Midterm Examination (Assignment) Summer 2021

Department & Program: MS (MBA) Class & Section: BBA, BSAF, MBA

Course Code & Name: Cost & Management Accounting Total Marks: 30 Marks

Instructor’s Name: Jameel Ahmed Khan Submission Deadline: 4th August 2021

Important Instructions:

 All questions carry equal marks

 Solved Assignment must be mailed to the respective faculty by the due date.
 Non-submissions of the assignments will be considered as absent for the Midterm.
 Please keep the font size at 12
 Plagiarism policy as per SZABIST rules shall be strictly followed
 You shall send your assignment back to email JAMEELHAKRO@LRK.SZABIST.EDU.PK

Question 01:

a) Manufacturing overhead items are indirect product costs that cannot be traced to
individual products. Explain how manufacturing overhead costs are accumulated and
how they are assigned to products in a job order cost system.

b) Matt Litkee is confused about under- and over-applied manufacturing overhead. Define
the terms for Matt, and indicate the balance in the manufacturing overhead account
applicable to each term.

Question 02:

Explain the following with suitable examples

1. Product and Period Cost

2. Standard and Budgeted Cost
3. Committed and Discretionary Fixed Cost
4. Direct and Indirect Cost

Question 03:

Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual
inventory records. Prepare journal entries to record the following transactions during the month
of June.
June 1 Purchased raw materials for $20,000 on account.
8 Raw materials requisitioned by production:
Direct materials $8,000
Indirect materials 1,000
15 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000.
25 Incurred $108,000 of factory labor.
25 Time tickets indicated the following:
Direct Labor (7,000 hrs × $12 per hr) = $84,000
Indirect Labor (3,000 hrs × $8 per hr) = 24,000
$108,000
25 Applied manufacturing overhead to production based on a predetermined overhead
rate of $7 per direct labor hour worked.
28 Goods costing $18,000 were completed in the factory and were transferred to finished
goods.
30 Goods costing $15,000 were sold for $20,000 on account

QUESTION # 04:

Glavine Corporation incurred the following costs while manufacturing its product.
Materials used in product $ 125,000 Advertising expense $45,000
Depreciation on plant 60,000 Property taxes on plant 19,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-line 110,000 Sales commissions 35,000
Workers Salaries paid to sales clerks 50,000
Factory supplies used 23,000
Work-in-process inventory was $27,000 at January 1 and $15,500 at December 31. Finished
goods inventory was $65,000 at January 1 and $50,600 at December 31.
Instructions
(a) Compute cost of goods manufactured.
(b) Compute cost of goods sold.