Question 3 (20 marks)

Assume you have just taken a position as controller for a new company that manufactures and sells wrought iron wall hangings. Although the founder of the company, who is the president and CEO, is a great artisan, she has very limited knowledge of accounting.

To help your new boss better understand accounting for a manufacturing organization, write a memo to her in which you (1) identify, (2) describe, and (3) provide examples of the three manufacturing costs and the three inventory accounts used in accounting for a manufacturing company.

Question 4 (20 marks)

ABC Limited company has recorded the following costs:
Month	Units Produced	Cost A	Cost B	Cost C
Jan	10,000	$40,000	$125,000	$24,500
Feb	9,000	$36,000	$125,000	$23,250
Mar	12,000	$48,000	$125,000	$27,000
Apr	15,000

Instructions

If the company produces units in April, what would be the expected costs for each of Cost A, Cost B, and Cost C?

If the cost is a mixed cost, use the high-low method to determine April's cost.

Question 5 (20 marks)

Account balances for ABC Manufacturing Company's accounting records for the month ending Dec 31, last year, appear below:

Factory Supervision Salaries	$85,000
Income Tax Expense	$40,000
Raw Materials Inventory, Dec 1	$16,500
Work in Process Inventory, Dec 31	$57,000
Sales Salaries Expense	$25,000
Factory Depreciation Expense	$5,400
Raw Materials Purchases	$480,000
Work in Process Inventory, Dec 1	$72,000
Factory Utilities Expense	$5,700
Direct Labour	$130,000
Raw Materials Inventory, Dec 31	$23,000
Sales Returns and Allowances	$270
Indirect Labour	$15,700