Questions and Answers of Cost And Management Accounting An Introduction

Calculation earnings A company currently remunerates its factory workers on a time basis and is now considering the introduction of alternative methods of remuneration.The following information
Calculation of earnings and a discussion of time-based and individual performancebased remuneration systems(a) Describe the characteristics of factory direct and indirect labour cost and explain the
Calculation of labour turnover and efficiency ratio X Ltd has an average of 42 workers employed in one of its factories in a period during which 7 workers left and were replaced. The company pays a
Computation of earnings and analysis by direct and indirect categories(a) Explain how the following cost items, relating to direct personnel, would be processed in a manufacturing business’s cost
Effect of incentive scheme on company costs(a) Shown below is a summary of the previous week’s payroll data for the moulding department in Peal Public Limited Company, a company manufacturing two
A domestic appliance retailer with multiple outlets stocks a popular toaster known as the Autocrisp 2000, for which the following information is available:LO1 Average sales Maximum sales 75 per day
Calculation of EOQ and frequency at ordering A company is planning to purchase 90 800 units of a particular item in the year ahead. The item is purchased in boxes, each containing 10 units of the
(a) Write short notes to explain each of the following in the context of materials control:(i) Continuous stocktaking.(ii) Perpetual inventory system.(iii) ABC inventory analysis.(b) State the
Calculation of EOQ XYZ Ltd produces a product which has a constant monthly demand of 4000 units. The product requires a component which XYZ Ltd purchases from a supplier at £10 per unit. The
Calculation of EOQ Most textbooks consider that the optimal re-order quantity for materials occurs when ‘the cost of storage is equated with the cost of ordering’. If one assumes that this
Calculation of EOQ and average stocks A company uses Material Z (cost £3.50 per kg) in the manufacture of Products A and B. The following forecast information is provided for the year
Calculation of EOQ Sandy Lands Ltd carries an item of inventory in respect of which the following data apply:You are required to:(i) calculate the minimum annual cost of ordering and stocking the
Calculation of re-order and maximum stock levels A retail company has been reviewing the adequacy of its stock control systems and has identified three products for investigation. Relevant details
Calculation of minimum purchase cost when cost per unit is not constant A company is reviewing the purchasing policy for one of its raw materials as a result of a reduction in production requirement.
A firm makes special assemblies to customers’orders and uses job costing. The data for a period are:(i) What overhead should be added to job number CC20 for the period?A £24600 B £65457 CG
A company absorbs overheads on machine hours.In a period, actual machine hours were I/D)actual overheads were £496500 and there was under-absorption of £12 520.What was the budgeted level of
The following information is to be used for subquestions(i) and (ii) below:(i) Based on the data above, what is the labour hour absorption rate (to 2 decimal places) as conventionally calculated?AV
The following data are to be used for questions (i)and (ti) below:(i) Based on the data above, how many machine hours (to the nearest hour) were budgeted?A 11398 B 11500 C 11825 D 11950 (ii) Based on
(a) Specify and explain the factors to be considered in determining whether to utilize a single factory-wide recovery rate for all production overheads or a separate rate for each cost centre,
Overhead analysis, calculation of overhead rate and overhead charged to a unit of output A company makes a range of products with total budgeted manufacturing overheads of £973560 incurred in three
Overhead analysis sheet and calculation of overhead absorption rates PTS Limited is a manufacturing company which uses three production departments to make its product. It has the following factory
Overhead analyis and calculation of product costs A furniture-making business manufactures quality furniture to customers’ orders. It has three production departments and two service
Overhead analysis sheet and calculation of overhead rates Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of
Computation of three different overhead absorption rates and a cost-plus selling price A manufacturing company has prepared the following budgeted information for the forthcoming year:It has recently
Various overhead absorption rates and under-/over-recovery The following data relate to a manufacturing department for a period:Job ZX was one of the jobs worked on during the period. Direct material
Calculation of overhead absorption rates and under-/over-recovery of overheads BEC Limited operates an absorption costing system. Its budget for the year ended 31 December shows that it expects its
Calculation of overhead absorption rates and under-/over-recovery of overheads A manufacturing company has two production cost centres (Departments A and B) and one service cost centre (Department C)
Various overhead absorption rates AC Limited is a small company which undertakes a variety of jobs for its customers.An enquiry has been received, and the production department has produced estimates
Calculation of fixed and variable overhead rates, normal activity level and under-/over-recovery of overheads(a) C Ltd is a manufacturing company. In one of the production departments in its main
Calculation of overhead absorption rates and product costs Bookdon Public Limited Company manufactures three products in two production departments, a machine shop and a fitting section; it also has
Reapportionment of service department overheads and a calculation of under-/overrecovery of overheads An organization has budgeted for the following production overheads for its production and
Reapportionment of service department costs JR Co. Ltd’s budgeted overheads for the forthcoming period applicable to its production departments, are as follows:Required:Apportion the service
A company operates an integrated cost and financial accounting system.The accounting entries for the return of unused direct materials from production would be: A DR Work-in-progress account; CR
In an interlocking accounting system, the profit shown in the financial accounts was £79252 but the cost accounts showed £74 294 profit.The following stock valuations were the only differences
Integrated accounts and computation of the net profit Set out below are incomplete cost accounts for a period for a manufacturing business:1. Raw materials:Issues of materials from stores for the
Preparation of interlocking accounts from incomplete information(a) Describe briefly three between:(i) financial accounting, and(ii) cost and management accounting.(6 marks)(b) Below are incomplete
Preparation of cost accounts from reconci- liation statement (a) The cost accountant and the financial accoun- tant of C Limited had each completed their final accounts for the year. Shown below are
Integrated accounts and stores pricing On 30 October 2002 the following were among the balances in the cost ledger of a company manufacturing a single product (Product X) in a single process
Stores pricing and preparation of relevant ledger accounts V Ltd operates interlocking financial and cost accounts. The following balances were in the cost ledger at the beginning of a month, the
Integrated accounts, profits computation and reconciliation relating to absorption and marginal costing A company manufactures two products (A and B).In the period just ended production and sales of
Labour cost accounting(a) Describe briefly the purpose of the ‘wages control account’. (3 marks)(b) A manufacturing company has approximately 600 weekly paid direct and indirect production
Labour cost accounting and recording of journal entries(a) Identify the costs to a business arising from labour turnover. (5 marks)(b) A company operates a factory which employed 40 direct workers
Computation of contract profit A company has been carrying out work on a number of building contracts (including Contract ABC) over the six-month period ended 31 May 2002. The following information
Contract costing(a) PZ ple undertakes work to repair, maintain and construct roads. When a_ customer requests the company to do work PZ ple supplies a fixed price to the customer and _allocates a
In process costing, where losses have a positive scrap value, when an abnormal gain arises, the abnormal gain account is A. debited with the normal production cost of the abnormal gain units.B.
Process B had no opening stock. 13500 units of raw material were transferred in at £4.50 per unit.Additional material at £1.25 per unit was added in process. Labour and overheads were £6.25 per
A chemical process has a normal wastage of 10%of input. In a period, 2500 kgs of material were input and there was an abnormal loss of 75 kgs.What quantity of good production was achieved?Ave 2i7S ks
Intermediate KL Processing operates the FIFO method of accounting for opening work in process in its mixing process. The following data relates to April:Losses in processes are expected to be 10% of
The following details relate to the main process of Z Limited, a paint manufacturer:All losses occur at the end of the process.The numbers of equivalent units to be included in Z Limited’s
Preparation of process accounts with all output fully completed A product is manufactured by passing through three processes: A, B and C. In process C a byproduct is also produced which is then
Preparation of process accounts with all output fully completed A chemical compound is made by raw material being processed through two processes. The output of Process A is passed to Process B where
Equivalent production and no losses A firm operates a process, the details of which for the period were as follows. There was no opening work-in-progress. During the period 8250 units were received
Losses in process (weighted average)A company operates expensive process plant to produce a single product from one process. At the beginning of October, 3400 completed units were still in the
Losses in process (weighted average)A company manufactures a product that goes through two processes. You are given the following cost information about the processes for the month of November.You
Losses in process (weighted average)(a) A company uses a process costing system in which the following terms arise:conversion costs work-in-process equivalent units normal loss abnormal
Losses in process and weighted averages method ABC ple operates an integrated cost accounting system and has a financial year which ends on 30 September. It operates in a processing industry in which
Losses in process (weighted average method) and decision-making based on relevant costs ABC ple manufactures processed foods in two successive processes.During April 2000, ABC ple produced a total
Losses in process (weighted average)Chemical Processors manufacture Wonderchem using two processes, mixing and distillation. The following details relate to the distillation process for a
Process accounts involving an abnormal gain and equivalent production The following information relates to a manufacturing process for a period:10000 units of output were produced by the process in
Preparation of process accounts with output fully completed and a discussion of FIFO and average methods of WIP valuation(a) Z Ltd manufactures metal cans for use in the food processing industry. The
FIFO method and losses in process The manufacture of one of the products of A Ltd requires three separate processes. In the last of the three processes, costs, production and stock for the month just
(a) Explain briefly the term ‘joint products’ in the context of process costing.(b) Discuss whether, and if so how, joint process costs should be shared amongst joint products.(Assume that no
Process costing FIFO method (no losses in process) and apportionment as joint cost(a) The following information relates to the final process in a factory for the month just ended:There is no loss of
Preparation of joint product account and a decision on further processing PQR Limited produces two joint products—P and Q — together with a by-product R, from a single main process (process 1).
Joint cost apportionment and decision on further processing(a) Polimur Ltd operates a process that produces three joint products, all in an unrefined condition.The operating results of the process
Joint cost apportionment and decisien on further processing BK Chemicals produces three joint products in one common process but each product is capable of being further processed separately after
Joint cost apportionment, decision on further processing and allocation of scarce capacity Three products are produced from a single process.During one period in which the process costs are expected
Joint cost apportionment and decision on further processing A company manufactures four products from an input of a raw material to process |. Following this process, product A is processed in
Profitability analysis and a decision on further processing C Ltd operates a process which produces three joint products. In the period just ended costs of production totalled £509640. Output from
When comparing the profits reported under marginal and absorption costing during a period when the level of stocks increased, A absorption costing profits will be higher and closing stock valuations
Preparation of variable and absorption costing statements Solo Limited makes and sells a single product. The following data relate to periods 1 to 4.There were no opening stocks at the start of
Preparation of variable and absorption costing profit statements and an explanation of the change in profits A company sells a single product at a price of £14 per unit. Variable manufacturing costs
Preparation of variable and absorption costing profit statements and CVP analysis R Limited is considering its plans for the year ending 31 December 2001. It makes and sells a single product, which
Preparation of variable and absorption costing profit statements and comments in support of a variable costing system A manufacturer of glass bottles has been affected by competition from plastic
Under/over-recovery of fixed overheads and preparation and reconciliation of absorption and variable costing profit statements(a) Discuss the arguments put forward for the use of absorption and
Equivalent production and preparation of variable and absorption costing profit statements A new subsidiary of a group of companies was established for the manufacture and sale of Product X. During
Preparation of variable and absorption costing profit statements for FIFO and AVECO methods The following information relates to product J, for quarter 3, which has just ended:The selling price of
Calculation of overhead absorption rates and an explanation of the differences in profits A company manufactures a single product with the following variable costs per unitThe selling price of the
Z plc currently sells products Aye, Bee and Cee in equal quantities and at the same selling price per unit. The contribution to sales ratio for product Aye is 40%; for product Bee it is 50% and the
A Limited has fixed costs of £60000 per annum. It manufactures a single product which it sells for£20 per unit. Its contribution to sales ratio is 40%.A Limited’s breakeven point in units is:A
The following data relate to the overhead expenditure of a contract cleaners at two activity levels: Square metres cleaned 12750 15 100 Overheads 73 950 83 585 What is the estimate of the overheads
A company which makes a single product has a contribution to sales ratio of 30%. Each unit is sold at £8. In a period when fixed costs were £30000 the net profit was £56 400.What was the total of
The following data have been extracted from the budget working papers of BL Limited: Production volume 1,000 units 2,000 units per unit per unit Direct materials 8.00 8.00 Direct labour 7.00 7.00
(a) Briefly describe the parts of the above breakeven chart marked (i) to (vi). (6 marks)(b) State and explain the assumptions of breakeven analysis. (8 marks)(c) Prepare a report addressed to the
Figure 9.8 shows a typical cost-volume-profit chart:Required:(a) Explain to a colleague who is not an accountant the reasons for the change in result on this cost-volume-profit chart from a loss at
Separation of fixed and variable costs and construction of a break-even graph A building company constructs a standard unit which sells for £30000. The-company’s costs can be readily identifiable
Profit-volume graph and changes in sales mix A company produces and sells two products with the following costs:Required:(a) Calculate the break-even sales revenue per period, based on the sales mix
Multi-product profit-volume graph JK Limited has prepared a budget for the next twelve months when it intends to make and sell four products, details of which are shown below:Budgeted fixed costs are
Break-even chart with an increase in fixed costs and incorporating expected values A manufacturer is considering a new product which could be produced in one of two qualities— Standard or De Luxe.
Analysis of costs into fixed and variable elements and break-even point calculation(a) ‘The analysis of total cost into its behavioural elements is essential for effective cost and management
Non-graphical CVP analysis and calculation of margin of safety Z Ltd manufactures and sells three products with the following selling prices and variable costs:The company is considering expenditure
Calculation of sales by _ individualproducts to achieve a target contribution A company manufactures and sells three products which currently have the following annual trading performance:For each
Decision-making and non-graphical CVP analysis York plc was formed three years ago by a group of research scientists to market a new medicine that they had invented. The technology involved in the
Marginal costing and absorption costing profit computations and calculation of breakeven point for a given sales mix A company has two products with the following unit costs for a period:Production
Analysis of change in profit arising from changes in volume and production methods plus sales revenue required to achieve a desired profit A company has the following summary performance over two
Decision-making and non-graphical CVP analysis Fosterjohn Press Ltd is considering launching a new monthly magazine at a selling price of £1 per copy. Sales of the magazine are expected to be 500
describe activity-based costmanagement.Appendix
explain how standard costs are set;Appendix
explain the meaning of standard hours produced;Appendix
define basic, ideal and currently attainable standards;Appendix

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