COST ACCOUNTING

Parallel Quiz
October 17, 2018

Problem 1

1. Direct Cost, Indirect Cost, Prime Cost, and Conversion Cost

Binbin, Kaka, and Atung have a furniture manufacturing company named PT Asian Games. Costs for
its operation are below:

Assembly department labor payroll
Factory equipment depreciation expense
Jati woods
Utility expense for furniture factory
Marketing staff payroll
Wood paint
Table wheels
Warehouse rent expense
Weekly advertising expense
Finished goods delivered expense
Nails
Site Manager Payroll
Price
$ 83000
$ 120000
$ 372000
$ 78000
$ 41000
$ 55000
$ 47000
$ 64000
$ 28000
$ 26000
$ 10000
$ 5900

Instructions:
1. Classify the costs based on these categories:
a. Variable cost and Fixed cost
b. Inventoriable cost and Period cost
c. Direct cost and Indirect cost
2. Determine the costs based on the category from number 1!
3. How much is the prime cost of PT Asian Games?
4. How much is the conversion cost of PT Asian Games?

2. COGM, COGS, Income Statement

(USD)

Marketing Expenses 114,500

Page 1 of 6
 Direct Material ?

Direct Labor 326,800

Purchase of Raw Material 662,200

Research and Development 68,700

Prepaid Rent Expense 22,300

Gain on Sale Machine 14,500

Indirect Labor 76,800

Factory Utilities 77,500

Ending WIP Inventory 98,200

Machine Maintenance 23,200

Ending Raw Material inventory 44,300

Office Rent Expenses 45,600

Beginning Finished Goods Inventory 45,300

Factory Administration 45,900

Beginning Raw Material Inventory 31,200

Office Administrative Expenses 23,400

Ending Finished Goods Inventory 42,800

Indirect Material 124,600

Interest Expenses 38,000

Salaries Expenses 125,800

Beginning WIP Inventory 87,900

Accumulated Depreciation - Machine 212,800

Machine Depreciation 55,300

Office Utilities Expenses 12,300

Other Factory Overhead 13,200

Gross Profit Margin 30%

Income Tax Expense 25%

Sales ?

Based on information given, prepare:

Page 2 of 6
 a. COGM, COGS Statement for PT. XYZ for the year 20X8
b. Income statement for PT. XYZ for the year 20X8, and
c. Calculate cost/unit for the year 20X8

3. High-Low Method
Habibie opened a computer service counter in a new shopping mall. He had anticipated that the costs
for the computer service would be primarily fixed, but he found that the service costs increased with
the number of computers he fixed. Costs for this service over the past 12 months in 20X7 are as
follows:

20X7 Number of Computers Total Cost (Rp)

January 70 26,280,000

February 150 40,000,000

March 310 65,640,000

April 190 43,500,000

May 170 42,050,000

June 260 57,250,000

July 230 53,500,000

August 180 43,100,000

September 140 37,750,000

October 120 28,000,000

November 200 47,650,000

December 280 61,075,000

Required:
1. Calculate the cost formula for Habibie’s Computer Service using the high-low method.
2. Predict the cost of Habibie’s Computer Service for January 20X8 for 155 computers using the
formula you have got in question A.

Problem 2
Job Costing
Steer Co. has three outstanding jobs: Job A100, Job A101, and Job A102. Steer Co. uses normal
costing to determine the cost of its products. Manufacturing overhead was expected at $75,000 and

Page 3 of 6
would be allocated using machine hours. Machine hours was expected at 2,500 hours. Job A100 used
1,000 machine hours, Job A101 used 800 machine hours, and Job A102 used 600 hours.

Raw materials (consist of both direct and indirect materials) worth $200,000 were purchased on credit.
$63,000 were issued to Job A100, $59,000 to Job A101, and $52,000 to Job A102. $15,000 of indirect
materials were also issued.

Total payroll was $133,000 paid in cash. Direct labor cost in Job A100 was $34,000, direct labor cost
in Job A101 was $27,000, direct labor cost in Job A102 was $23,000. Salary for general and
administrative was $20,000 and salary for sales and marketing was $15,000. The rest of the payroll is
indirect material.

Last period, the company rented their buildings for three periods. For this period, rent for factory
building was $25,000 and for office building was $38,000.

Total depreciation is $38,000. $20,000 was the depreciation of office equipment and $18,000 was the
depreciation of factory equipment.

Utilities expense incurred in the office was $5000, and in the factory was $7,000. Advertisement cost
was $12,000.

At the end of the period, Job A100 was finished and sold for $180,000 on credit, Job A101 was not
finished yet and needed further processing, and Job A102 was finished and taken out of the factory.

Over/under-allocated overhead is booked to COGS.

Required:
a. Calculate the MOH rate.
b. Prepare journal entries related to actual cost incurred for the period.
c. Prepare journal entries related to the cost tracing and allocation to WIP.
d. Prepare journal entries related to completion of WIP into finished goods.
e. Prepare journal entries when sales occur.
f. Calculate over/under allocation of manufacturing overhead.
g. Prepare journal entries to allocate over/under-allocated manufacturing overhead to COGS.

Problem 3

Page 4 of 6
 Process Costing
Wantex Inc. has two departments: Printing and Binding. Each department has one direct-cost category
(direct materials) and one indirect-cost category (conversion costs). This problem focuses on the
Binding Department. Books that have undergone the printing process are immediately transferred to
the Binding Department. Direct material is added when the binding process is 80% complete.
Conversion costs are added evenly during binding operations. When those operations are done, the
books are immediately transferred to Finished Goods. Wantex Inc., uses the weighted-average
method of process costing. The following is a summary of the April 2018 operations of the binding
department.

Physical
Transferred- Direct Conversion
Units
In Costs Materials Costs
(books)
Beginning work in process 1,050 $ 32,550 $0 $13,650
Degree of completion, beginning work in process 100% 0% 50%
Transferred in during April 2018 2,400
Completed and transferred out during April 2,700
Ending work in process (April 30) 750
Degree of completion, ending work in process 100% 0% 70%
Total costs added during April $129,600 $23,490 $70,200

Required:
1. Summarize total Binding Department costs for April 2018, and assign these costs to units
completed (and transferred out) and to units in ending work in process.
2. Prepare journal entries for April affecting Work in Process in Binding Department.

Refer to the information above, suppose that Wantex Inc. uses the FIFO method instead of the
weighted-average method in all of its departments. The only changes under the FIFO method are that
total transferred-in costs of beginning work in process on April 1 are $36,750 (instead of $32,550)
and that total transferred-in costs added during April are $124,800 (instead of $129,600).

3. Explain any difference between cost of ending work-in-process in the Binding Department under
the weighted-average method and the FIFO method.

Problem 4

Page 5 of 6
Spoilage
Dank Inc. is medical supply manufacturer specialized in producing first aid kits. Each product is
processed in three consecutive production departments, which are: Cutting Department, Assembly
Department, and Finishing Department. All good units from Cutting Department will be transferred to
Assembly Department. In Assembly Department, direct materials are added during stage 50% to 70%
evenly. The inspection point is at 30% stage of production. Normal spoilage rate is 5% of all good
units, which have passed the inspection. All good units will be transferred to Finishing Department.

The company uses the weighted average method of process costing. Below is production and cost data
recorded in Assembly Department during September 2018:

$
Item Quantity Prod. Stage
Transferred in Direct Material Conversion cost

WIP, beginning 40.000 40% 48.173.637 0 45.343.001

Transferred in 110.000 146.826.363 630.000.000 873,736,999

Transferred out 120.000

WIP, ending 20.000 75%

Spoilage 10.000
Required:
a) For each category, compute equivalent units in the Assembly Department
b) Summarize total Finishing Department costs for September and calculate cost per equivalent
units
c) Assign total costs to good units completed, spoilage, and ending inventory
d) Prepare the journal entry to record transfer to Finishing Department and spoilage

Page 6 of 6