
( 100%
C/ C
Materials $ 1 0 . 8 0 0 $ 34.035
BWI P
8.000
80%
Conversion Costs
$ 9 , 0 0 0 $ 50.276
Compl eted
19.500
Trans-ln $ 1 1 . 0 0 0 $ 50.000
EWIP
11.000
I00?o 55%
Production SummaryFIFO Method Production SummaryWAVG Method
June 30. 2002 June
30. 2002
Actual Units
Actual Units
BWI P 8.000 BWIP 8.000
Started 2Z500
Started
2Z500
Available 30.500 Available 30.500
Com pitted 19.500
Compl eted
19.500
EWI P \ 1 1.000 EWIP 11.000
1. Manufacturing Costs to be Allocated
1. Manufacturing Costs to De Allocated:
BWI P
\
$
30.800 BWIP $ 30,800
DM
\ $ 34.035
DM $ 34,035
C/ C
\
$ 50,276
C/ C
$
50,276
Trans-ln
$ 50.000
Trans-ln
II. Equivalent Units
$
$
50.000
165.111
$ 165.111
II. Equivalent Units
dm\
/ C / C
Trans-ln
DM C/ C Trans-ln
8.000 BWIP
-\ / 1 . 6 0 0
-
Compl eted
19.500 19.500
19.500
11, 500 S&C
11,000 EWIP
11.508)
l l . 000\
11.500
6.050
11.500
1 1.000
EWIP
1 1 000
6,050
1 1,000
III. Unit Costs
30.500
25,550
30.500
22.500 19.1 50 22.500
III. Unit Costs
DM s 1.5127 DM S
1.4700
C/C
$
2.6254 C/ C $
2.3200
Trans-ln
cs as Allocated:
$
2.2222 Trans-ln
IV. Manufacturing Costs as Allocated:
$
$
2.0000
5.7900
$ 6.3603
IV. Manufacturing Cos
BWIP
$
30.800
COGM
$
1 12,905
Costs to
Compl ete
D M
EWIP
D M
$ 1 6 . 1 7 0
/c/c
4X201
4.201 C/ C
Trans-ln
14.036
22,000 52,206 BWIP
$ 35.001
Started and Completed
73.143 $ 165.111
cogm/
$ 108.144
EWIP /
DM
C/ C
Trans-ln
1 6.639\
15.884
24.444 56.967
165.111
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Special Order (3 points each)
The Famsworth Co. sells its products for $70 each. The current capacity is 50,000
units and the current production is 30,000. The cost of each product is $50. This cost
is itemized below:
Direct Materials $12\
Di r ect Labor $18 U i / c
V a r i a b l e M O H $ 1 ' *
Fi x e d MOH $ 1 3 X %o j > a > " - ' J f ^ o Oo
The Rice Co. wants to purchase 10,000 units at a price of $45. Farnsworth is seriously
considering the offer even if it loses money.
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gJ>2. What is the profit/loss for the total order?
What is the contribution margin per unit on the special
order?
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Should Farnsworth accept the special order?
Al l ocati ng Joi nt Costs (3 poi nts each) //, 17
Johnson Company manufactures three joint products in a single process. The
following information is available on June 2012.
P r o d u c t Ga l l o n s S a l e s Va l u e C o s t A f t e r F i n a l S e l l i n g
A t S p l i t - O f f S p l i t - O f f P r i c e
1 4 , 5 0 0 $ 1 4 $ 4 $ 2 4
2 1 8 , 0 0 0 8 5 1 5
3 1 3 , 5 0 0 1 8 2 2 2
Allocate the joint cost of $558,000 to the production based on (round to nearest whole
percentage)
ct . nui i i uei ui yai i ui i o
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c. approximated NRV at split-off.
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