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Cost Accounting Questions – Due in 2 hours

Cost Accounting Questions – Due in 2 hours

Daniel Kevins

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1. Juicy Manufacturing Corporation incurred the following costs.

Beginning direct materials inventory

$19,200

Beginning work-in-process inventory

$8,400

Beginning finished goods inventory

$22,800

Ending direct materials inventory

$19,200

Ending work in process

$16,800

Ending finished goods

$31,200

Factory supervisor’s salary

$33,600

Depreciation on plant

$14,400

Sales

$960,000

Selling and administrative expenses

$150,000

Plant maintenance

$7,200

Plant utilities

$13,200

Direct material purchases

$258,000

Direct labor

$288,000

Required: Calculate the following.

a. Direct materials used

b. Cost of goods manufactured

c. Cost of goods sold

d. Operating income

2. Jack and Jill Manufacturing Inc. began the year with the following.

	Units
Beginning work-in-process	30,000	30% complete
Transferred to finished goods	50,000
Ending inventory	5,000	60% complete

Materials added at the beginning of the process.

Required: Calculate the equivalent units for the following.

a. Materials costs under the weighted average process cost method

b. Conversion costs under the weighted average process cost method

c. Materials costs under the FIFO process cost method

d. Conversion costs under the FIFO process cost method

3. Overhead costs have been divided into three cost pools that use the following activity drivers.

Product	# of Setups	Machine Hours	Packing Orders
X	36	1,950	82.5
Z	36	5,850	247.5
Cost per Pool	$72,000	$165,000	$45,000

a. What is the allocation rate for Product Z per setup using activity-based costing?

b. What is the allocation rate for Product Z per machine hours using activity-based costing?

c. What is the allocation rate for Product Z per packing order using activity-based costing?

4. Sales volume averages 10,000 units per year.

Recently, its main competitor reduced the price of its product to $68.

Maximum expects sales to drop dramatically unless it matches the competitor’s price.

In addition, the current profit per unit must be maintained.
Information about the product (for production of 10,000) is as follows.

	Standard Quantity	Actual Quantity	Actual Cost
Materials (pounds)	2,400	2,500	$50,000
Labor (hours)	600	750	$22,500
Setups (hours)	0	150	$4,500
Material handling (moves)	0	500	$4,000
Warranties (number repaired)	0	300	$21,000

Required:

a. Calculate the target cost for maintaining current market share and profitability.

b. Calculate the non-value-added cost per unit.

c. If non-value-added costs can be reduced to zero, can the target cost be achieved?

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Daniel Kevins

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