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## Work-in Process Account

1. a)

Job Costing

 Raw Material Account Particular Amount Particular Amount Opening balance =+F8-D7 Work-in-progress =+D16 Purchase of Raw material =+F24 Closing Stock of Raw material 20000 Total =D6+D7 Total =F6+F7
 Work-in Process Account Particular Amount Particular Amount Op balance 6700 Cost of goods manufactured =+J7 Raw material =+F19-D15-D17-D18 Direct Labour =+J33*3700 Manufacturing OH =3700*D33 Closing balance =+J26 Total =SUM(D15:D18) Total =SUM(F15:F18)
 Finished Goods Particular Amount Particular Amount Op balance 8790 Cost of goods sold =+J17 Cost of goods manufactured =+L8-J6 closing balance 8900 Total =+J6+J7 Total =+L6+L7
 Accounts payable Particular Amount Particular Amount Bank account 6700 Op balance 2345 Closing balance 900 Raw Materila purchased =+D25-F23 Total =+D23+D24 Total =+F23+F24

Cost of Goods Sold:

 Cost of goods sold Particular Amount Particular Amount Finished Goods =+L17 Cost of sales =+(48000/160)*100 Total =+J17 Total =+L17+L18

b) The manual solution was initially created since it involved large number of computations ranging from Raw Materials Account, Work-In-Progress,Finished Goods, Accounts payableandCost of Goods Sold. All the heads were opened first and then data relevant to each heads were entered. Later on the manual solution was then entered into the excel spreadsheet.

c)

 Basis of comparison Job costing Process Costing Operational Costing Meaning Job costing can be defined as the computation of cost of a special contract or work where the work is executed according to the instruction of customers. Process costing refers to the method where cost, which are charged to numerous procedure and operations, are determined. Under operational costing products may be of homogeneous in nature but are different in terms of materials Assignment of cost Computing cost of each job Initially cost is ascertained for each process and then it is spread over units manufactured. Operational costing represents the differences in the components of parts that are used to produce a product. Suited industry Job costing is mainly suitable for industries produces products according to the order of customers Process costing is suitable for industries where production is carried out in large number or in mass It is mainly suited for industries that produces goods of homogeneous in nature with little difference Examples An example of job costing involves salaries for labours working in particular process An example of process costing includes cost of manufactured goods undertaken by different departments. For instance laptop computers have inbuilt screens however the size of screens are different from each other.

2. a)

 Calculation of Equivalent Units Particulars Direct Material Direct Labor Overhead physical units Units Completed 20000 20000 20000 20000 Closing WIP =+M8-D5 =+D6*0.4 =+D6*0.4 =+D6 Total =+D5+D6 =+E5+E6 =+F5+F6 =+G5+G6
 Calculation of Costs per equivalent unit Particulars Direct Material Direct Labor Overhead Total Cost in the Beginning 10000 =+(6000/160)*100 =+(6000/160)*60 =SUM(D12:F12) Costs incurred during the year 50000 30000 =+E13*0.6 =SUM(D13:F13) Total =+D12+D13 =+E12+E13 =+F12+F13 =+G12+G13 Cost per equivalent unit =+D14/D7 =+E14/E7 =+F14/F7 =+D15+E15+F15
 Statement showing assigning the cost to units transferred Particulars Direct Material Direct Labor Overhead Total Cost of units transferred =+D15*D5 =+E15*E5 =+F15*F5 =SUM(D21:F21) Closing WIP =+D15*D6 =+E15*E6 =+F15*F6 =SUM(D22:F22) Total =+D21+D22 =+E21+E22 =+F21+F22 =+G21+G22

b)

 Work in Process Account Particulars Units Amount Particulars Units Amount Opening  balance =+M6 =+G12 Transfer to next process =+G5 =+G21 Material Introduced =+M7 =+D13 Labour =+E13 overhead =+F13 Closing balance =+G6 =+G22 Total =SUM(D29:D32) =SUM(E29:E32) Total =SUM(G29:G32) =SUM(H29:H32)

3. a) Particulars                                           Amount

Process 1 Cost                                            \$1,24,000.00

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 out put from process 2       =                   9000

Selling Price Grade A output = \$28.00

Transfer to Process 3 (kg)       = 7000

Extra Cost fot 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

 Particulars Amount Process 1 Cost 124000 Process 1 Output Kg 17600 Sludge sold to road builders (kg) 1600 Net Output (kg) =+D5-D6 Transfer to Process 2 Output (kg) 9000 Extra cost in Process 2 72000 Grade A out put from process 2 =+D8 Selling Price Grade A output 28 Transfer to Process 3 (kg) =+D7-D8 Extra Cost fot Process 3 48000 Grade B output from Process 3 (kg) =+D12 Selling Price Grade B output 24 Sludge sells (per kg) 3.5 Packaging cost 1

Calculations using physical unit approach:

Calculation of Joint cost per kg

Particulars                    Amount

Process 1 Cost =          \$1,24,000.00

Sales of Sludge =        \$(5,600.00)

Net Process cost =      \$1,18,400.00

Net Output (kg) =       16000

Joint cost per kg =       \$7.40

 Calculation of Joint cost per kg Particulars Amount =+C4 =+D4 Sales of Sludge =-D6*D16 Net Process cost =+D23+D24 =+C7 =+D7 Joint cost per kg =+D25/D26

Statement showing profit for Grade A products

Particulars                                     Amount

Sales of Grade A products      = \$2,52,000.00

Extra cost in Process 2            =  \$(72,000.00)

Joint cost                                =  \$(66,600.00)

## Cost of Goods Sold

Packaging cost                       =  \$(9,000.00)

Gross Profit                            =  \$1,04,400.00

 Statement showing profit for Grade A products =+C22 =+D22 Sales of Grade A products =+D10*D11 Extra cost in Process 2 =+-D9 Joint cost =-D27*D8 =+C17 =-D17*D10 Gross Profit =+SUM(D33:D36)

Statement showing profit for Grade B products

Particulars                                   Amount

Sales of Grade B Products      =  \$1,68,000.00

Extra Cost fot Process 3         = \$(48,000.00)

Joint cost                               =  \$(51,800.00)

Packaging costs                     =  \$(7,000.00)

Gross Profit                           =  \$61,200.00

 Statement showing profit for Grade B products =+C32 =+D32 Sales of Grade B Products =+D14*D15 =+C13 =-D13 =+C35 =-D27*D14 Packaging costs =-D17*D14 Gross Profit =+SUM(D42:D45)

Calculation using Net Realisable value approach

Calculation showing allocation of Joint costs

Particulars                                         Amount

Net Process cost                     =  \$1,18,400.00

Sales of Grade A products      =  \$2,52,000.00

Sales of Grade B Products      =  \$1,68,000.00

Total Sales                               =  \$4,20,000.00

Joint cost / sales amount        =  \$0.28

 Calculation showing allocation of Joint costs Particulars Amount =+C25 =+D25 =+C33 =+D33 =+C42 =+D42 Total Sales =+J24+J25 Joint cost / sales amount =+J23/J26

Statement showing profit for Grade A products

Particulars                                    Amount

Sales of Grade A products      =  \$2,52,000.00

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 A products =+I22 =+J22 =+C33 =+D33 =+C34 =+D34 =+C35 =-J27*J33 =+C36 =+D36 Gross Profit =+SUM(J33:J36)

Statement showing profit for Grade B products

Particulars                                Amount

Sales of Grade B Products =   \$1,68,000.00

Extra Cost for Process 3    =     \$(48,000.00)

Joint cost                          =      \$(47,360.00)

Packaging costs                =      \$(7,000.00)

Gross Profit                      =       \$65,640.00

 Statement showing profit for Grade B products =+I32 =+J32 =+C42 =+D42 =+C43 =+D43 =+C44 =-J27*J42 =+C45 =+D45 Gross Profit =+SUM(J42:J45)

b) By product, costing methods are used by the business when it has the production process from which the final products are split off at the later phase of production. There can be numerous split off points at each split off points products can be clearly recognised and the product is physically split away from the production procedure in order to further refine the product (Salako, & Yusuf 2016). One of the method of dealing the product by product is that in the question if the organisation incurs any cost following the split off point the cost will be probably associated with the specific product and this will possibly help in question “A” to more readily assigned to them. Therefore, if an organisation incus more than one by product cost before the split off point it could have been allocated to the products under the guidelines of GAAP or IFRS standards.

## Physical Unit Approach

4. a)

 Calculation showing actual hours worked Particulars Amount Standard Direct Labor Rate 12 Actual Direct labor rate 14 Standard Direct labor hour 12000 Direct Labor Usage Variannce (A) 11000 Standard Cost (B) =+D8*D6 Standard cost of Actual Hours (A+B) =+D10+D9 Actual Hours Worked =+D11/D6
 Statement showing calcuation of Actual Purchase Price Particulars Amount Standard unit price of material 5 Actual Quantity purchased and used 2000 Standard Quantity allowed for actual production 1800 Material Purchase price variance (favourable) (A) 4000 Standard Costs of actual quanity (B) =+D18*D19 Actual Costs (B-A) =+D22-D21 Actual Purchasse price =+D23/D19

b) The material price variance is referred as the product of real amount of direct material used and the difference amid the standard price and real price of the product per unit of direct material. Material price variance is computed on the purchase price in order to establish the competence of purchase department in getting the direct material at lower cost.

Purchase price variance are considered to be mandatory in the environment of manufacturing where the raw materials are bought from the suppliers and are delivered to the business as and when necessary (Kaplan & Atkinson, 2015). There are numerous reasons of computing the purchase price variance, which are as follows;

Issue of Layering: The cost of the product is taken into the consideration from the scheme of layering of inventory in the form of first in first out. Due to this, the outcome of the real cost differs by a significant amount from the current market value.

Deficiency of materials: The deficiency of materials tends to increase the cost the products

Assumptions of amounts: The cost of product is generated based on the procurement quantity than the sum on which an organisations purchases.

Purchase price variance can help the management in measuring the efficiency of the organisation on product expenditure. If an organisation it involved in the business of commodity, selling it must take on the standards of purchasing materials. Once the purchase department have formulated the price of the purchased materials and have received consent for the budget from the administration, the purchase department can inform the price in the form of standard price of those materials during the commencement of the fiscal year (Salako, & Yusuf 2016). This will enable the purchase department to identify the purchase price variance when they commence the procedure of receiving inventory in the warehouse.

Purchase price variance plays a vital role in regulating the cost of materials and creates force for better resources of improved quality. The purchase department is able to measure the purchase price variance while making the purchase of raw materials. If there is any major amount of price variance, the purchase departments reclassifies the same into the inventory of the raw materials inventory of work in process, the cost of products and inventory of the finished products. Therefore, the process of reclassification of the purchase price variance is also referred as allocation of variance.

## Net Realisable Value Approach

5. a)

 Calcualtion of Budget Particulars 11383 11110 11202 Total Opening inventory 47890 =+E13 =+F13 =SUM(E11:G11) Purchase =+E14+E13-E11 =+F14+F13-F11 =+G14+G13-G11 =SUM(E12:G12) Closing Inventory =35000*120% =35000*120% =35000*120% =SUM(E13:G13) Cost of goods sold =0.6*E15 =0.6*F15 =0.6*G15 =SUM(E14:G14) Sales( Cash+Credit) 117500 121456 119456 =SUM(E15:G15) Gross Profit =+E15-E14 =+F15-F14 =+G15-G14 =SUM(E16:G16)

b) Usually, the government budget states the plan, which lays down the programs, goals and objectives that is required to be achieved during the given period. It consist of the monetary value of the projected revenues and expenses, which will be incurred at a future date. Budgeting as the non-technical process for government forms the lawful document once the legislations approves it. At federal level, the budget is influenced by the fiscal, social, administrative and economic policies having collective impacts on the economy.

There are different disciplines and perspective are involved in the government budgeting. The perspective of accountant centres around the responsibility and the variance between the proposed and the actual resources expanding on the programs and public policy (Kaplan & Atkinson, 2015). Notwithstanding the views the government budgeting considered as more political instead of being considered as the technical. The technical feature of the government budget consist of the preparation of budget in line together with the application of laws, rules and administration standards. These consists of the reformation, instrumentalism of the interested group of determinants, procedure and policymaking. Initially reformist holds the opinion that budgetary decisions must be made in accordance with efficiency, which is opposed to politics.

The actions along with the political decision of the government are greatly influenced by the political considerations. On instrumental basis, budgetary decisions should be made based on the bargaining and consensus amongst the shareholders. It is noteworthy to denote that branches of government have asserted for the control of budgetary power in order to influence the power for processing the desired outcomes and political gains (Salako, & Yusuf 2016). The role of budgeting is often debatedwith the objective of policy development and support. Debates relating to policy is generally debated among the competitive stakeholders with the viewpoint of sorting out differences at the time of budget. Budgeting as a non-technical procedure consist of negotiating and interacting among the political actors and stakeholders that is the politicians and bureaucrats.

During the planning stage of the budget cycle, the public, interest groups, officials and the institutional stakeholders influence the executives to set the priorities for budget programs. The legislature together with the help of executive branch of government bargain in order to reach the required direction and focus on the budget. Therefore, decisions involving on reaching the budget are executed with the help of strategies, contracts and programs through negotiations and consensus (Kaplan & Atkinson, 2015). Hence, the budgetary procedure and system is regarded as more political than technical. It is necessary for the public administrations and higher management of public institutions to have a good understanding relating to the dynamics of government budgeting. Thus, this would help in political environmental negotiations towards formulating and budget for the betterment of the community.

## Product by Product Costing

c)

The above stated picture represents the animated look at the budget where a cartoon character is glued on the data of monthly expenditure and analyses the way of cutting down the expenditure.

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250 words