Using the simple costing system, calculate the product cost per unit for the Executive and Elite coat.

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Subject: ACCY211: Management Accounting II Type of assessment task: Assignment 2 Due date: Week 8 in your enrolled tutorial class. 40 marks QUESTION 1 Agrava Ltd. provides the costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. Percent Complete Work in process, August 1 Units started during August Units completed and transferred out during August Work in process, August 31 Work in process, August 1 Costs incurred during August Total costs to account for Physical units 50,000 80,000 100,000 Materials 100% Conversion 80% 30,000 100% 30% Total $490,000 $990,000 $1,480,000 Direct Materials $130,000 $260,000 $390,000 Conversion $360,000 $730,000 $1,090,000 Required: Using weighted-average process costing to complete the following requirements: (a) Determine the equivalent units for August. (10 marks) (b) Compute the costs per equivalent unit. (10 marks) (c) Compute the cost of goods completed and transferred out during August ( 5 marks) (d) Compute the cost remaining in the work in process inventory on August 31. (10 marks) (e) Prepare a journal entry to record the transfer of the cost of goods completed and transferred out. ( 5 marks) 40 marks QUESTION 2 Quintric Ltd. produces two types of fine wool coats that are classified as Executive and Elite coat. Quintric's currently using a simple job-costing system that has two direct-cost categories (direct materials and direct labour) and a single indirect-cost pool with indirect cost allocation based on machine-hours. For 2016, Quintric's budget includes estimated manufacturing overhead costs of $200,000 and 8,000 machine hours. Quintric collected the following information for 2016. Number of coats Machine hours per coat Price per coat Cost of materials per coat Direct labour costs per coat Executive coat 400 coats 10 $700 $200 $180 Elite coat 200 coats 10 $1,200 $ 300 $ 410 Required: (a) Using the simple costing system, calculate the product cost per unit for the Executive and Elite coat. (10 marks) (b) Quintric Ltd. incurred actual total manufacturing costs of $202,000 and 8,000 total machine hours during the year. Determine the amount of under applied or over applied manufacturing overhead for the period and prepare a journal entry to close any balance in the manufacturing overhead account assuming the under/over applied overhead amount is insignificant. (5 marks) (c) Quintric is concerned about the accuracy of the costs assigned to the Executive and Elite coat and therefore is planning to implement an activity-based costing (ABC) system. Quintric's ABC system would have the same direct-cost categories as its simple costing system. However, instead of a single indirect-cost pool there would now be three categories (design, setup and printing machine operations) for assigning indirect costs. To see how activity-based costing would affect the costs of the Executive coat or Elite coat, the following information is collected for an analysis. Activity Costs Cost Allocation Quantity of Cost Allocation Base Base Executive coat Elite coat Design $80,000 Design hours 800 design hours 3,200 design hours Setups 45,000 Number of setups 10 setups 40 setups Machine 75,000 Machine hours 3,000 machine hours 2,000 machine hours operations $200,000 (d) Using the activity based costing system, calculate the estimated product cost per unit for the Executive and Elite coat. (15 marks) Compare the costs of the Executive coat and Elite coat under the simple and activity based costing systems. Explain why the simple and activity based costing systems differ in the cost of the Executive and Elite coat. (10 marks) 20 marks QUESTION 3 Axioma Ltd has the following budgeted sales for the next six-month period: Month January February March April May June Unit Sales 90,000 120,000 210,000 150,000 180,000 120,000 Axioma Ltd. sells a single product at a price of $50 per unit. There were 24,000 units of finished goods in inventory at the beginning of February. Axioma Ltd.'s policy is to keep an inventory of finished goods that is equal to 20% of the unit sales for the next month. Five kilograms of materials are required for each unit of finished goods produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 20% of the production needs for the next month. Material inventory at the beginning of February was $1,104,000 (138,000 kilograms). Required: (a) Prepare sales budgets in units and dollars for February and March (b) Prepare production budgets in units for February and March (c) Prepare direct materials usage budget in kilograms and dollars for February (d) Prepare direct materials purchases budgets (in kilograms and dollars) for February (4 marks) (8 marks) (4 marks) (4 marks)