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Question:1
             The accounting information system for Textbook Inc. reported the following cost
             And inventory data for the year.

             Costs Incurred:
             Raw Material Purchased                                         110,000
             Direct Labour                                                   40,000
             Indirect Labour                                                 18,000
             Equipment Maintenance (Factory)                                  9,000
             Insurance (Factory)                                             15,000
             Rent (90% Factory / 10% Selling & Admin)                        30,000
             Amortization (Factory Equipment)                                18,000
             Factory Supplies                                                 5,000
             Advertising Expense                                             18,000
             Selling and Admin Expenses                                      20,000
             Revenue (net):                                                           475,000

                                                                        Beginning     Ending

             Inventories:                                               Balance    Balance
             Raw Materials                                                  10,000 13,000
             Work in Process                                                15,000 17,000
             Finished Goods                                                 35,000 30,000

             a) Prepare Schedule of Cost of Goods Manufactured
             b) Prepare Income Statement (including Cost of Goods
             Sold)

Answer 1

             (a)
             Workings:
                                                                        Amount
             Computation of raw materials consumed                      in $

             Opening                                                         10,000
             Add: Raw material purchases                                    110,000
             Less: Closing                                                  -13,000
             Raw materials consumed                                         107,000


             Rent                                                       30,000
Factory rent (90%)                           27,000

Selling and admin expenses                   3,000

                             Textbook Inc.
                              Cost Sheet
                                             Amount
                                             in $
Direct raw materials consumed                   107,000
Direct labor                                      40,000
Prime Costs                                     147,000

Factory Overhead
Indirect Labour                                  18,000
Equipment Maintenance                             9,000
Insurance                                        15,000

Factory rent                                 27,000
Amortization (Factory Equipment)                 18,000
Factory Supplies                                  5,000

Add: Opening work in process                     15,000
Less: Closing work in process                   -17,000

Cost of goods manufactured                      237,000
Add: Opening finished goods                      35,000
Less: Closing finished goods                    -30,000

Cost of goods sold                              242,000
Selling and administration overhead

Rent                                         3,000
Advertising Expense                              18,000
Selling and Admin Expenses                       20,000

Cost of sales                                283,000

(b)
                          Income Statement
                             Cost Sheet
                                             Amount
                                             in $

Revenue                                         475,000
Less: cost of goods sold       242,000
         Gross profit                   233,000
         Less:

         Rent                         3,000
         Advertising Expense              18,000
         Selling and Admin Expenses       20,000

         Net Profit                   192,000




Questions: 2
Answer2:
Computation of variable cost per unit and fixed cost using high-low method:

                                                                            Units   Overhead

High Activity is in the month of february                                   1,800   16,200

Low Activity is in the month of february                                    900     11,520

Variable Cost per Unit = (y2 - y1)/(x2 - x1)

Where,
 y2 is the total cost at highest level of activity = 16,200
 y1 is the total cost at lowest level of activity = 11,520
 x2 are the number of units/labor hours etc. at highest level of activity
= 1,800
  x1 are the number of units/labor hours etc. at lowest level of activity =
900

Variable cost per unit = (16,200-11,520)/(1,800-900)
                     =4,680/900 =5.2
Variable cost per unit = $5.2 per unit

Fixed cost = Total overhead - ( units * variable cost per unit)
Fixed cost = 16,200 - 1,800*5.2
          = 16,200 - 9,360 =11520
                                                                      6840
Fixed cost = $6,840

Cost equation:

The cost equation for overhead is Y = $6,840 + $5.2X where

Y = estimated factory overhead and
X = units produced
Fixed cost = $6,840

Total estimated costs for production of 1500 units = $6,840+5.2*1500
                                     =$6,840 + $7,800 = $14,640

Total estimated costs for production of 1500 units = $14,640.

Part B

Cost equation = 6313.2658 + 28.5056(Production).

 Using this cost equation estimate total overhead costs for production of 1,500
units.

Cost = 6313.2658 + 28.5056 * 1500 = 49071.67



The cost equation is based on the regression line. The first part
represents the fixed costs and the second part the variable costs. More
the production, more the variable costs and more the total costs
Cost accounting sample assignment help

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Cost accounting sample assignment help

  • 1. Question:1 The accounting information system for Textbook Inc. reported the following cost And inventory data for the year. Costs Incurred: Raw Material Purchased 110,000 Direct Labour 40,000 Indirect Labour 18,000 Equipment Maintenance (Factory) 9,000 Insurance (Factory) 15,000 Rent (90% Factory / 10% Selling & Admin) 30,000 Amortization (Factory Equipment) 18,000 Factory Supplies 5,000 Advertising Expense 18,000 Selling and Admin Expenses 20,000 Revenue (net): 475,000 Beginning Ending Inventories: Balance Balance Raw Materials 10,000 13,000 Work in Process 15,000 17,000 Finished Goods 35,000 30,000 a) Prepare Schedule of Cost of Goods Manufactured b) Prepare Income Statement (including Cost of Goods Sold) Answer 1 (a) Workings: Amount Computation of raw materials consumed in $ Opening 10,000 Add: Raw material purchases 110,000 Less: Closing -13,000 Raw materials consumed 107,000 Rent 30,000
  • 2. Factory rent (90%) 27,000 Selling and admin expenses 3,000 Textbook Inc. Cost Sheet Amount in $ Direct raw materials consumed 107,000 Direct labor 40,000 Prime Costs 147,000 Factory Overhead Indirect Labour 18,000 Equipment Maintenance 9,000 Insurance 15,000 Factory rent 27,000 Amortization (Factory Equipment) 18,000 Factory Supplies 5,000 Add: Opening work in process 15,000 Less: Closing work in process -17,000 Cost of goods manufactured 237,000 Add: Opening finished goods 35,000 Less: Closing finished goods -30,000 Cost of goods sold 242,000 Selling and administration overhead Rent 3,000 Advertising Expense 18,000 Selling and Admin Expenses 20,000 Cost of sales 283,000 (b) Income Statement Cost Sheet Amount in $ Revenue 475,000
  • 3. Less: cost of goods sold 242,000 Gross profit 233,000 Less: Rent 3,000 Advertising Expense 18,000 Selling and Admin Expenses 20,000 Net Profit 192,000 Questions: 2
  • 4. Answer2: Computation of variable cost per unit and fixed cost using high-low method: Units Overhead High Activity is in the month of february 1,800 16,200 Low Activity is in the month of february 900 11,520 Variable Cost per Unit = (y2 - y1)/(x2 - x1) Where, y2 is the total cost at highest level of activity = 16,200 y1 is the total cost at lowest level of activity = 11,520 x2 are the number of units/labor hours etc. at highest level of activity
  • 5. = 1,800 x1 are the number of units/labor hours etc. at lowest level of activity = 900 Variable cost per unit = (16,200-11,520)/(1,800-900) =4,680/900 =5.2 Variable cost per unit = $5.2 per unit Fixed cost = Total overhead - ( units * variable cost per unit) Fixed cost = 16,200 - 1,800*5.2 = 16,200 - 9,360 =11520 6840 Fixed cost = $6,840 Cost equation: The cost equation for overhead is Y = $6,840 + $5.2X where Y = estimated factory overhead and X = units produced Fixed cost = $6,840 Total estimated costs for production of 1500 units = $6,840+5.2*1500 =$6,840 + $7,800 = $14,640 Total estimated costs for production of 1500 units = $14,640. Part B Cost equation = 6313.2658 + 28.5056(Production). Using this cost equation estimate total overhead costs for production of 1,500 units. Cost = 6313.2658 + 28.5056 * 1500 = 49071.67 The cost equation is based on the regression line. The first part represents the fixed costs and the second part the variable costs. More the production, more the variable costs and more the total costs