CA Questions

Cartmans Fine Furniture is involved in manufacturing
designer furniture as per the requirements of the customers

using a wide range of material and craftmanship. In
begenning of July firm had no finished jobs and the firm
started working on unfinished jobs 412, 415 and 416 from
June. These jobs carried an accumulated cost of $4765 at the No Finished
start of July and the details are provided in WIP Summary
table. In the month of july the firm worked on these three Job at beg
jobs in addition to starting jobs 417 and 418. In July, the firm of july
purchased material worth $6500 and used 415 hours of
labour. The labour are paid $10 per hour. The details of
labour for each job is provided in the job card. The details of At the beginig of July
various material used in the manufacturing is provided in has accumulated
material requsition Doc. In addition to these direct costs, the cost
firm also incurred $2000 on depreciation, $3000 on electricity DM
and $2200 on Rent. The firm uses normal costing method DL
based on the labour hour. The budgeted MOH per year of Cost of DL
$108000 and budgeted labour hours per month 600 hours. Total
At the end of July Job 412 was finished and sold to a
customer for $10,000. Jobs 416 & 417 have been finished,
but yet to be sold. In the month of July Cartman paid selling
commission of 5% of item sold and incurred admin and
general expenses of $2000. Firm pays taxes at a rate of 20%.
1. Prepare a job costing overview diagram.
2. Prepare a summary of Job Costs for the month of July.
3. Prepare an income statement for the month of july.
Details of WIP as on 1st July 2XXX

Job Direct Direct Factory
Numb Materi Labou Overhe Total Incured
er als r ads Costs in June
$ $ $ $
412 450 620 930 2,000
415 525 390 585 1,500
416 640 250 375 1,265
1,615 1,260 1,890 4,765
Details of material requested in July

Requisition
Job Number dockets
↓
$
412 440
415 120
416 2700
417 880
418 250
Sundry Supplies 50
Details of labourfrom
CardsLabour
in July
Job Number Time Sheets
↓ HOURS
412 50
415 25
416 260
417 50
418 20
Factory Cleaning 10
June July
Unfinished WIP
412 417
415 418
416
At the beginig of July

has accumulated 4765
cost
6500 Depriciat 2000
415 hrs Electicity 3000
10 hr Rent 2200
4150 Used Normal costing Method
Budgeted Budgeted
MoH 108,000 PER YEAR admin Exp 2000 Moh 9000 Per month
Moh 15
Budgeted Applicatio
labour hr 600 Tax Rate 20% n Rate
Job 412 10,000 sold
Cartman 5%
July Costs Traced Allocated
Beginnin
Job Applied Total Unfinishe Finished Sold
g costs Direct Direct Revenue
Number Factory Costs d (WIP) (FG) (COGS)
b'fwd Materials Labour
Overhead
$ $ $ $ $ $ $ $ $
412 2,000 440 500 750 3,690 3,690 10,000

415 1,500 120 250 375 2,245 2,245
416 1,265 2700 2600 3900 10,465 10,465
417 0 880 500 750 2,130 2,130
418 0 250 200 300 750 750
Total 4765 4390 4050 6075 19280 2995 12595 3690 10000
SUMMARY SHEET
COGS FOR
WIP OPEN DM USED DL USED MOH APPL WIP CLOSE FG CLOSE JULY
BASED ON
LABOUR
HOUR
ACTUAL MOH 7350

Depriciat 2000
Electicity 3000
Rent 2200
Sundry Supplies 50
Factory Cleaning 100
Adjusted to COGS 1275
INCREASE COGS BY 1275
Identify the Total Manufacturing Overheads (MOH).
Schedule 5 (Actual TMOH)
DEP
Electricity
Rent
Sundry
Cleaning
TMOH (Actual)
Manufacturing OH Application Rate
Adjusted to COGS = 7350- 6750, 1275
Schedule for DM
Item
Beginning DM
Direct Material Purchased
DM transferred to MOH
Ending DM
DM Used production
Schedule for MC
Item
DM Used Production
DL Used Production
Manufacturing Overheads applied
Total Manufacturing Cost
Schedule for COGM

Item
Beginning work-in-process inventory
Manufacturing costs incurred
Ending work-in-process inventory
Cost of Goods Manufactured
Schedule for COGS

Item
Beginning Finished Goods inventory
Cost of Goods Manufactured
Ending Finished Goods inventory
Unadjusted Cost of Goods Sold
Adjustment to COGS (Write Off)
Adjusted COGS
Income statement
Item
Revenues
COGS
Gross margin
Expenses
Operating Income
Taxes (20%)
Net Income
(Actual TMOH)
2000
3000
2200
50
100
7350
= BUDGETED MOH
BUDGETED LABOUR HR
S = 7350- 6750, 1275 BUG MOH 108000 PER YEAR

9000 PER MONTH
BUG LH 600 PER MONTH
Moh app 15
Amount
0
6500
50 Sundry Used
2060 Opening + Purchase = Closing + Used
4390
Amount
4390
4050
6075
14515
Amount
4765
14515
2995
16285
Amount
0
16285
12595
3690
1275
4965
Amount
10000
4965
5035
2500
2535 IF OI, is negative taxes will be 0
507
2028
ng + Used
JOB A DM /DL 150 1
JOB B DM /DL 400 2
JOB C DM /DL 70 3
INDIRECT TRAVEL/ EXPE 2
DM 3 PAID
BOX OF WIRE, DM 3
EXPECTED OVERHEAD 150,000 PER YEAR
UNITS OF LABOUR HOUR 7500 PER YEAR
APPLICATION RATE 20
SUMMARY SHE
July Costs Traced
Beginning costs
Job Number Direct
b'fwd
Materials
$ $
JOB A 0 $ 150.00
JOB B 0 $ 400.00
JOB C 0 $ 70.00
Total 0 620
WIP OPEN DM USED
BUDGETED OVERHEAD 3,600,000.00

MACHINE HOURS 80000
APPLICATION RATE 45.00
May-19
B12-008 $263,000
K12-009 163,000
K12-011 0
L15-005 0
L15-006 0
Total 426,000
Indirect material 375,000 27,000

Indirect labour 1,035,000 90,000
Utilities 735,000 66,000
Depreciation 1,155,000 105,000
Total overhead 3,300,000 288,000
SUMMARY SHE
July Costs Traced
Beginning costs
Job Number Direct
b'fwd
Materials
$ $
B12-008 $ 263,000.00 $ 2,500.00
K12-009 $ 163,000.00 $ 14,000.00
K12-011 0 $ 71,800.00
L15-005 0 $ 118,700.00
L15-006 0 $ 78,000.00
TOTAL 426,000 285,000
Identify the Total Manufacturing Overheads (MOH).

DEP 105,000
Utilities 66,000
Indirect material 27,000
Indirect labour 90,000
DM transferred from Moh 69,000
TMOH (Actual) 357,000.00

Applies MOH 270,000
Actual MOH 357,000.00
Adjustment to COGS 87,000.00
Schedule for DM
Item Amount
Beginning DM 2895000
Direct Material Purchased 294000
DM transferred to MOH 27000
Ending DM 2877000
DM Used production 285,000
Schedule for MC
Item Amount
DM Used Production $ 285,000.00
DL Used Production $ 240,000.00
Manufacturing Overheads applied $ 270,000.00
Total Manufacturing Cost $ 795,000.00
Schedule for COGM

Item Amount
Beginning work-in-process inventory $ 426,000.00
Manufacturing costs incurred $ 795,000.00
Ending work-in-process inventory $ 450,600.00
Cost of Goods Manufactured $ 770,400.00
Schedule for COGS

Item Amount
Beginning Finished Goods inventory 0
Cost of Goods Manufactured 770400
Ending Finished Goods inventory 258,000
Unadjusted Cost of Goods Sold 512,400.00
Adjustment to COGS (Write Off) 87,000.00
Adjusted COGS 599,400.00
Income statement
Item Amount
Revenues 768,600
COGS 599400
Gross margin 169200
Expenses 50,000
Operating Income 119200
Taxes (20%) 23840
Net Income 95,360.00
Cost of overhead 1,250,000

DL cost 2,500,000
MOH applied 0.5
SUMMARY SHE
July Costs Traced
Beginning costs
Job Number Direct
b'fwd
Materials
$ $
House 402 0 56,000
House 403 0 65,000
House 404 0 62,000
House 405 0 84,000
Total 0 267000
DL transfer to MOH 22,000

Depriciation 6800
Liability Insurance 6000
Rental 34000
TMOH 68,800
MOH applied 94000

Actual MOH 68,800
Adj to COGS -25,200
HR completed
HR completed
HR completed
HR
18 PER HOUR
SUMMARY SHEET
Unfinished
Direct Applied Total Costs Finished (FG) Sold (COGS)
(WIP)
Labour Overhead
$ $ $ $ $ $
$ 18.00 $ 20.00 $ 188.00 $ 188.00
$ 36.00 $ 40.00 $ 476.00 $ 476.00
$ 54.00 $ 60.00 $ 184.00 $ 184.00
36 120 848 0 848 0
DL USED MOH APPL WIP CLOSE FG CLOSE COGS FOR JULY

BASED ON
LABOUR HOUR
EXPENSE 50,000
TAX RATE 20%
Jun-19
B12-008 $2,500 13,500 300
Raw Material
K12-009 14,000 36,000 1,000
purchases *
K12-011 71,800 85,100 1,400 Direct labour cost
L15-005 118,700 55,000 2,500 Machine hours
Account balance 30
L15-006 78,000 50,400 800 June 2019 Raw
Material Inventory
Totals $285,000 $240,000 6,000
SUMMARY SHEET
Unfinished
(WIP)
Labour Overhead
$ $ $ $ $ $
$13,500.00 $ 13,500.00 $ 292,500.00 292,500
$36,000.00 $ 45,000.00 $ 258,000.00 $ 258,000.00
$85,100.00 $ 63,000.00 $ 219,900.00 $ 219,900.00
$55,000.00 $ 112,500.00 $ 286,200.00 $ 286,200.00
$50,400.00 $ 36,000.00 $ 164,400.00 $ 164,400.00
240,000 270,000 1,221,000 450,600 258,000 512,400
From DM Schedule the DM used for Production is 354k but from the summary table DM used in the month is only 285. Hence
SUMMARY SHEET
Unfinished
(WIP)
Labour Overhead
$ $ $ $ $ $
41,000 $ 20,500.00 $ 117,500.00 117,500
35,000 $ 17,500.00 $ 117,500.00 $ 117,500.00
57,000 $ 28,500.00 $ 147,500.00
55,000 $ 27,500.00 $ 166,500.00 $ 166,500.00 $ 166,500.00
188,000 94000 549000 284000 166500 117500
Revenue
1 July 2018 – During June

31 May 2019 2019
2,895,000 294,000
2,535,000 240,000
73,000 6,000
$255,000
Revenue
$
438,750
329,850
768,600
sed in the month is only 285. Hence it can be concluded that the difference is due to MOH used.
Revenue
$
220,000
220,000
Gazza McDonald is a final year IT student at USQ who runs a business on the
side to help pay his way through university. Gazza’s Custom Computers imports
computer components/parts and constructs desk-top computers to individual
customer specifications on a job-order basis. Gazza rents an old shed in an
industrial estate and employs a number of local USQ IT students on a casual basis
to construct the computers, paying them $16 per hour for the time they work.
Apart from direct materials and direct labour used on particular jobs, Gazza has
overhead costs that amount to approximately $2,500 per year. He has to manage
the cost side of his business very carefully to ensure he makes a profit because of
the slim profit margins and the competitive nature of the industry.
Gazza’s business is growing steadily with direct labour time estimated at 1,000 hours for the current year, which is an
Incomplete jobs at the end of June (ie. at the beginning of July) were jobs Jn26
and Jn28 which had balances of $412 and $73 respectively. The materials
inventory at 30 June (ie. at the beginning of July) amounted to $4,970. During
July, various materials used in the business costing $6,890 were purchased on
account.
The job cards revealed that direct materials used on jobs, during July, was as follows:
Hard Disks,
Job card
burners, etc
Jn26
Jn28 535
Jy10 505
Jy11 634
Jy12 500
Jy13 556
Jy14 610
The cost of cleaning fluids and other sundry materials (rivets, small screws, etc) used generally in the workshop durin
Labour was paid for work done on the following jobs:
Job card Jn26

hours 12.5
In addition to the above, Gazza paid a high school boy $5 per hour to clean up the workshop area and also do some ge
Overheads are costed to jobs progressively based on direct labour hours.
The monthly electricity account for $65 was owing at the end of the month. Depreciation of the workshop equipment
Jobs Jn26, Jy10 and Jy12 were completed and billed (at a 30% mark-up) to clients during July. Jobs Jn28 and Jy13 an
Required:
(a) Prepare a schedule of Jobs worked on during the month, which summarizes (for each job, as well as in to
jobs not completed (ie. the work-in-progress balance);
jobs completed, but not yet collected or billed (ie. the finished goods balance);
jobs completed, collected, and billed (ie. the cost of goods sold)
(note: round all figures to the nearest whole dollar)
(b) Determine the amount of over/under applied overhead and appropriately deal with it
(c) Prepare an Income Statement for July
rs for the current year, which is an increase of 20% over the previous year. He is looking at the figures for last month (July) to se
Special
Monitors Keyboards
features DL 16 per hour
$ $ $ Over head
2500 per year
219 86 109 Labour time 1000 hours
266 91 212 Total LH 16000
250 70 114 WIP
311 105 190 jn 26 412 Opening DM 4970
237 75 86 jn28 73 DM purchase 6890
29 Appliead OH 2.5
278 123
d generally in the workshop during July amounted to $20.
Jn28 Jy10 Jy11 Jy12 Jy13 Jy14

2.25 14 17.75 16 8.25 10.5
workshop area and also do some general storeroom reorganization. The boy worked 2 hours per day after school for 5 days during
ation of the workshop equipment averages $45 per month. Gazza also paid $50 rent for July.
uring July. Jobs Jn28 and Jy13 and Jy14 were incomplete, while Jy11 was completed but awaiting collection at the end of July.
izes (for each job, as well as in total) the opening work in progress balance, the direct materials used, the direct labour traced, an
y deal with it
res for last month (July) to see how the business went for that month.
SUMMARY SHEE
July Costs Traced
Job Beginning
Number costs b'fwd Direct Direct
Materials Labour
per year $ $ $
Jn26 412 414 200
Jn28 73 1104 36
Jy10 939 224
Jy11 1240 284
Jy12 898 256
Jy13 585 132
Jy14 1011 168
Total 485 6,191 1,300
Beginning
after school for 5 days during July. 5
collection at the end of July.
d, the direct labour traced, and the overhead allocated. Also, indicate on the summary:
SUMMARY SHEET
Allocated
Applied Total Costs Unfinished Finished Sold
Revenue
Factory (WIP) (FG) (COGS)
Overhead
$ $ $ $ $ $
31 1,057 1,057 1,374

6 1,219 1,219
35 1,198 1,198 1,557
44 1,568 1,568
40 1,194 1,194 1,552
21 738 738
26 1,205 1,205
203 8,179 3,162 1,568 3,449 4,484
ing Ending
Electricity 65
Depricition 45
Rent 50
Sundry 20
Cleaning 50
TMOH (Actual) 230

Actual - Applied 27
Adjusted to COGS 27
Schedule for DM
Item Amount
Beginning DM 4970
Ending DM 5,649
Schedule for MC
Item Amount
DM Used Production 6191
DL Used Production 1,300
Manufacturing Overheads applied 203
Total Manufacturing Cost 7694
Schedule for COGM

Item Amount
Beginning work-in-process inventory 485
Manufacturing costs incurred 7694
Ending work-in-process inventory 3,162
Schedule for COGS

Item Amount
Cost of Goods Manufactured 5017.625
Unadjusted Cost of Goods Sold 3449
Adjustment to COGS (Write Off) 27
Adjusted COGS 3476.25
Income statement
Item Amount
Revenues 4,484
COGS 3476.25
Gross margin 1007.775
Expenses 0
Operating Income 1007.775
Taxes (20%) 201.555
Net Income 806.22
Jerry Mud is an electrician and keeps track
of the work he does through the use of job
sheets. Direct materials and direct labour are
traced and charged to the particular jobs to
which they relate, however overheads are
allocated to jobs based on direct labour
dollars. Direct labour is charged to jobs at a
rate of $20 per hour. Jerry expects his annual
overheads to be about $32,000, and plans to
work about 1950 hours per year.
During last month, Jerry worked on three jobs

H47 (direct materials $14,300, and 56 direct
labour hrs), H48 (DM $6,200 and 2 DLH)
and H49 (DM $19,850 and 71 DLH). By the
end of the month, Job H47 had been
completed and charged out, H48 completed
but not charged out and H49 was incomplete.
The actual overhead costs for last month
amounted to $1,860.
Required:
a) What is the pre-determined overhead allocation rate for the year?
b) Prepare a summary of Job Cost Sheets for last month
c)
d) Is overhead over or under-applied for last month, and by how much ?
Any over or under-
applied overhead is allocated
back to the relevant accounts
in proportion to their total
costs at month-end. What
would have been the end-of-
period adjusting journal
entry for last month? Post
that entry to the “T” a/c’s
SUMMARY SHEET
Beginning Applied
Job Number Direct Direct
costs b'fwd Factory
Materials Labour
Overhead
$ $ $ $
h47 14300 1120 919
h48 6200 40 33
h49 19850 1420 1165
Total 0 40,350 2,580 2,117
Beginning
Actual OH 1860
Applied 2,117
Under -257
DL 20 per hr
OH 32000
Labour hr 1950
Applied Moh 16
ET
Unfinished Finished Sold

Total Costs Revenue
(WIP) (FG) (COGS)
$ $ $ $ $
16,339 16,339
6,273 6,273
22,435 22,435
45,047 22,435 6,273 16,339 0
Ending
WIP 49% -126

FG 0.14 -36.0
COGS 36% -92
Electricity
Depricition
Rent
Sundry
Cleaning
TMOH (Actual)
Actual - Applied -257
Adjusted to COGS -257
Schedule for DM
Item Amount
Beginning DM 0
Ending DM -40,350
Schedule for MC
Item Amount
DM Used Production 40350
DL Used Production 2,580
Manufacturing Overheads applied 2,117
Total Manufacturing Cost 45047
Schedule for COGM

Item Amount
Beginning work-in-process inventory 0
Manufacturing costs incurred 45047
Ending work-in-process inventory 22,435
Schedule for COGS

Item Amount
Unadjusted Cost of Goods Sold 16339
Adjustment to COGS (Write Off) -257
Adjusted COGS 16082.0512820513
Income statement
Item Amount
Revenues 16,339
COGS 16082.0512820513
Gross margin 257
Expenses 0
Operating Income 257
Taxes (20%) 51.3846153846145
Net Income 205.538461538458
St. Barts Hospital - Direct Method
Service Departments "Front-line" Departments TOTAL
COST CENTER Cleaning Dept Laundry Dept General Wards Children's Wards
INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000

$170,000
Services provided: by the Cleaning Dept.

basis of allocation - area cleaned (m2) 200 1400 400 2000
10% 70% 20% 100%
Services provided: by the Laundry Dept.
basis of allocation - no. of uniforms laundered 6 24 10 40
15% 60% 25% 100%
Allocation of Cleaning Department Cost 15556 4444 20000
Allocation of Laundry Department Cost 7059 2941 10000
Total Cost of the Front-line Departments 122614 47386 170000

Revenue Center
If particlar department allocates cost for itself then we will ignore the cost
If Service offers to itself cancel the number
St. Barts Hospital - StepDown Method
Cleaning Dept Laundry Dept General Wards Children's Wards
INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000

$170,000

10% 70% 20% 100%
15% 60% 25% 100%
2000 14000 4000
Allocation of Cleaning Department Cost
$12,000 8471 3529
Allocation of Laundry Department Cost
$170,000
Total Cost of the Front-line Departments $122,471 $47,529
St. Barts Hospital - Reciprocal Method
Cleaning Dept Laundry Dept General Wards Children's Wards
INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000 $170,000

10% 70% 20% 100%
15% 60% 25% 100%
$2,000 $14,000 $4,000

Allocation of Cleaning Department Cost 1
Allocation of Laundry Department Cost 1 1800 $12,000 7200 3000
Allocation of Cleaning Department Cost 2 $180 $1,260 $360
Allocation of Laundry Department Cost 2 27 108 45

Allocation of Cleaning Department Cost 3 2.7 18.9 5.4
Allocation of Laundry Department Cost 4 0.405 1.08 0.675
Allocation of Cleaning Department Cost 4 TO BE DONE UNTIL 1
Allocation of Laundry Department Cost 5
Total Cost of the Front-line Departments $122,588 $47,411 $169,999

USING EQUATION
LET THE TOTAL COST OF CLEANING DEP C

THE TOTAL COST OF LAUNDRY DEP L
C 20,000 + (6/40)L
L 10,000+ (200/2000)C
GENERAL WARD 100,000 +(1400/2000)C +(24/40) L
Merv’s Building Products Co supplies building materials
to wholesale customers (eg. registered builders, etc) as also
to retail customers (eg. the home handyman). Wholesale
customers are charged wholesale prices, while all others are
charged retail prices. Merv needs to know the revenues and
costs of each of these two customer groups to ensure that
the prices charged are covering the costs of the customer
groups. The direct costs of each customer group (eg cost of
merchandise, direct labour, etc) are traced to each group.
However, certain indirect costs need to be allocated to the
two customer groups on some rational basis. The following
data has been collected for the most recent accounting
period for service department costs (as indicated below) to
be allocated to the two customer groups.
Information
Recruitment
Technology
Dept
Dept
Costs:
wages 42200 $78,790
telephone 5,780 4,610
depreciation 1,250 36,890
insurance 2,680 17,620
other 20,990 37,480
$72,900 $175,390
Data:
No. of recruitments 4 11
No. of processing runs 410 55
No. of training modules 2 3
No. of customers
Staff Training Wholesale Retail
Dept Division Division
Cost Centre Revenue Centre
RD ITD STD WD
$49,330 $516,400 $419,500 INTIAL OH 72,900 175,390 204,980 613,560
14,350 35,900 28,650 NO OF RECR. 11 7 16
11,420 18,000 16,500 NO OF PROC 410 730 2,400
28,140 12,560 8,820 NO OF TRAIN 2 3 10
101,740 30,700 27,460 CA OF RECRUIT 41657
$204,980 $613,560 $500,930 CA OF PROCES 98811
CA OF TM 73207
827,236
7 16 12
730 2,400 1,860 Cost Centre Revenue Centre
5 10 18 RD ITD STD WD
1745 2,260 INTIAL OH 72,900 175,390 204,980 613,560
NO OF RECR. 11 7 16
NO OF PROC 410 730 2,400
NO OF TRAIN 2 3 10
CA OF RECRUIT 17433 11093 25357
CA OF PROCES 192,823 28,209 92,740
CA OF TM 244,282 87244
818,900
Revenue Centre
RD TOTAL
500,930 1,567,760
12 46
1,860 5400
18 33
31243
76579
131773
740,524 1,567,760
Revenue Centre
RD TOTAL
500,930 1,567,760
12 46
1,860 5400
18 33
19017
71,874
157038
748,860 1,567,760
E-books is an online book retailer. The
company has four departments. The
two revenue-producing departments
are Corporate Sales and Consumer
Sales. The two support departments
are Administration and Information
Systems. Each of the sales
departments conducts merchandising
and marketing operations
independently.
The following data are available for the

month of September 2001:
Number of Processing
Departments Revenues Employees Time Used
Administrativ
Corporate Sales $1,334,200 42 1920 minutes
e
Consumer Sales $ 667,100 28 1600 minutes 72,700
Administrative - 14 320 minutes No of Emp
Information Systems - 21 1120 minutes Time used 320
The reciprocal allocation method explicitly

includes the mutual services provided
among all support departments. 20931
Interdepartmental relationships are
fully incorporated into the support
department cost allocations.
402.52712
Corporate Sales 998,270
Consumer Sales 489,860 7.74090616
Administrative 72,700
Information Systems 234,400
Information Corporate Consumer
Total
Systems Sales Sales
234,400 998,270 489,860 1795230
21 42 28 91
1920 1600 3840
16776.9231 33553.8462 22369.2308
251,177 125588 104657
4830 9661 6440

2415.16272 2012.6356
92.8908739 185.781748 123.854499
46.445437 38.7045308
1.78636296 3.57272592 2.38181728
1,169,724 625,504 1,795,228

DIRECT
SUPPORT DEPARTMENTS OPERATING DEPARTMENTS

HR INFOR SYS CORP. SALES
Budgeted costs incured before
Interdepartment cost allocations 72700 234400 998270
Support work supplied by human resources department
Budgeted number of employees 21 42
Support work by information systems
Budgeted processing time 320 1920
Allocation of HR DEPARTMENT Cost 43620
Allocation of INFORMATION Department Cost 127855
Total Cost of the Front-line Departments 1169745
STEP-DOWN

Allocation of HR DEPARTMENT Cost 16776.92 33553.85
Allocation of INFORMATION Department Cost 251176.92 150706
Total Cost of the Front-line Departments 1182530

Allocation of Cleaning Department Cost 1 16776.92308 33553.8462
Allocation of Laundry Department Cost 1 20931.4103 251176.9231 125588.462
Allocation of Laundry Department Cost 2 402.52712 2415.16272
Total Cost of the Front-line Departments 1169724.81
PERATING DEPARTMENTS
CONSU SALES TOTAL
489860 1795230
28 91
1600 3840
29080 72700
106545 234400
625485 1795230
CONSU SALES TOTAL
489860 1795230
28 91
1600 3840
22369.23 55923
100471 251177
612700 1795230
CONSU SALES TOTAL
489860 1795230
28 91
1600 3840
22369.2308
104657.051
6440.43393
2012.6356
123.854499
38.7045308
2.38181728
0.7443179
625505.037 1795229.85
Direct
Admin Janitorial Fabricating Assembly
Direct costs ### 30,000 ### ###
Number of employees 10 30 40
Square feet 2,000 ### ###
Allocation of Employes Department Cos 16666.6667 22222.2222
Allocation of Sq feet Department Cost 5660.37736 15849.0566
Total Cost of the Front-line Department 62,327 88,071
Step-down
Direct costs ### 30,000 ### ###
Allocation of Employes Department Cost 5000 15000 20000
Allocation of Sq feet Department Cost 35,000 6603.77358 18490.566
Total Cost of the Front-line Departments 61,604 88,491
Step-down
Direct costs ### 30,000 ### ###
Allocation of Cleaning Department Cost 1 5000 15000 20000
Allocation of Laundry Department Cost 1272.72727 35,000 6363.63636 17818.1818
Allocation of Laundry Department Cost 4.62809917 23.1404959 64.7933884
Total Cost of the Front-line Departments 61,770 88,394
Finishing Total
### 195,000
20 100
### 55,000
11111.1111
8490.56604
44,602 195,000
Finishing Total
### 195,000
20 100
### 55,000
10000
9905.66038
44,906 195,000
Finishing Total
### 195,000
20 100
### 55,000
10000
9545.45455
254.545455
34.7107438
0.92561983
0.12622089
0.00336589
0.00168295
44,836 195000.004
Erle’s Furniture Factory
In Dept
A, for
this
month
(August)
:
In Dept
B, for
this
month
(August)
:
•
Erle’s Furniture Factory
Erle’s Furniture is involved in manufacturing large volume wooden furniture that are similar. At any poin
Their plant has two process depts. – the assembly dept & the paint shop. Currently they are manufactu
Dept A: Assembly - Timber chairs are cut-out & assembled. Timber is introduced at the beginning of th
evenly throughout the process
In Dept B: Paint Shop - The assembled chairs are transferred-in (T/I) from Dept A. They are then sand
process. The chairs are then dried, polished, and finally transferred to finished goods.
Beginning WIP at 1 August:

1000 chairs (at the 60% point in the process). Brought forward costs ►materials $4200, labour & Overh
During August:
2000 more chairs were commenced, August’s current costs added were ► materials $9000, CC’s $106
As at the end of August:
2400 had been fully completed, with the remainder (600) 20% complete
Determine the cost of: Assembled chairs (that will be sent to paint shop) & WIP at end of Aug
Beginning WIP at 1 August:

1300 chairs (at the 30% point in B’s process), brought forward costs ► T/I $12000, materials (paint) $0
During August:
the 1300 chairs were finished, & the 2400 T/I from A were worked on. August’s current costs added we
CC’s $10240
As at the end of August:
3000 had been fully completed, with the remainder (700) 80% complete
Determine the cost of: Completed chairs & WIP at end of Aug
Need to measure equvivalent unit for completed and closing not for op
Rule for Equvivalent cost for material is everything or
IF 0%, THEN COUNT NOTHING IF ABOVE COUNT EVE
Dept. A (Assembly) Process
at start
mats. added
▼
Step 1 conversion costs incurred evenly throughout process
0% 100%
PROCESS COSTING - WEIGHTED AVERA
Step 2
WIP - Dept. A (Assembly)
units % $
Bal (begin) 1000 60% mat 4,200
cc 3,000
Tot 7,200 Step 7 units
Commenced 2000 Completed 2400 mat
mat 9,000 13,200 cc
Curr Costs
Curr Costs
cc 10,600 13,600 Tot
Tot 19,600 26,800
Bal (end) 600 20% mat 2,640
cc 648
Tot 3,288 26,800
OPENING+CURRENT=CLOSING+ENDING
Mat CC
Step 3 - COSTS $ $
B'fwd costs 4,200 3,000
Current costs 9,000 10,600
Tot 13,200 13,600 $26,800
Step 4
QUANTITIES Phy units % Equivalent Units
Completed units 2400 100% 2400 2400 FOR CONVERSION COST, WE WILL
COUNT THE PERCENTAGE
In WIP (end) 600 20% 600 120 COMPLETED
3000 3000 2520
Step 5
Wt. Av. Cost per Eq. Unit = $4.40 $5.40
Step 6
COSTS ASSIGNED Total
to Completed units $10,560 $12,952 $23,512
to WIP (end) 2,640 648 3,288
$26,800
Dept. B (Paint Shop) Process
Trans-In units & costs mats. added

▼ ▼
conversion costs incurred evenly throughout process
0% 40% stage 100%
OCESS COSTING - WEIGHTED AVERAGE ASSUMPTION

EVERY SECOND/THIRD/.. WILL HAVE A TRANSFER-IN C
WIP - Dept. B (Paint Shop)

units % T/I 12,000
Bal (begin) 1300 30% mat 0
cc 4,000
$ Tot 16,000 units
10,560 Completed 3000
12,952 Transferred In 2400 T/I $23,512
23,512 mat 5,550
Curr Costs
cc 10,240
transfer-
out Tot 39,302
Bal (end) T/I 6,718
mat 1,050
cc 2,240
T=CLOSING+ENDING 10,008
T/I Mat CC
COSTS $ $ $
B'fwd costs 12,000 0 4,000
Current costs $23,512 5,550 10,240
35,512 5,550 14,240

ERSION COST, WE WILL Completed units 3000 100% 3,000 3,000 3,000
T THE PERCENTAGE
COMPLETED In WIP (end) 700 80% 700 700 560
3,700 3,700 3,560
Wt. Av. Cost per Eq. Unit = 9.60 1.50 4.00
COSTS ASSIGNED
to Completed units 28,794 4,500 12,000
to WIP (end) 6,718 1,050 2,240
THIRD/.. WILL HAVE A TRANSFER-IN COST
$
T/I 28,794
mat 4,500
cc 12,000
45,294 COGM
$55,302
FOR TRANSFER-IN ALWAYS EVERYTHING
45,294
10,008
55,302
mats. added
at start ▼
Step 1 conversion costs incurred evenly throughout processà
0% 100%
PROCESS COSTING - FIFO ASSUMPTION
Step 2
units % $
Bal (begin) 1000 60% mat 4,200 Step 3
cc 3,000 $
7,200 units Bgn Bal 7,200
Commenced 2000 Completed 2400 mat 6,300
mat 9,000 cc 9,938
Current Costs
cc 10,600 Step 8 Tot 23,438 ►
19,600
Bal (end) 600 mat 2,700
cc 663 Step 8
3,363
Mat CC
Step 4: COSTS $ $
Current period costs 9,000 10,600 $19,600
Step 5:
to complete WIP (begin) 1000 100% 0 400 The opening stock was at 60%,
from there we took it to 100%,
started & completed 1400 100% 1400 1400 so did we add any material.
in WIP (end) 600 20% 600 120
3000 2000 1920
Step 6:
Current Cost per Eq. Unit = 4.50 5.52 10.02
Step 7: COSTS ASSIGNED

to Completed units: Mat CC
+ current costs to complete 0.00 2208 2208.33
►started & completed this period 6300 7729 $14,029
to Completed units: 6300 9938 $16,238
to WIP (end) 2700 663 3363
$19,600
T.I. mats. added

▼ ▼at 40% stage
conversion costs incurred evenly throughout processà
0% 40% stage 100%
TING - FIFO ASSUMPTION

units % T/I 12,000
Bal (begin) 1300 30% mat 0
cc 4,000 $
Tot 16,000 units Bgn Bal 16,000
Completed 3000 T/I 19,003
Transferred In 1700 T/I $23,438 mat 4,500
mat 5,550 cc 8,431
Curr Costs
cc 10,240 Tot 47,934
$39,228
Bal (end) 700 T/I 4,434
mat 1,050
cc 1,809
7,293
T/I Mat CC
COSTS $ $ $
Current period costs $23,438 5,550 10,240 $39,228
Equivalent Units
QUANTITIES Phy units % T/I Mat CC
to complete WIP (begin) 1300 30-100% 1,300 1,300 910 70%
started & completed 1700 0-100% 1,700 1,700 1,700 100%
in WIP (end) 700 0%-80% 700 700 560 80%
If anything less than 40%, the material is not added 3,700 3,700 3,170
Current Cost per Eq. Unit = 6.33 1.50 3.23
COSTS ASSIGNED
to Completed units: T/I Mat CC
+ current costs to complete 8,235 1,950 2,940 $13,124
►started & completed this period 10,769 2,550 5,491 $18,810
to Completed units: 19,003 4,500 8,431 31,934
to WIP (end) 4,434 1,050 1,809 $7,293
$39,228
COGM
WE
Reliance Milling Corp manufactures pre-mixed flour
products (eg cake mixes, bread mixes, etc) for the
retail market. Flour in milled in the milling process,
and then the various flour-based mixture products
are manufactured in subsequent processes. The
following information relates to the mixing
department, where the flour is heated and sifted and
then the mixture ingredients are added at the 75%
point in the process. Conversion costs (labour and
overheads) are assumed to be incurred evenly
throughout the process.
At the commencement of August, there were 7,300

kgs of mixture in progress, 20% complete. Costs
attached to this mixture were $19,750 from the prior
milling process, as well as $6,420 for conversion
costs incurred in the mixing process so far. During
the month of August, a further 41,000 kg of flour
came into the mixing department from the milling
department, with costs attached from that prior
department amounting to $110,300.
The cost of mixture ingredients in the mixing

department for August amounted to $81,490 while
conversion costs incurred were $141,800. At the end
of August there were 5,100 kgs of mixture on hand
at the 65% point in the process.
Dept. A (Assembly) Pro

at start
mats. added
▼
Step 1 conversion costs incurred evenly throughou
0%
Step 2
units %
Bal (begin) 7300 20% mat
cc
Transferred In 41000 Tot
Commenced 48300
mat
Curr Costs
cc
Tot
Bal (end) 5100 65% mat
cc
Tot
Step 3 - COSTS
B'fwd costs
Current costs
Tot
Step 4
QUANTITIES Phy units %
Completed units 41,000 100%
In WIP (end) 5100 65%
46100
Step 5
Wt. Av. Cost per Eq. Unit =
Step 6
COSTS ASSIGNED
to Completed units
to WIP (end)
WIP - Dept. B (
units %
Bal (begin) 7300 20%
Transferred In 41000
Curr Costs
Bal (end) 5100 65%
COSTS
Current period costs
QUANTITIES Phy units

to complete WIP (begin) 7300
started & completed 41000
in WIP (end) 5100
If anything less than 40%, the material is not added
Current Cost per Eq. Unit =
COSTS ASSIGNED
to Completed units:
+ current costs to complete
►started & completed this period
to Completed units:
to WIP (end)
WEIGHTED AVERGE METHOD
Trans-In units & costs

▼
sts incurred evenly throughout process conversion costs in
100% 0%
PROCESS COSTING - WEIGHTED AVERAGE ASSUMPTION

WIP - Dept. A (Assembly) WIP - D
$ units
19,750 Bal (begin) 7300
6,420
26,170 Step 7 units $
Completed 41,000 mat 90,040
81,490 101,240 cc 137,132 Transferred In 41000
141,800 148,220 Tot 227,172
Curr Costs
223,290 249,460
11,200 transfer-out
11,088 Bal (end) 5100
22,288 249,460
OPENING+CURRENT=CLOSING+USED
Mat CC
$ $ COSTS
19,750 6,420 B'fwd costs
81,490 141,800 Current costs
101,240 148,220 $249,460
Equivalent Units QUANTITIES

41,000 41000 Completed units
FOR CONVERSION COST, WE WILL COUNT
5100 3315 THE PERCENTAGE COMPLETED In WIP (end)
46100 44315
$2.20 $3.34 Wt. Av. Cost per Eq. Unit =
Total COSTS ASSIGNED

$90,040 $137,132 $227,172 to Completed units
11,200 11,088 22,288 to WIP (end)
$249,460

T/I 0
mat 19,750
cc 6,420 $
Completed 43200 T/I 99,766
T/I $110,300 mat 73,707
mat 81,490 cc 132,428
cc 141,800 Tot 332,071 COGM
$333,590
T/I 10,534
mat 7,783
cc 9,372
27,689
T/I Mat CC
$ $ $
od costs $110,300 81,490 141,800 $333,590
Equivalent Units
% T/I Mat CC
30-100% 7,300 7,300 5,840 80%
0-100% 41,000 41,000 41,000 100%
0%-80% 5,100 5,100 3,315 65%
erial is not added 53,400 53,400 50,155
2.07 1.53 2.83
T/I Mat CC
to complete 15,078 11,140 16,511 $42,730
riod 84,687 62,567 115,917 $263,171
99,766 73,707 132,428 305,901
10,534 7,783 9,372 $27,689
$333,590
mats. added
▼
40% stage 100%
EVERY SECOND/THIRD/.. WILL HAVE A TRANSFER-IN COST

% T/I 0
20% mat 19,750
cc 6,420 $
Tot 26,170 units T/I 98,653
Completed 43200 mat 90,550
T/I $110,300 cc 137,657
mat 81,490 326,860 COGM
Curr Costs
cc 141,800
Tot 333,590
65% T/I 11,647
mat 10,690
cc 10,563
32,900
T/I Mat CC
$ $ $
0 19,750 6,420
$110,300 81,490 141,800
110,300 101,240 148,220 $359,760
Phy units % Equivalent Units

43200 100% 43,200 43,200 43,200
5100 65% 5,100 5,100 3,315 FOR TRANSFER-IN ALWAYS EVERYT
48,300 48,300 46,515
2.28 2.10 3.19
ompleted units 98,653 90,550 137,657 326,860

o WIP (end) 11,647 10,690 10,563 32,900
359,760
Work in process, beginning: 2nd Department (Material is added at 50%
Units in process 8,000
Stage of completion with

100% Work in process, beginning:
respect to materials
Stage of completion with 35% Units in process

respect to conversion
Stage of completion
Costs in the beginning inventory: with respect to
materials
Stage of completion
Materials cost 110,500 with respect to
conversion
Labour cost 33,000 Costs in the beginning inventory:
Overhead cost 26,000 Materials cost
Labour cost
Units started into

production during the 94,000 Overhead cost
month
Units completed and

92,000 Transfer In cost
transferred out
Costs added to production during the Units transferred
month: during the month
Units completed and
Materials cost 950,000
transferred out
Costs added to production during the
Labour cost 310,000
month:
Overhead cost 170,000 Materials cost
Work in process, ending: Labour cost
Units in process ??? Overhead cost

Stage of completion
100% Transfer in cost
with respect to materials
Stage of completion Work in process,

60%
with respect to conversion ending:
Units in Ending WIP

Stage of completion
with respect to
materials
Stage of completion
with respect to
conversion
WEIGHTED AVERAGE
at start
mats. added
▼
0%
Step 2
units %
cc
Tot
Commenced 94000
mat
Curr Costs
cc
Tot
Bal (end) 10000 60% mat
cc
Tot
Step 3 - COSTS
B'fwd costs
Current costs
Tot
Step 4
Completed units 92000 100%
In WIP (end) 10000 60%
102000
Step 5
Step 6
COSTS ASSIGNED
to Completed units
to WIP (end)
mats. added
at start ▼
Step 1 conversion costs incurred evenly throughout processà
0%
Step 2
units % $
Bal (begin) 8000 35% mat 110,500
cc 59,000
169,500
Commenced 94000
mat 950,000
Current Costs
cc 480,000
1,430,000
Bal (end) 10000 mat 101,064
cc 30,252
131,316
Mat
Step 4: COSTS $
Current period costs 950,000
Step 5:
to complete WIP (begin) 8000 35%-100% 0
started & completed 84000 100% 84000
in WIP (end) 10000 60% 10000
102000 94000
Step 6:
Current Cost per Eq. Unit = 10.11
Step 7: COSTS ASSIGNED

to Completed units: Mat
+ current costs to complete 0.00
►started & completed this period 848936
to Completed units: 848936
to WIP (end) 101064
Work in process, beginning: Work in process, beginning:
Units in
Units in process 200 200
process
Stage of
Stage of completion with completion
50% 100%
respect to materials with respect
to materials
Stage of
completion
Stage of completion with
90% with respect 60%
respect to conversion to
conversion
Costs in the
Costs in the beginning
beginning
inventory:
inventory:
Materials cost $1900 Materials $300

cost
Labour
Labour cost 1800 $350
cost
Overhead
Overhead cost 3500 $800
cost
Transfer-in
$2000
Cost
Units started into

production during the 1,600
month
Units
started into
Units completed and
transferred out 1,400 production ????
during the
month
Units
completed
Costs added to production
and 1000
during the month:
transferred
out
Costs added
to
Materials cost 13,000 production
during the
month:
Materials
Labour cost 8,400 $2,300
cost
Labour
Overhead cost 9,700 $1000
cost
Work in process, ending: Overhead $3,200

cost
Work in
Units in process ??? process,
ending:
Stage of completion Units in

60% ???
with respect to materials process
Stage of
Stage of completion completion
40% 0%
with respect to conversion with respect
to materials
Stage of
completion
with respect 30%
to
conversion

at start
mats. added
▼
0%
Step 2
units %
90 cc
Tot
Commenced 1600
mat
Curr Costs
cc
Tot
Bal (end) 400 60% mat
40% cc
Tot
Step 3 - COSTS
B'fwd costs
Current costs
Tot
Step 4
Completed units 1400 100%
In WIP (end) 400 40%
1800
Step 5
Step 6
COSTS ASSIGNED
to Completed units
to WIP (end)
2nd Department (Material is added at 50% Stage)
ork in process, beginning:
5000
100%
60%
in the beginning inventory:
240,500
115,000
160,000
210,000
??
80,000
dded to production during the

month:
880,000
200,000
140,000
??
???
0%
40%

▼
osts incurred evenly throughout process
100%
IP - Dept. A (Assembly)
$
$ 110,500.00 Bal (begin)
$ 59,000.00
$ 169,500.00 Step 7 units $
Completed $ 92,000.00 mat 956,529
$ 950,000.00 1,060,500 cc 506,000 Transferred In
$ 480,000.00 539,000 Tot 1,462,529
Curr
$ 1,430,000.00 1,599,500
$ 103,970.59 transfer-out
$ 33,000.00 Bal (end)
$ 136,970.59 1,599,500
Mat CC
$ $ COSTS
110,500 59,000 B'fwd costs
1,060,500 539,000 $1,599,500

92000 92000 THE PERCENTAGE COMPLETED Completed units
10000 6000 In WIP (end)
102000 98000

$ 956,529.41 $ 506,000.00 $1,462,529.41 to Completed units
$ 103,970.59 $ 33,000.00 $ 136,970.59 to WIP (end)
$1,599,500.00
T.I.
▼
ed evenly throughout processà
100%
PROCESS COSTING - FIFO ASSUMPTION
Assembly)
Step 3 Bal (begin)

$
units Bgn Bal 169,500
cc 449,748 Transferred In
Step 8 Tot 1,468,184 ►
Curr
Curr
Step 8 Bal (end)
CC
$
480,000 $1,430,000 COSTS
Current period cost
Equivalent Units
5200 The opening stock was at 60%, from there QUANTITIES
we took it to 100%, so did we add any
84000 material. to complete WIP (begin)
6000 started & completed
95200 in WIP (end)
If anything less than 40%, the material is n
5.04 15.15
Current Cost per Eq. Unit =
CC COSTS ASSIGNED
26218 26218.49 to Completed units:
423529 $1,272,466 + current costs to comp
449748 $1,298,684 ►started & completed this period
30252 131316 to Completed units:
$1,430,000 to WIP (end)

▼
osts incurred evenly throughout process
100%
IP - Dept. A (Assembly)
$
$ 1,900.00 Bal (begin)
$ 5,300.00
$ 7,200.00 Step 7 units $
$ 13,000.00 14,900 cc 21,000 Transferred In
$ 18,100.00 23,400 Tot 33,720
Curr
$ 31,100.00 38,300
$ 2,180.49 transfer-out
$ 2,400.00 Bal (end)
$ 4,580.49 38,300
Mat CC
$ $ COSTS
1,900 5,300 B'fwd costs
14,900 23,400 $38,300

1400 1400 THE PERCENTAGE COMPLETED Completed units
240 160 In WIP (end)
1640 1560

$ 12,719.51 $ 21,000.00 $ 33,719.51 to Completed units
$ 2,180.49 $ 2,400.00 $ 4,580.49 to WIP (end)
$ 38,300.00

▼ ▼
0% 50% stage 100%

units % T/I 210,000
5000 60% mat 240,500
cc 275,000 $
Tot 725,500 units T/I 1,379,406
Completed 80,000 mat 1,120,500
92000 T/I $1,462,529 cc 566,820
mat 880,000 3,066,726
Curr Costs
cc 340,000
Tot 2,682,529
17,000 40% T/I 293,124
mat -
cc 48,180
341,303
T/I Mat CC
$ $ $
B'fwd costs 210,000 240,500 275,000
Current costs $1,462,529 880,000 340,000
1,672,529 1,120,500 615,000 $3,408,029

Completed units 80,000 100% 80,000 80,000 80,000
In WIP (end) 17,000 40% 17,000 0 6,800 FOR TRANSFER-IN A
97,000 80,000 86,800
OSTS ASSIGNED
to Completed units 1,379,406 1,120,500 566,820 3,066,726
to WIP (end) 293,124 0 48,180 341,303
3,408,029
T.I. mats. added

▼ ▼at 40% stage
conversion costs incurred evenly throughout processà
0% 40% stage 100%

units % T/I 210,000
5000 60% mat 240,500
cc 275,000 $
Completed 80,000 T/I 1,239,201
92,000 T/I $1,468,184 mat 880,000
mat 880,000 cc 297,026
Curr Costs
Curr Costs
cc 340,000 Tot 3,141,727
$2,688,184
17,000 40% T/I 228,983
mat 0
cc 42,974
271,957
T/I Mat CC
$ $ $
Current period costs $1,468,184 880,000 340,000 $2,688,184
Equivalent Units
Phy units % T/I Mat CC
o complete WIP (begin) 5000 60-100% 0 0 2,000 40%
arted & completed 92,000 0-100% 92,000 92,000 92,000 100%
17,000 0%-40% 17,000 0 13,600 80%
hing less than 40%, the material is not added 109,000 92,000 107,600
urrent Cost per Eq. Unit = 13.47 9.57 3.16
OSTS ASSIGNED
o Completed units: T/I Mat CC
+ current costs to complete 0 0 6,320 $6,320
►started & completed this period 1,239,201 880,000 290,706 $2,409,908
o Completed units: 1,239,201 880,000 297,026 2,416,227
228,983 0 42,974 $271,957
$2,688,184

▼ ▼
0% 50% stage 100%

units % T/I 2,000
200 60% mat 300
cc 1,150 $
Tot 3,450 units T/I 22,325
Completed 1,000 mat 2,600
1400 T/I $33,720 cc 4,534
mat 2,300 29,459
Curr Costs
cc 4,200
Tot 40,220
600 40% T/I 13,395
mat -
cc 816
$ 14,210.92
T/I Mat CC
$ $ $
B'fwd costs 2,000 300 1,150
Current costs $33,720 2,300 4,200
35,720 2,600 5,350 $43,670

Completed units 1,000 100% 1,000 1,000 1,000
In WIP (end) 600 30% 600 0 180 FOR TRANSFER-IN A
1,600 1,000 1,180
OSTS ASSIGNED
to Completed units 22,325 2,600 4,534 29,459
to WIP (end) 13,395 0 816 14,211
43,670
ER-IN COST
COGM
ER-IN COST
COGM
Wipeout Enterprises produces
exercise equipment. One of its plants
produces two versions of a small bike
for children: a basic model and a
custom model. The custom model has
a fancy frame, a plush seat, and some
electronic gadgets. At the beginning of
the year, the following data were
provided/estimated for this plant:
Plant Overhead Costs:

Item Description Cost ($)
Maintenance 84,000
Process setups 96,000
Goods receival officers 40,000
Engineering support 120,000
Purchasing clerks 60,000
Materials handling 120,000
Factory rent & leases 20,000

Accounts payable dept 30,000
Estimated MOH 570,000
Basic Model Custom Model 2 Cost Object
Expected production quantity (units) 20,000 10,000
Selling price - per unit 90 180
Prime costs (direct materials & direct
40 80 DM+DL=Prime Cost
labour) – per unit
MOH applied per unit
Machine hours 5,000 5,000 1
Direct labour hours 10,000 10,000 20,000
Other data:
Number of deliveries received & placed

250 500
into inventory
1
Number of batch-run set-ups 20 80

1
Engineering support (hours provided) 1,500 4,500 1
Number of purchase requisitions made (&
100 200 COST DRIVERS
subsequent orders placed)
Maintenance workers (hours) 1,000 3,000
is a denominator level, but
Number of suppliers invoices processed cost itself canot be cost
250 500
& paid driver.
Number of material movements for

2000 8000
production runs (eg by fork-lifts etc)
1
5120 16780
when the ratio is same, they are interrelated activities
use a homegenous overhead cost pool,

pool them into group depending upon
the ratio. Unit Level
Batch Level
COST DRIVER
Product Sustainbility Level
Facility Level
Cost driver can be machine hours/

Labour Hour
TRADITIONAL METH
MOH Application
28.5
Rate
Item Description Basic Model Custom Model
800000 800000
285000 285000
Total Cost 1085000 1085000

Number of Units 20,000 10,000
DM+DL=Prime Cost Cost Per Unit 54.25 108.5
Selling Price 90 180

1 Profit Per Unit 35.75 71.5
Activity Based Costing Method

Pool 1: Machine Hours
Item Description Cost Total
2
Factory rent &
20,000
4 leases
3 20000
1 2
20000
1:03
a denominator level, but
ost itself canot be cost Pool 2: Number of Purchase
driver. 1:02
4
Goods receival
40,000
officers
Purchasing clerks 60,000
130000
Accounts payable
30,000
dept
Pool 3: Number of batch-up set ups
Process setups 96,000

Materials
120,000
handling 216000
Pool 4: Maintaince worker
Maintenance 84,000
Engineering
120,000
support 204000
Cost Allocation
Item Description Basic Model Custom Model
Prime Cost 800000 800000
MOH pool-1 10000 10000
MOH pool-2 43333 86667
MOH-pool 3 43200 172800
MOH pool 4 51000 153000
Total Cost 947533 1222467
Number of Units 20,000 10,000
Cost Per Unit 47.3766666666667 122.246666666667
Revenue Per unit 90 180
Profit Per Unit 42.62 57.75
TRADITIONAL METHOD
Per Unit
Machine
Machine Basic Item Description Basic Model Custom Model
Custom
800000 800000 40 80
142500 142500 14.25 28.5
942500 942500 Total Cost

20,000 10,000 Number of Units
94.25 Cost Per Unit 54.25 108.5

47.125
90 180 Selling Price 90 180
42.875 85.75 Profit Per Unit 35.75 71.5
rs
Cost Allocation
Base Allocation
(denominator Rate
level)
10000 2
10000 2
hase
Cost Allocation
Base Allocation
(denominator Rate
level)
300 433
p set ups
Cost Allocation
Base Allocation
(denominator Rate
level)
100 2160
rker
Cost Allocation
Base Allocation
(denominator Rate
level)
4000 51
Conclusion, Profit Margin of Basic Model is high. Whereas its low in custom
Model. Recommendation: Need to increase Selling Price, or reduce the cost.
Conclusion, Profit Margin of Basic Model is high. Whereas its low in custom
Model. Recommendation: Need to increase Selling Price, or reduce the cost.
Tim and Lisa operate TLs Take-Away Coffee Bar
located in a central city shopping centre, catering for
busy, “on-the-run” people who don’t want to be held up.
The business offers flat-whites, which sell for $2.50 as
well as three extremely popular exotic types (Latin,
Mediterranean, and Continental) which sell for $2.70 (the
20c higher is to cover the cost of special additives).
The coffee bar sells about 10,000 cups per month, but is
concerned about operating costs (particularly labour) and
profitability, as it appears to be making only a very
modest profit even though Tim, Lisa and staff are “run
off their feet” all day. The flat-whites (which have their
own machines) are simple to make, but the exotic types
(which use the basic coffee, milk and sugar, but also
have special additives) require their machines to be
specially set-up and then cleaned-out more regularly.
They also require a number of special ingredient stock
items to be ordered, received, accounted and paid for.
Tim and Lisa have engaged a business consultant to
investigate why they are not trading more profitably
because they feel they can do no more than they are at
present to be efficient and profitable. They feel their
prices are very reasonable and are loathe to put them up.
The overall average cost per cup of coffee is $2.42 [i.e.
$24,161 (below) ÷ 10,000 cups], so the profit margin on
each cup is very slim.
Ingredients:
Coffee (DM) 3,230
Milk (DM) 995
Additives (for the exotic coffees only) (DM) 1,010

Sugar (DM) 206
Labour:
Coffee machine set-up costs 2,570
Coffee machine cleaning-up costs 3,360
Stock ordering & receiving costs 1,320
Stock moving, recording & control costs 1,550
Invoice processing & paying costs 1,140

Coffee preparation & serving costs (DL) 3,700
General cleaning 900
Other:
Electricity for the coffee machines 420
Rent & Insurances 2,000

Equipment depreciation (based on usage) 900
Display advertising & signage 860
Total costs 24,161
Exotic
Flat Whites
Types
Sales (cups) 4,900 5,100 1::1
Coffee machines set-ups 40 240
1::6
Stock orders & receivals 4 36
1::9
Stock movements 30 270 1::9
Coffee machines cleaning-ups 40 240

1::6
Supplier invoices processed and paid 8 72

1::9
Signage & displays 4 12 1::3
8,131
Cost Allocation
Activity Based Costing Method
Pool 1: sales cup
Item
Cost Total
Description
Coffee
preparation
3,700
& serving
costs (DL)
Coffee
3,230
(DM)
Milk (DM) 995
Electricity
for the
420
coffee
machines 12,351
Rent &
2,000
Insurances
Equipment
depreciation
900
(based on
usage)
General
900
cleaning
Sugar (DM) 206
Pool 2: Coffe Machine set-ups
Item
Cost Total
Description
Coffee
machine set- 2,570
up costs
Coffee
machine 5,930
3,360
cleaning-up
costs
Pool 3: stock-order
Item
Cost Total
Description
General
cleaning
Invoice
processing
1,140
& paying
costs
Stock 4,010
moving,
1,550
recording &
control costs
4,010
Stock
ordering &
1,320
receiving
costs
Pool 4: Signange & Display
Item
Cost Total
Description
Display
advertising 860
& signage
860
Cost Allocation
Item
Flat whites Exoctic types
Description
MOH pool-
6051.99 6299.01
1
MOH pool-
847 5083
2
MOH-pool
401 3609
3
MOH pool
215 645
4
Additives 1,010
POOl 5
Total Cost 7515 16646

Number of
4,900 5,100
Units
Cost Per
1.53 3.26
Unit
Revenue
2.5 2.7
Per unit
Profit Per
0.97 -0.56
Unit
sales cup
Cost Allocation Base (denominator Allocation
level) Rate
10,000 1.2351
Machine set-ups
level) Rate
280 21
stock-order
level) Rate
40 100.25
40 100.25
ange & Display

level) Rate
16 53.75
Conclusion, Greater than 3.26 should be

flat whites. As cost per cup is 3.26.
A B C
Sales Price 15 21 36
per Unit
Variable 9 14 19
Cost per
Unit
Sales Mix 20% 20% 60% Weight by unit sold (default). Weight
Percentage usuage.
Total Fixed
Cost 40,000
Contributio
n Margin 6 7 17
Per Unit (Revenue-VC,
Sales Price -
Variable cost)
Wt AVG CM
12.8
BE qty 3125 Total number of A, B, & C
Product
wise BEQ 625 625 1875
Product
wise BE 9375 13125 67500
revenue
BER 90000
Contribution Margin / Limited Resource - Lowest/Highest
Lowest- Minimum Highest - Maximum
In the previous example if labor hrs. is limited to 775 hrs. and you are required to
produce at least 50 units of each of the products, what sales mix would maximize your
profit?
LIMITED RESOURCE
Product A B C
Sales Price
per Unit 15 21 36
Variable
Cost per 9 14 19
Unit
No. of lab.
hrs 2 3.5 5
Total Fixed
40,000
Cost
Contributio
n Margin 6 7 17
Per Unit
CM Per
Labour hr. 3.00 2.00 3.40
No of units
(Max Profit) 50 50 100
Labour Hr
used 100 175 500
Wt of
products 0.25 0.25 0.5
Wt Avg
Contributio 11.75
n Margin
BEQ 3404
Product
wise 851 851 1702
Revenue
Product
wise
12765.95744681 17872.3404255319 61276.5957446808
Breakeven
Revenue 91915
ght by unit sold (default). Weight by limited source
usuage.
COLA Lemonade
SP per case 19.1 20.25
Variable
Cost per 14.4 15.9
case
Cases sold
per foot of
10 24
shelf space
per day
Total Fixed
Total number of A, B, & C used 100,000
Cost
CM Per unit 4.7 4.35
CM per sq
47.00 104.40
foot
No of foot 1 1
No of cases 10 24
WT avg foot
0.04 0.09
used
Wt Avg
Contribution 7.48797
Margin
BEQ 13355
est - Maximum
Product
502 1205
Wise
Revenue
Product 9589 24400
wise
Breakeven
431821
Revenue
500
Natural Orange
Punch Juice
27.1 39.5
21.5 29.8 12
Maximum
25 22
Min-1
100,000
Max-6
5.6 9.7 Selling Price- Variable
140.00 213.40 Cases sold per day * CM per unit

4 6
100 132
0.38 0.50
7.48797
13355
13355
5021 6627
136058 261773
431821
Robinson Computers makes 5,700 units of a circuit board, CB76, at a cost of $230
each. Variable cost per unit is $180 and fixed cost per unit is $50. Peach
Electronics offers to supply 5,700 units of CB76 for $210. If Robinson buys from
Peach, it will be able to save $20 per unit in fixed costs but continue to incur the
remaining $30 per unit.
a. Should Robinson accept Peach’s offer? Explain.

b. If Peach is able to supply only 5000 units are $210 and if Robinson is still able
to save $20 per unit on the fixed costs, should Robinson accept peach’s offer and
produce the remaining 700 themselves?
BEFORE AFTER CHANGE

VC 180 210 30
FC 50 30 -20
TOTAL PER
UNIT 230 240 10
Cost for
5700 unit 1311000 1368000 57000
Cost Operating (5
years)
Disposal of old
As Fixed cost remains unchanged, and will occur Machine
whether or not we produce. So the decision will be
continuing producing, as if we accept peach's offer it Cost of New
will cost us higher. Machine
Cost for
5000 units 1050000 1311000 Cost of new machine is less than the cost o
operating the old machine. So, RT should
Cost for 700 replace the new machine.
units 161000
1211000 1311000 (100,000.00)
Direct materials
Direct labour
As, producing 700 and giving jobwork of 5000 is saving
us 1,00,000. So we will go with the proposal. Variable
manufacturing
overhead
Fixed
manufacturing
overhead –
traceable*
Fixed
manufacturing
overhead -
allocated
Total
*40% relates to cleaning and maintenance of the icing

equipment and 60% relates to depreciation of icing equipm
(with no resale value)
REVISION QUESTION
RT Manufacturing is deciding whether
to keep or replace an old machine. It
obtains the following information:
KEEP REPLACE DIFFERENCE Keep
90000 75000 15000

Cash Operating (5 years ) 60000
-2800 2800
Disposal of old Machine
8800 -8800
Cost of New Machine
90000 81000 9000 60000
f new machine is less than the cost of

ating the old machine. So, RT should
replace the new machine.
5,000 liters
Per Liter
per year
Carol’s Cupcakes sells cupcakes and other deserts through its retail
$1.00 $5,000 store. The company has always made all of its ingredients from scratch,
but has recently been approached by a supplier that specializes in icing.
0.5 2,500 Carol believes that the supplier’s icing is of equal quality to her own,
and believes their offer of $3.00 per liter may enable her to save
money. Carol is evaluating her own cost of producing icing:
0.25 1,250
a.) Assuming there is no other use for b.) If the offer is accep
1 5,000 the icing equipment or the space it Cupcakes could use the sp
uses in the kitchen, what is the net been previously used for
dollar advantage or disadvantage of as a bacon-frying space. C
accepting the supplier’s offer? that a new bacon line o
would produce margins o
year. Should Carol’s Cup
the supplier’s off
b.) If the offer is accep
Cupcakes could use the sp
been previously used for
as a bacon-frying space. C
that a new bacon line o
would produce margins o
year. Should Carol’s Cup
1.75 8,750 the supplier’s off
$4.50 $22,500 Make Buy

Yes, Carol should accept
relates to cleaning and maintenance of the icing
t and 60% relates to depreciation of icing equipment $750 in the cupcake busi
(with no resale value) DM 1 0 It will be better to make the loss o
DL 0.5 0 icing than buying, as cost of
making is 0.85 less than buying
VMOH 0.25 0 the icing. And carol will have net
FMOH 0.4 0 loss of $4250 per year
Purchase Pric 0 3
Icing per litre 2.15 3
Per 5000 litre 10750 15000 4250
5000
750
VISION QUESTION
Replace Difference
25000 35000
-10000 10000
42,000 42,000
57000 87000
b.) If the offer is accepted, Carol’s

upcakes could use the space that had
been previously used for making icing
s a bacon-frying space. Carol believes
that a new bacon line of cupcakes
would produce margins of $5,000 per
year. Should Carol’s Cupcakes accept
the supplier’s offer?
b.) If the offer is accepted, Carol’s
upcakes could use the space that had
been previously used for making icing
s a bacon-frying space. Carol believes
that a new bacon line of cupcakes
would produce margins of $5,000 per
year. Should Carol’s Cupcakes accept
the supplier’s offer?
Yes, Carol should accept the offer as she can make

$750 in the cupcake business after eliminating the
loss of icing.
4. Special order, activity-based costing. (CMA, adapted) The
Reward One Company manufactures windows. Its manufacturing
plant has the capacity to produce 12,000 windows each month.
Current production and sales are 10,000 windows per month.
The company normally charges $250 per window. Cost
information for the current activity level is as follows:
Production Capacity 12,000

Sales 10,000
Selling Price 250
Revenue 2,500,000
Direct Material 600,000
Direct labour 700,000
Variable Cost 150,000
fixed mfg cost 250,000
Fixed marketing 400,000
2,100,000
Reward One has just received a special one-time-only order for
2,000 windows at $225 per window. Accepting the special order Special Order 2,000
would not affect the company’s regular business or its fixed Price 225
costs. Reward One makes windows for its existing customers in
batch sizes of 100 windows (100 batches  100 windows per
batch = 10,000 windows). The special order requires Reward One Revenue from Special
to make the windows in 25 batches of 80 windows. Order 450000
Batches 25

Reward One is concerned that if it accepts the special order,
its existing customers will immediately demand a price Sales 10,000
discount of $20 in the month in which the special order is Selling Price 230
being filled. They would argue that Reward One’s capacity Revenue 2,300,000
costs are now being spread over more units and that existing Direct Material 600,000
customers should get the benefit of these lower costs. Should
Reward One accept the special order under these conditions?
Show your calculations Direct labour 700,000
2,100,000
Special Order 2,000
RevenuePrice
from Special 225
Order 450000
Batches 25

Suppose plant capacity were only 11,000 windows instead of Sales 9,000
12,000 windows each month. The special order must either be
taken in full or be rejected completely. Should Reward One
accept the special order? Show your calculations.
Suppose plant capacity were only 11,000 windows instead of
12,000 windows each month. The special order must either be
taken in full or be rejected completely. Should Reward One Selling Price 250
accept the special order? Show your calculations. Revenue 2,250,000
Direct Material 600,000
Direct labour 700,000
2,100,000
Special Order 2,000
RevenuePrice
from Special 225
Order 450000
Batches 25
What is the maximum amount of discount that Reward One Maximum Discount Reward One can Offer
could offer its customers?
Best Trim, a manufacturer of lawn mowe
204,000 spark plugs next year. Best Trim esti
be required each month. A supplier quotes
supplier also offers a special discount opti
purchased at the start of the year, a disco
given. Best Trim can invest its cash at 10% p
Without With Differences place each purcha
Production 10,000 12,000 2,000
DM 600,000 720000 120,000
DL 700,000 840000 140,000
Variable Cost 150,000 187500 37,500 Purchase 204,000
60 Fixed Cost 250,000 250,000 0 Units Req 17,000
70 F Marker Cos 400,000 400,000 0 Price 9
1500 Total Cost 2,100,000 2,397,500 297,500 PO cost 260
Operating In 400,000 552,500 152,500
What is the opportunity cost of interes
204,000 units at the start of the year inst
2000 They should accept the special order, if it of 17,000 units pe
has no long-term implicatons. As the
operating income is increasing by
152,500
2,950,000 If purchase 204,000 at onc
If purchase 17,000 per
month
Avg Investment in inventory
if purchase 204,000
If purchase 17,000
60 Operating Before Discount 400,000 Difference
Opportunity forgone from purchasing

70 Total Discount 200000 240,000 at start
1500 Operating After 200,000
Would this opportunity cost be recorded
2000
By giving $20 discount, the operating
2,300,000 income will fall down to 2,00,000. So No, as only actual cost are recorded in t
2,750,000 rather we should reject the special order opportunity c
Should Best Trim purchase 204,000 units a

units each mo
Total Revenu 2,700,000 Doubt
DM 660000.00 Purchasing
DL 770000.00 204,000
60 VC 172500.00 P.O cost 260
70 FMC 250000.00 Annual
1500 F Mark Cost 400000.00 purchase 1799280
Total Cost 2252500.00 Annual Intere 89964
Operating 447,500 1889504
2000
2,250,000 It will result in making 9000 units, the operating
2,700,000 income is increasing, so they can accept the offer.
15.25(Incremental Operating Income/Total Units)

a manufacturer of lawn mowers, predicts that it will purchase
plugs next year. Best Trim estimates that 17,000 spark plugs will
each month. A supplier quotes a price of $9 per spark plug. The
o offers a special discount option: If all 204,000 spark plugs are
t the start of the year, a discount of 2% off the $9 price will be
m can invest its cash at 10% per year. It costs Best Trim $260 to
place each purchase order.
Discount 0.02 if all are purchase together
Cash Inv 0.1
e opportunity cost of interest forgone from purchasing all

s at the start of the year instead of in 12 monthly purchases
of 17,000 units per order?
Cost
8.82
tment in inventory
899640
76500
823140
orgone from purchasing

0,000 at start 82314
pportunity cost be recorded in the accounting system? Why?
y actual cost are recorded in the accounting system not the

opportunity cost.
Trim purchase 204,000 units at the start of the year or 17,000

units each month?
Doubt
Purchasing
17,000 p.m Diff
3120 -2860
indicates that purchasing 17,000 spark plugs at the beginning of
-36720 each month is preferred relative to purchasing 204,000 spark
1836000
plugs at the beginning of the year because the opportunity cost
7650 82314 of holding larger inventory exceeds the lower purchasing and
1846770 42734 ordering costs
Benta Ware Limited - A Manufacturer of Clay Pots
Product Specifications Quantity Cost

Direct Material (Clay) 8 kg per pot 0.5 per kg
Direct Labour 0.5 hrs per pot 10 per hr
Projected Sales Jan Feb Mar Apr May

Sales Units (Pots) 1200 2000 2400 2600 2700
Selling Price 15 15 15 15 15
Projected Inventories Jan Feb Mar

Finished Goods
Opening 1800
Value of Opening FG 20700

Closing - 1.5 X Next
months Sale
RM opening 19200
Closing - 1 X Next months production
Projected Overheads Jan Feb Mar

Variable MOH $2 $2 $2
(per Labout Hr)
3500 3500 4250

Fixed MOH
Projected S & A Jan Feb Mar

Variable (per unit) $1 $1 $1
Fixed 1000 1000 1000
Projected Taxes
Rate 40%
Capital Expenditure Jan Feb Mar

Acquisitions Land & Buidlings 100,000
Motor Vehicles 50,000
Plant & Equipment (purchse cost 30000, ACC

Disposals Dep 20000) 30,000
Finance Equity Issue 100000

Long term loan 30000
Reciepts & Payments

Collections f 10% in the month of Sale
70% in the next month
20% in the month after that
Dec Sales = 20000
Nov Sales = 15000
Payments 100% paid in the

for RM following month Purchase in Dec 15000
Payments
for
MOH,S&A 50% in the month of sale
50% in the month following the sale
Manufacturing Depr = 3000 pm
S& A depr = 1000 pm
MOH & SA expense for Dec = 10000
Taxes Payable in Mar, June, Sep, Dec = 4000
Cash 10000 at the end of 30th Dec
Revenue Budget
Jan Feb Mar Apr May
Sales Units 1200 2000 2400 2600 2700
(Pots)
Revenue
(units * SP) 18000 30000 36000 39000 40500
Production Budget
Jan Feb Mar Apr May
Closing FG 3000 3600 3900 4050 0
Add Units
Sold 1200 2000 2400 2600 2700
Less
Opening FG 1800 3000 3600 3900 4050
Units 2400 2600 2700 2750
Produced
DM Budget (Kg)
Jan Feb Mar Apr
DM Closing 20800 21600 22000
DM Used 19200 20800 21600 22000
19200 20800 21600 20800

DM opening
DM 20800 21600 22000
Purchased
DM Budget ($)
Jan Feb Mar Apr
DM Closing 10400 10800 11000 0
DM Used 9600 10400 10800 11000
DM opening 9600 10400 10800 10400
DM 10400 10800 11000
Purchased 0
DL Budget (Hrs & $)

Jan Feb Mar
DL Used (Hrs)1200 1300 1350
DL Used ($) 12000 13000 13500
MOH Budget ($)
Jan Feb Mar

VMOH (Lab
Hrs) 2400 2600 2700
FMOH 3500 3500 4250
TMOH 5900 6100 6950
S&A OH Budget
Jan Feb Mar
V S&A Exp 1200 2000 2400 UNITS SOLD*EXPENSE COST
F S&A Exp 1000 1000 1000
T S& A Exp 2200 3000 3400
Manufacturing Cost
Jan Feb Mar
DM Used ($) 9600 10400 10800

DL Used ($) 12000 13000 13500
TMOH ($) 5900 6100 6950
TMC 27500 29500 31250
MC Per unit 11.46 11.35 11.57
COGM Budget
Jan Feb Mar
Opening WIP0 0 0
TMC 27500 29500 31250
Closing WIP 0 0 0
COGM 27500 29500 31250
COGS Budget
Jan Feb Mar
Opening Fin
Goods 20700 34375.00 40846.15
COGM 27500 29500 31250
Closing Fin
Goods 34375.00 40846.15 45138.89
COGS 13825.00 23028.85 26957.26
Budgeted Income Statement

Jan Feb Mar
Revenue 18000 30000 36000
Less COGS 13825 23029 26957
Gross Margin 4175 6971 9043
Less S&A 2200 3000 3400
Income
Before taxes 1975 3971 5643 IF EARNINGS 0, TAX RATE 0
Tax @40% 790 1588 2257
PAT 1185 2383 3386
Collections
Nov Dec Jan Feb Mar
Sale 15000 20000 18000 30000 36000 80600
10%
Collection 1500 2000 1800 3000 3600
70%
Collection 10500 14000 12600 21000
20%
Collection 3000 4000 3600
Total 1500 12500 18800 19600 28200 80600
18800 19600 28200
Payments
Nov Dec Jan Feb Mar
Purchase of
RM 15,000 10400 10800 11000
Payment for
RM 15,000 10,400 10,800
TMOH 10000 5900 6100 6950

S&A 2200 3000 3400
Total TMOH
S&A 10000 8100 9100 10350
Payables
Depr 4000 4000 4000 4000
Payables 6000 4100 5100 6350

Without PAYMENT
Depr OF RM
50% Payment 3000 3000 2050 2550
50% Payment 2050 2550 3175
Payment 3000 5050 4600 5725
(MOH & SA)
Nov Dec Jan Feb Mar

Purchase of
LABOUR 12000 13000 13500 IF ITS EVERY WEEK, IT W
MONTH AND 25
Payment
foR LABOUR 12,000 13,000 13,500
Cash Budget IF FORTH NIGHTLY PAYM

Jan Feb Mar 50% NEX
Opening Cash10,000 -3,250 -11,650
Collections
From Sa18800 19600 28200
Disposal 30,000
Equity 100000
Long term
Loan 30,000
Total
Collections 118,800 19,600 88,200
Payments
For RM15,000 10,400 10,800
Payment
MOH & SA 5,050 4,600 5,725
land &
buildings 100,000
MV 50,000
Taxes 4000
Labour 12,000 13,000 13,500
Total
Payments 132,050 28,000 84,025
Closing -3,250 -11,650 -7,475
PAYMENT
PAYMENT PAYMENT OF
OF LABOUR OF MOH EXPENSES
IF ITS EVERY WEEK, IT WILL BE 75% OF THE SAME
MONTH AND 25% OF THE NEXT
IF FORTH NIGHTLY PAYMENT, 50% THIS MONTH,

50% NEXT MONTH
DM Strawberry 2.15 per Kg
Sugar 0.95 per Kg
Units Strawberry 0.65 Keeps 3 weeks raw material ready.

Sugar 0.35
October Predicted Sales 500 kgs

November Predicted Sales 550 kgs 412.5
December Predicted Sales 605 kgs 453.75
SP 10 per Kg
Finished G Keeps 1 week stock on head one week 1/4 a month
DL 6 min 12 per hour

0.1 per hour
VMOH electricty 0.45 per kg

Sales Comm 10% of sales revenue
Tax Rate 35%

FMOH OCT/Nov 2100
Decmeber 2500
S&a Expense 800 per month
120 kg strawberries
100 kg sugar
Revenue Budget
Oct Nov Dece Jan Feb
Sales Units 500 550 605 665.5 732.05
(Pots)
Revenue
(units * SP) 5000 5500 6050 6655 7320.5
Production Budget
Oct Nov Dece Jan Feb
Closing FG 138 151 166 183 0
Add Units
Sold 500 550 605 665.5 732.05
Less
Opening FG 60 137.5 151.25 166.375 183.0125
Units 578 564 620 682
Produced
1762
DM Budget Strawberries Sugar Strawberries Sugar Strawberries Sugar
(Kg)
Oct Nov Dec Jan
DM Closing 268 144 295 159 324 175
DM Used 376 202 366 197 403 217
DM opening 120 100 268 144 295 159
DM 524 247 393 212 433 233

Purchased
$ 1126 234 845 201 930 221
$ 1361 1047 1151
DL Budget (Hrs & $)
Oct Nov Dec
DL Used (Hrs)57.80 56.38 62.01
DL Used ($) 693.6 676.5 744.15
MOH Budget ($)

Oct Nov Dec
VMOH (Lab
Hrs) 578 564 620
FMOH 2100 2100 2500
TMOH 2678 2664 3120
S&A OH Budget
Jan Feb Mar
V S&A Exp 500 550 605
UNITS SOLD*EXPENSE COST
F S&A Exp 800 800 800
T S& A Exp 1300 1350 1405
Manufacturing Cost
Jan Feb Mar
DM Used ($) 1361 1047 1151
DL Used ($) 693.6 676.5 744.15
TMOH ($) 2678 2663.75 3120.125
TMC 4732.165 4386.9 5015.59
MC Per unit 8.19 7.78 8.09
COGM Budget
Jan Feb Mar
Opening WIP0 0 0
TMC 4732.165 4386.9 5015.59
Closing WIP 0 0 0
COGM 4732.165 4386.9 5015.59
COGS Budget
Oct Nov Dec
Opening Fin
Goods 491.228201 1125.73 1176.97
COGM 4732.165 4386.9 5015.59
Closing Fin
Goods 1125.73 1176.97 1345.65
COGS 4097.66 4335.66 4846.92
Budgeted Income Statement

Oct Nov Dec
Revenue 5000 5500 6050
Less COGS 4098 4336 4847
Gross Margin 902 1164 1203
Less S&A 1300 1350 1405
Income
Before taxes -398 -186 -202 IF EARNINGS 0, TAX RATE 0
Tax @40% -139 -65 -71
PAT -258 -121 -131
7.5 social security
Direct Labour 0.4 per hour
0.1 per hour
0.5 employee insurance
Increase Wag 12 per hour
16000 frames
100% end of inventory of following month sales

Plus 50% of second month sale
Payment 50% same

50% following
Revenue Budget
Jan Feb Mar Apr
Sales Units 12000 13000 6000 11000
(Pots)
Selling Price 53 52 52 52
Revenue
(units * SP) 636000 676000 312000 572000
Production Budget
Dec Jan Feb Mar Apr
Closing FG 16000 16000 11500 16500 26500
Add Units
Sold 12000 13000 6000 11000
Less
Opening FG 16000 16000 11500 16500
Units 12000 8500 11000 21000
Produced 10,000
DL Budget (Hrs & $)

dec Jan Feb Mar First Quarter
DL Used (Hrs)30000 36000 25500 22000 83500
DL Used ($) 330000 396000 280500 242000 918500
Pension
Cost (.4) 12000 14400 10200 8800 33400
Insurance
Cost (.1) 3000 3600 2550 2200 8350
Medical
Insurance
(.5) 15000 18000 12750 11000 41750
Social
Security
(11*.75) 24750 29700 21037.5 18150 68887.5
Total Direct
Labour cost $ 384,750.00 $ 461,700.00 $ 327,037.50 $ 282,150.00 1070887.5
Nov Dec Jan Feb Mar
Purchase of
LABOUR 384,750 461,700 327,038 282,150
50% in the
same month 192375 230,850 163,519 141,075
50% in the
following
month
192375 230850 163518.75
Total $ 192,375.00 $ 423,225.00 $ 394,368.75 $ 304,593.75
May
11000
52
572000
May First Quarter

31000 44000
11000 31000
26500 43500
31500
$ 1,122,187.50
The following data relates to the operations of Aussie Company, a wholesale distributor of consumer goods:
Current assets as at March

31: COLLECTIONS
Cash $8,000
Accounts receivable $20,000 Sale
Inventory $36,000 Cash @ 60%
Building and equipment,
$120,000
net Credit @40%
Accounts payable 21,750 Total
Capital stock $150,000
Retained earnings $12,250 COGS
Ending Inventory
COGS = 75% of sales. Opening Inventory
Actual and budgeted sales data: Inventory Purchased
March (actual) $50,000 PAYMENT

April $60,000
May $72,000 Purchase of RM
June $90,000 50% Payment
July $48,000 50% Payment
Total
Sales are 60% for cash and 40% on credit. Credit sales are collected in
the month following sale. The accounts receivable at March 31 are a
result of March credit sales.
Each month’s ending inventory should equal 80% of the following

month’s budgeted cost of goods sold.
One-half of a month’s inventory purchases are paid for in the month of

purchase; the other half is paid for in the following month. The accounts
payable at March 31 are the result of March purchases of inventory.
Total Payables
Monthly expenses are as follow: commissions, 12% of sales; rent, $2,500

per month; other expenses (excluding depreciation), 6% of sales.
Assume that these expenses are paid monthly. Depreciation is $900 per
month (includes depreciation on new assets).
Depreciation (Manu + S&A
Equipment costing $1,500 will be purchased for cash in April.

The company must maintain a minimum cash balance of $4,000. An
open line of credit is available at the local bank. All borrowing is done at
the beginning of a month, and all repayments are made at the end of a
month; borrowing must be in multiples of $1,000. The annual interest
rate is 12%. Interest is paid only at the time of repayment of principal;
calculate interest on whole months.
REQUIRED: CASH BUDGET

Using the preceding data, complete the cash budget for April.
(Ending Balance = $1350) Opening cash
Collections
Sales
Total collections
Payment
For RM
Commission @ 12% sales
Rent
Others @ 6% sales
Equipment
Interest @ 12%
Total payment
Closing
Minimum cash balance
or of consumer goods:
March April May June July

50000 60000 72000 90000 48000
30000 36000 43200 54000 28800
20000 24000 28800 36000

56000 67200 82800 64800
37500 45000 54000 67500 36000

36000 43200 54000 28800
36000 43200 54000 28800
52200 64800 42300
March April May June July

43500 52200 64800 42300 -
21750 26100 32400 21150
- 21750 26100 32400 -
47850 58500 53550
900 900 900 900 900

April May June July
8000 1350 -5410
56000 67200 82800
56000 67200 82800
47850 58500 53550 -

n @ 12% sales 7200 8640 10800 5760
2500 2500 2500 2500
3600 4320 5400 2880
1500
62650 73960 72250 11140

1350 -5410 5140 -11140

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Cartmans Fine Furniture is involved in manufacturing

designer furniture as per the requirements of the customers

1. Prepare a job costing overview diagram.

2. Prepare a summary of Job Costs for the month of July.

3. Prepare an income statement for the month of july.

Details of WIP as on 1st July 2XXX

Details of material requested in July

At the beginig of July

412 2,000 440 500 750 3,690 3,690 10,000

ACTUAL MOH 7350

Manufacturing OH Application Rate

Adjusted to COGS = 7350- 6750, 1275

Schedule for COGM

Schedule for COGS

S = 7350- 6750, 1275 BUG MOH 108000 PER YEAR

WIP OPEN DM USED

BUDGETED OVERHEAD 3,600,000.00

Indirect material 375,000 27,000

Identify the Total Manufacturing Overheads (MOH).

Manufacturing OH Application Rate

Schedule for COGM

Schedule for COGS

Cost of overhead 1,250,000

DL transfer to MOH 22,000

MOH applied 94000

DL USED MOH APPL WIP CLOSE FG CLOSE COGS FOR JULY

B12-008 $2,500 13,500 300

1 July 2018 – During June

Labour was paid for work done on the following jobs:

Job card Jn26

Overheads are costed to jobs progressively based on direct labour hours.

d generally in the workshop during July amounted to $20.

Jn28 Jy10 Jy11 Jy12 Jy13 Jy14

collection at the end of July.

31 1,057 1,057 1,374

Manufacturing OH Application Rate

Schedule for COGM

Schedule for COGS

During last month, Jerry worked on three jobs

Unfinished Finished Sold

WIP 49% -126

Schedule for COGM

Schedule for COGS

INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000

Services provided: by the Cleaning Dept.

Allocation of Cleaning Department Cost 15556 4444 20000

Allocation of Laundry Department Cost 7059 2941 10000

Total Cost of the Front-line Departments 122614 47386 170000

Cleaning Dept Laundry Dept General Wards Children's Wards

INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000

Services provided: by the Cleaning Dept.

2000 14000 4000

Allocation of Cleaning Department Cost

$12,000 8471 3529

Allocation of Laundry Department Cost

Cleaning Dept Laundry Dept General Wards Children's Wards

INITIAL OVERHEAD COSTS ► $20,000 $10,000 $100,000 $40,000 $170,000

Services provided: by the Cleaning Dept.

$2,000 $14,000 $4,000

Allocation of Laundry Department Cost 2 27 108 45

Total Cost of the Front-line Departments $122,588 $47,411 $169,999

LET THE TOTAL COST OF CLEANING DEP C

The following data are available for the