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Batch 6

Batch 6. Assessment. The following costs have been accrued for ABC Company for the month. Direct labor $210000 Indirect labor 85000 Supervision 32000 Sales commission 40000 Sale Salaries 18000. Classify the following 1. period costs 2. product costs 3. fixed costs

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Batch 6

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  1. Batch 6 Assessment

  2. The following costs have been accrued for ABC Company for the month. • Direct labor $210000 • Indirect labor 85000 • Supervision 32000 • Sales commission 40000 • Sale Salaries 18000

  3. Classify the following • 1. period costs • 2. product costs • 3. fixed costs • 4. variable costs

  4. Solution • 1. Period costs= marketing costs+ admin costs. • Ie • Sales commission + Sales salaries • = 40000+18000= 58000

  5. Product cost = D.labor+ In. Labor+ Supervision • = 210000+ 85000+ 32000= 327000 • 3. Fixed costs= Sales salaries+ Supervision • = 32000+ 18000= 50000

  6. Variable cost= DLabor+ indirect labor+ sales commission • = 210000+ 85000+40000= 335000

  7. Question 2 • The following information is from the books of a company at the end of the period. • Direct labor 140000 • Sales commission 30000 • Property tax on factory building 50000 • Var. manf. Overhead 70000 • Advertising expense 100000

  8. Factory depreciation 60000 • Direct materials used 130000 • Required • 1. Fixed manfacturing overhead • 2. prime cost • 3. Manufacturing cost for the period • 4. Conversion cost

  9. 5. Variable manufacturing cost • 6. Total variable cost • 7. Direct product cost • 8. Total period cost.

  10. Solution • 1. Fixed manf. Cost = property tax+ depreciation • = 50000+60000= 110000 • 2. Prime cost= DM+ DL • 130000+140000= 270000 • 3. M. cost= DL+DM+ PT+VOH+Dep • = 140000+130000+50000+70000+60000=450000

  11. 4. Conversion cost= OH+ DL = PT+VOH+Dep+DL 50000+70000+60000+140000=320000 5. VM cost= DM+DL+VOH 130000+140000+ 70000= 340000 6. Total V.C= DM+DL+VOH+Sales commission = 130000+140000+ 70000+30000= 370000

  12. Direct product cost= DM+ DL • = 130000+140000= 270000 • Total period cost= Sales com+ Advertising • = 30000+100000= 130000

  13. Question 3 • The following are from the books of a company at the end of April ( all figures are in thousands). • 1 April 30. April • Cash 56 42 • Accounts reci. 200 220 • WIP 120 116 • Materials 41 47

  14. The following are from the books of a company month of April ( all figures are in thousands). • 1 April 30. April • Cash 66 40 • Accounts reci. 180 220 • WIP 100 116 • Materials 41 47

  15. F.Goods 135 100 • Acc. Payable 15 18 • Raw.Mat.Purcahse - 80 • Direct Lab.Payable 30 35 • D.labor - 140 • In.production cost - 93 • Selling Expense - 85 • Admin Expense - 90 • Sales - 510

  16. Required • 1. Prepare the CGS statement • 2. Prepare the income • 3. How much is paid to suppliers? • 4.How much is paid to direct labor? • 5. How much is collected form customers?

  17. 1. CGS • Direct Material 1.4 41 • +Purchases 56 • Direct material available 97 • -Direct material 30.4 47 • D. Material used 50 • +D. Labor 140 • D.cost of Man 190 • +OH 93 • Man.cost for the period 283

  18. +WIP 1.4 120 • -WIP 30.4 116 • Cost of completed goods 287 • +FGI 1.4 105 • Cost of goods available for sale 392 • -FGI30.4 110 • CGS 282

  19. 2. Sales 510 • -CGS 282 • Gross margin 228 • -Selling exp. 85 • -Admin 90 • Profit 53

  20. 3.Material purchase= 56 • Acc. payable balance increase = 18-15= 3 • Therefore the amount paid is • 56-3= 53 • 4. DL cost = 140 • DL payable increase = 35-30= 5 • DL paid= 140-5= 135

  21. Collections • Sales = 510 • Increase in receivables= 220-200= 20 • Collections= 510-20= 490

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