SZABIST

Assignment-1

SEMESTER: SPRING 2021

Course Name: Cost Accounting Course Code: BA2408 Section: 4B- BBA TOTAL MARKS : 5

Student Name: Tariq Zahid Bhurgari ID#: 1411561

Last Date of Submission: WEDNESDAY 7thAPRIL, 2021

Faculty Name: SYED ASHFAQ AHMED

Guidelines to the students:

 Assignments must be well-structured and HAND WRITTEN

 The content of the assignment should be original.

 Assignment must be written on the prescribed template.

 The LAST DATE of assignment submission must be STRICTLY adhered to; failing

which student will lose marks allotted to this assignment.

Page 1 of 4
 Q1.

Estimated cost and operating data for three companies for the upcoming year follow:

Neo Company Yeo Company Xerox Company

Direct labor-hours 80,000 45,000 60,000
Machine-hours. . . 30,000 70,000 21,000
Direct materials cost. $400,000 $290,000 $300,000
Manufacturing overhead cost. $536,000 $315,000 $480,000

Predetermined overhead rates are computed using the following allocation bases in the
three companies:
Allocation Base
Neo Company........................Machine-hours
Yeo Company........................Direct Labor-hours
Xerox Company......................Direct materials cost

1. Compute each company’s predetermined overhead rate.

2. Assume that Yeo Company works on three jobs during the upcoming year. Direct
labor hours recorded by job are: Job 518, 11,000 hours; Job 620, 14,000 hours; and
Job 618, 13,000 hours. How much overhead will the company apply to Work in
Process for the year? If actual overhead costs total $530,000 for the year, will
overhead be underapplied or overapplied? By how much?

Q2.

December 31, 2018, trial balance of the Balkwell Company showed:

Description $
Sales 4,000,000
Purchases (Net) 5,400,000
Direct Labor 3,204,000
Sales Salaries 100,000
Sales Returns and Allowances 25,200
Transportation in 30,000
Factory Overhead 1,885,600
Advertising Expense 150,000
Delivery Expense 60,000
 Description December 31, 2017 December 31, 2018
$ $
Finished Goods 600,000 460,400
Work in process 129,800 136,800
Material 129,800 196,000

Required: Compute following from above information

(i) Total Manufacturing Cost
(ii) Cost of goods manufactured.
(iii) Cost of Goods Sold

Q3.
Silver Nest Company of France is a family-owned enterprise that makes birdcages for
the North French market. The company uses a job-order costing system in which overhead is
applied to jobs on the basis of direct labor cost. At the beginning of the year, it was estimated that
the total direct labor cost for the year would be € 200,000 and the total manufacturing overhead
cost would be €330,000.
At the beginning of the year, the inventory balances were as follows:

Raw materials......................................€ 25,000

Work in process..................................€10,000
Finished goods.....................................€40,000

During the year, the following transactions were completed:

a. Raw materials purchased for cash, €275,000.
b. Raw materials requisitioned for use in production, €280,000 (materials costing
€220,000 were charged directly to jobs; the remaining materials were indirect).
c. Costs for employee services were incurred as follows:

Direct labor.............................................€180,000
Indirect labor.............................................€72,000
Sales commissions....................................€63,000
Administrative salaries.............................€90,000

d.Rent for the year was €18,000 (€13,000 of this amount related to factory operations,
and the remainder related to selling and administrative activities).
e. Utility costs incurred in the factory, €57,000.
f. Advertising costs incurred, €140,000.
g. Depreciation recorded on equipment, €100,000. (€88,000 of this amount was on
equipment used in factory operations; the remaining €12,000 was on equipment used in
selling
and administrative activities.)
h. Manufacturing overhead cost was applied to jobs, € ?
i. Goods that had cost €675,000 to manufacture according to their job cost sheets were
completed.
j. Sales for the year totaled €1,250,000. The total cost to manufacture these goods according
to their job cost sheets was €700,000.
Required:

1. Prepare journal entries to record the transactions for the year.

2. Compute the Overhead pre-determined rate.
3. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal
entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold