Reference no: EM131048446
Task
The purpose of this assignment is to continue to develop skills in costing systems. The assignment emphasises the role of control in managing the production of goods and services efficiently in the workplace. Each question builds on the knowledge gained through the first assignment to develop the concepts of management accounting control through costing. Each question uses realistic data and the professional practices similar to that found in these workplaces.
QUESTION 1 Job costing
Create a spreadsheet solution to the following problem. Follow the template provided.
Play the Job cost podcasts and work through the example problem in those podcasts.
| DATA INPUT |
|
| Ledger balances |
$
|
| Materials Control 31/18/X4 |
9,700
|
| Work-in-Process 1/8/X4 |
2,800
|
| Finished Goods 1/8/x4 |
4,300
|
| Accounts Payable 1/8/X4 |
900
|
Overhead is allocated by using a predetermined rate that is set at the beginning of each year by forecasting the years overhead and using forecast direct labour hours as a cost driver NI factory workers receive the same rate of pay
An Interview with the factory foreman revealed the following additional information-
| 1 Accounts Payable are for direct materials only The balance on 31 August was |
$500 |
| 2 Payments for Accounts Payable made during August were |
$3,700 |
| 3 A stocktake alter 0. Besets autopsy revealed only one unfinished job In the factory |
|
| 4 Source documents showed that the one unfinished job had direct labour |
$800 |
| 5 The direct tabour hours In the unfinished job was |
300 hours |
| 6 The direct material in the unfinished job was |
$6,000 |
| 7 The finished goods Inventory as at 31 August was |
517,000 |
| 8 The budget for 20X4 called for total direct labour hours of |
3,000 hours |
| 9 Budgeted factory overhead is |
$9,000 |
| 10 Jobs sold during August realised |
$12.00 |
| 11 Direct labour hours worked during August totalled |
3,700 hours |
| 12 Finished jobs are priced at a percentage mark-up on manufacturing cost. |
50% |
Required:
Given this incomplete information, complete the template below and calculate the beginning balance of the Direct Materials Control account
Some comments
Derive the solution by using the data to complete the jigsaw puzzle
Plug in all balances first
The ending balance of WIP is direct material + direct labour (both gmen) + direct labour hours X Me overhead rate The overhead rate is the budgeted overhead amount donded by the budgeted hours
The cost Of goods sold is the total sales revenue dmded by the mark-up
WIP transferred to FG Is a missing figure
DM in WIP is a missing figure
And the beginning balante Of DM IS a missing figure!
QUESTION 2 Process costing
Prepare a spreadsheet to solve the following process costing problem.
Review the four process costing videos provided in Interact Resources. Note that in the situation below there are two production departments.
QUESTION 3 Joint costing
Create a spreadsheet to solve the following joint cost problem.
Joint cost allocation: additional processing beyond split-off point
ABC Company produces three joint products: A, B and C. The material is added at the beginning of the process. At the end of Process 1, the split-off point, the three intermediate products enter three separate further processes. Product A enters Process 2, Product B enters Process 3 and Product C enters Process 4. None of the products can be sold unless the subsequent processing is carried out.
The following information relates to the month of June:
(i) Direct material issued to Process 1, $26 000.
(ii) Conversion costs incurred:
Labour Overhead
Process 1 $10 000 $14 000
Process 2 3 000 2 000
Process 3 1 000 1 000
Process 4 600 400
(iii) There was no work in process at the beginning or end of the month, and no finished goods inventories at the beginning of the month.
(iv) Details of production and sales:
|
|
Product
|
|
A
|
B
|
C
|
|
Tonnes produced
|
500
|
400
|
100
|
|
Tonnes ordered
|
600
|
600
|
200
|
|
Tonnes delivered
|
400
|
350
|
50
|
|
Selling price/tonne
|
$110
|
$80
|
$210
|
All delivery costs are met by customers.
Required:
(a) A statement showing the allocation of joint costs to products A, B and C using (i) a physical measures method, and (ii) the relative sales value method.
(b) Suppose that C's price falls to $7 per tonne. It costs $5 per tonne to dump material at the tip. Should Product C be dumped at the split-off point or processed further?
Question 4 Variance analysis
A. Solve using a spreadsheet. See the requirements embedded in the spreadsheet. Include the IF function to determine Favourable and Unfavourable variances.
B. Prepare a Business Report as if for senior management:
1. Critically evaluate the purpose of variance analysis,
2. Explain why the materials price variance should be calculated on purchase,
3. Identify other areas in an organisation where variance analysis would be useful and
4. Evaluate the practical relevance of detailed overhead variance analysis.
For item 4. see the reading by Murray Wells.
Suggested word limit about 300- 400 words. Ensure that your answer is in business report format. Read the following online references regarding business report writing.
https://bit.ly/FoBAcademic-Writing-Skills
and
https://unilearning.uow.edu.au/report/4b.html
Sphero Inc. Variance Analysis - Materials and Labour
Standard direct-labour rate $15.40
Actual direct-labour rate $12.20
Standard direct-labour hours $ 13.000
Direct-labour usage variance - unfavourable $9.800
Standard unit price of materials $5.00
Actual quantity purchased and used 1.800
Standard quantity allowed for actual production 1.650
Materials purchase price variance - favourable $298
Required
1. Compute the actual hours worked. rounded to the nearest hour.
2. Compute the actual purchase price per unit of materials. rounded
QUESTION 5 Cash budget
1. Spreadsheet the cash budget
2. How much is received from March sales?
3. How much was the sales in March? February?
4. What is meant by what if questions in the context of the budgetary process? What is the purpose of asking this type of question? How are financial models used to answer them? For Scarpa, change the spreadsheet forecasts to show a negative cash balance for April. Comment.