Answer to Question 1: Job costing
Part A
|
Raw Material Account |
|||
|
Particular |
Amount |
Particular |
Amount |
|
Opening balance |
$ 16,755.00 |
Work-in-progress |
$ 2,010.00 |
|
Raw material |
$ 5,255.00 |
Closing Stock of Raw material |
$ 20,000.00 |
|
Total |
$ 22,010.00 |
Total |
$ 22,010.00 |
|
Work-in Process Account |
|||
|
Particular |
Amount |
Particular |
Amount |
|
Opening balance |
$ 6,700.00 |
Cost of goods manufactured |
$ 30,110.00 |
|
Raw material |
$ 2,010.00 |
||
|
Direct Labor |
$ 14,800.00 |
||
|
Manufacturing OH |
$ 14,800.00 |
Closing balance |
$ 8,200.00 |
|
Total |
$ 38,310.00 |
Total |
$ 38,310.00 |
|
Accounts payable |
|||
|
Particular |
Amount |
Particular |
Amount |
|
Bank account |
$ 6,700.00 |
Opening balance |
$ 2,345.00 |
|
Closing balance |
$ 900.00 |
Raw Materials purchased |
$ 5,255.00 |
|
Total |
$ 7,600.00 |
Total |
$ 7,600.00 |
|
Finished Goods |
||||||
|
Particular |
Amount |
Particular |
Amount |
|||
|
Op balance |
$ 8,790.00 |
Cost of goods sold |
$ 30,000.00 |
|||
|
Cost of goods manufactured |
$ 30,110.00 |
closing balance |
$ 8,900.00 |
|||
|
Total |
$ 38,900.00 |
Total |
$ 38,900.00 |
|||
|
Cost of goods sold |
||||||
|
Particular |
Amount |
Particular |
Amount |
|||
|
Finished Goods |
$ 30,000.00 |
Cost of sales |
$ 30,000.00 |
|||
|
Total |
$ 30,000.00 |
Total |
$ 30,000.00 |
|||
|
Calculation of Closing WIP |
|
|
Particulars |
Amount |
|
Material |
$ 7,000.00 |
|
labour |
$ 1,200.00 |
|
Closing WIP |
$ 8,200.00 |
|
calculation of Overhead absorption rate |
|
|
Particulars |
Amount |
|
Overhead (Budgeted) |
$ 12,000.00 |
|
Budgeted Labor hours |
3000 |
|
Overhead Absorption rate |
$ 4.00 |
|
calculation of Labor hour rate |
|
|
Particulars |
Amount |
|
Labor amount |
$ 1,200.00 |
|
Labor hours |
300 |
|
Labor hour Rate |
4.00 |
Part B
It can be inferred that the excel spreadsheet was created first, than the manual sheet. This is mainly because, with the excel spreadsheet, balances can be cross checked and closing balances can be matched automatically.
Part C
|
Job costing |
Process Costing |
Operating costing |
|
The job costing process involves total accumulation of costs of labor, material in terms of specific jobs. |
In this method, production is done based on different processes and costs are calculated based on different units of processes. |
Operating costing method can be considered as a mixture of both job costing and process costing |
|
It is applicable in software industry |
It is applicable in manufacturing industry |
It is applicable in customized programs. |
Table: Difference between three costing systems
(Source: Liu & Kuang, 2014).
|
Calculation of Equivalent Units |
|||||
|
Particulars |
Direct Material |
Direct Labor |
Overhead |
physical units |
|
|
Units Completed |
20000 |
20000 |
20000 |
20000 |
|
|
Closing WIP |
10000 |
4000 |
4000 |
10000 |
|
|
Total |
30000 |
24000 |
24000 |
30000 |
|
|
Calculation of Costs per equivalent unit |
|||||
|
Particulars |
Direct Material |
Direct Labor |
Overhead |
Total |
|
|
Cost in the Beginning |
$ 10,000.00 |
$ 3,750.00 |
$ 2,250.00 |
$ 16,000.00 |
|
|
Costs incurred during the year |
$ 50,000.00 |
$ 30,000.00 |
$ 18,000.00 |
$ 98,000.00 |
|
|
Total |
$ 60,000.00 |
$ 33,750.00 |
$ 20,250.00 |
$ 114,000.00 |
|
|
Cost per equivalent unit |
2.00 |
1.41 |
0.84 |
4.25 |
|
|
Statement showing assigning the cost to units transferred |
|||||
|
Particulars |
Direct Material |
Direct Labor |
Overhead |
Total |
|
|
Cost of units transferred |
$ 40,000.00 |
$ 28,125.00 |
$ 16,875.00 |
$ 85,000.00 |
|
|
Closing WIP |
$ 20,000.00 |
$ 5,625.00 |
$ 3,375.00 |
$ 29,000.00 |
|
|
Total |
$ 60,000.00 |
$ 33,750.00 |
$ 20,250.00 |
$ 114,000.00 |
|
|
Work in Progress Account |
|||||
|
Particulars |
Units |
Amount |
Particulars |
Units |
Amount |
|
Opening balance |
5000 |
$ 16,000.00 |
Transfer to next process |
20000 |
$ 85,000.00 |
|
Material Introduced |
25000 |
$ 50,000.00 |
|||
|
Labor |
$ 30,000.00 |
||||
|
overhead |
$ 18,000.00 |
Closing balance |
10000 |
$ 29,000.00 |
|
|
Total |
30000 |
$ 114,000.00 |
Total |
30000 |
$114,000.00 |
|
Units to be Accounted |
|
|
Particulars |
Amount |
|
Units at the beginning WIP |
5000 |
|
Units started during the month |
25000 |
|
Total Units |
30000 |
a) i)
|
Calculation of Joint cost per kg |
|
|
Particulars |
Amount |
|
Process 1 Cost |
$ 124,000.00 |
|
Sales of Sludge |
$ (5,600.00) |
|
Net Process cost |
$ 118,400.00 |
|
Net Output (kg) |
16000 |
|
Joint cost per kg |
$ 7.40 |
|
Statement showing profit for Grade A products |
|
|
Particulars |
Amount |
|
Sales of Grade A products |
$ 252,000.00 |
|
Extra cost in Process 2 |
$ (72,000.00) |
|
Joint cost |
$ (66,600.00) |
|
Packaging cost |
$ (9,000.00) |
|
Gross Profit |
$ 104,400.00 |
|
Statement showing profit for Grade B products |
|
|
Particulars |
Amount |
|
Sales of Grade B Products |
$ 168,000.00 |
|
Extra Cost for Process 3 |
$ (48,000.00) |
|
Joint cost |
$ (51,800.00) |
|
Packaging costs |
$ (7,000.00) |
|
Gross Profit |
$ 61,200.00 |
ii)
|
Calculation showing allocation of Joint costs |
|
|
Particulars |
Amount |
|
Net Process cost |
$ 118,400.00 |
|
Sales of Grade A products |
$ 252,000.00 |
|
Sales of Grade B Products |
$ 168,000.00 |
|
Total Sales |
$ 420,000.00 |
|
Joint cost / sales amount |
$ 0.28 |
|
Statement showing profit for Grade A products |
|
|
Particulars |
Amount |
|
Sales of Grade A products |
$ 252,000.00 |
|
Extra cost in Process 2 |
$ (72,000.00) |
|
Joint cost |
$ (71,040.00) |
|
Packaging cost |
$ (9,000.00) |
|
Gross Profit |
$ 99,960.00 |
|
Statement showing profit for Grade B products |
|
|
Particulars |
Amount |
|
Sales of Grade B Products |
$ 168,000.00 |
|
Extra Cost for Process 3 |
$ (48,000.00) |
|
Joint cost |
$ (47,360.00) |
|
Packaging costs |
$ (7,000.00) |
|
Gross Profit |
$ 65,640.00 |
Workings:
|
Particulars |
Amount |
|
Process 1 Cost |
$ 124,000.00 |
|
Process 1 Output Kg |
17600 |
|
Sludge sold to road builders (kg) |
1600 |
|
Net Output (kg) |
16000 |
|
Transfer to Process 2 Output (kg) |
9000 |
|
Extra cost in Process 2 |
$ 72,000.00 |
|
Grade A output from process 2 |
9000 |
|
Selling Price Grade A output |
$ 28.00 |
|
Transfer to Process 3 (kg) |
7000 |
|
Extra Cost for Process 3 |
$ 48,000.00 |
|
Grade B output from Process 3 (kg) |
7000 |
|
Selling Price Grade B output |
$ 24.00 |
|
Sludge sells (per kg) |
$ 3.50 |
|
Packaging cost |
$ 1.00 |
From the above table, it can be inferred that revenue of byproduct is being deducted from process 1. Therefore, cost of process 1 has decreased which in turn has increased the total profit of the firm. On the other hand, revenue has being treated as a separate income. From this, it can be inferred that revenue and expenditure has been adjusted.
Answer to 4A 1.|
Calculation showing actual hours worked |
|
|
Particulars |
Amount |
|
Standard Direct Labor Rate |
$ 12.00 |
|
Actual Direct labor rate |
$ 14.00 |
|
Standard Direct labor hour |
12000 |
|
Direct Labor Usage Variance (A) |
$ 11,000.00 |
|
Standard Cost (B) |
$ 144,000.00 |
|
Standard cost of Actual Hours (A+B) |
$ 155,000.00 |
|
Actual Hours Worked |
12917 |
2.
|
Statement showing calculation of Actual Purchase Price |
|
|
Particulars |
Amount |
|
Standard unit price of material |
$ 5.00 |
|
Actual Quantity purchased and used |
2000 |
|
Standard Quantity allowed for actual production |
1800 |
|
Material Purchase price variance (favorable) (A) |
$ 4,000.00 |
|
Standard Costs of actual quantity (B) |
$ 10,000.00 |
|
Actual Costs (B-A) |
$ 6,000.00 |
|
Actual Purchase price |
$ 3.00 |
Needles, Powers & Crosson, (2013) opine that there are several reasons for calculation of variances. Variances can be considered as very useful in case of planning of production for the different organizations. With the help of measurement of variances, costs can be appropriately controlled.
Material price variance is the difference between standard price and actual price of material. If actual price of the variance is more, then, it can be considered as unfavorable condition for the organization. Due to this reason, material price variance can be considered as useful for the organizations (Henri, Boiral & Roy, 2016).
Overhead variance analysis helps to calculate the total variance of indirect expenses over the budgeted one. It helps to control indirect expenses in an effective manner (Liu & Kuang, 2014).
Conclusion
It can be concluded that variance analysis can be considered as extremely useful for the organizations. In addition to this, variance analysis helps to control costs and improve efficiency and productivity of the organization
5A.|
Calculation of Budget |
||||
|
Particulars |
Mar-31 |
Jun-30 |
Sep-30 |
Total |
|
Opening inventory |
47890 |
42000 |
42000 |
131890 |
|
Purchase |
64610 |
72873.6 |
71673.6 |
209157.2 |
|
Closing Inventory |
42000 |
42000 |
42000 |
126000 |
|
Cost of goods sold |
70500 |
72873.6 |
71673.6 |
215047.2 |
|
Sales( Cash + Credit) |
117500 |
121456 |
119456 |
358412 |
|
Gross Profit |
47000 |
48582.4 |
47782.4 |
143364.8 |
Budgeting can be considered as non-technical process. It helps to estimating total amount of expenses for a particular period of time in future. The process of budgeting can be considered as a blue print of the organization in order to make maximum efficiency for the organization. In addition to this, it can be inferred that the role of budgetary analysis is extremely pivotal for the success of the organization. In addition to this, budgetary method helps to integrate different management activities through different types of technical aspects. On the other hand, it can be also inferred that, budgetary process can also be considered as a political process. This is mainly because, Governments also get involved into budgetary analysis by abiding by different revenue and fiscal policies for the different economies. However, it can be also inferred that most of the modern organizations considers the process of budgeting to accomplish their short term and long term goals and objectives. For this reason, the role of budgeting plays a pivotal role for most of the organizations (Drury, 2013).
The above cartoon image shows the process of budget in a humorous manner. The management of the organization is about to plan for the budget throughout the night in order to plan effectively. This has been shown in this manner.
References
Drury, C. M. (2013). Management and cost accounting. Springer.
Henri, J. F., Boiral, O., & Roy, M. J. (2016). Strategic cost management and performance: The case of environmental costs. The British Accounting Review, 48(2), 269-282
Liu, Y., & Kuang, Y. (2014). The Establishment of Management Accounting System in Administrative Institutions. Journal of Accounting and Economics, 2, 003.
Melnyk, S.A., Bititci, U., Platts, K., Tobias, J. & Andersen, B., (2014). Is performance measurement and management fit for the future?. Management Accounting Research, 25(2), pp.173-186
Needles, B. E., Powers, M., & Crosson, S. V. (2013). Financial and managerial accounting. Nelson Education.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2022). Cost Accounting: Job Costing, Equivalent Units, And Joint Cost Allocation. Retrieved from https://myassignmenthelp.com/free-samples/accting2500-cost-and-management-accounting/closing-stock-of-raw-material-file-E8956D.html.
"Cost Accounting: Job Costing, Equivalent Units, And Joint Cost Allocation." My Assignment Help, 2022, https://myassignmenthelp.com/free-samples/accting2500-cost-and-management-accounting/closing-stock-of-raw-material-file-E8956D.html.
My Assignment Help (2022) Cost Accounting: Job Costing, Equivalent Units, And Joint Cost Allocation [Online]. Available from: https://myassignmenthelp.com/free-samples/accting2500-cost-and-management-accounting/closing-stock-of-raw-material-file-E8956D.html
[Accessed 19 April 2024].
My Assignment Help. 'Cost Accounting: Job Costing, Equivalent Units, And Joint Cost Allocation' (My Assignment Help, 2022) <https://myassignmenthelp.com/free-samples/accting2500-cost-and-management-accounting/closing-stock-of-raw-material-file-E8956D.html> accessed 19 April 2024.
My Assignment Help. Cost Accounting: Job Costing, Equivalent Units, And Joint Cost Allocation [Internet]. My Assignment Help. 2022 [cited 19 April 2024]. Available from: https://myassignmenthelp.com/free-samples/accting2500-cost-and-management-accounting/closing-stock-of-raw-material-file-E8956D.html.
WhatsApp
