Accoutning

Accoutning Part I 1. For a manufacturing company, identify the following as either a product cost or a period cost (0.5 X 8 = 4 Marks) Insurance for factory building Depreciation of sales equipment Marketing manager's salary Raw material for production Production employee wages Electricity bill for office building Customer service expenses Office equipment depreciation 2. Black Brothers Furniture Corporation incurred the following cost( 2 x 12 Marks = 24 Marks) a. Wood used in production of furniture…………………………………… b. Fuel used in delivery truck…………………………………………………….. c. Straight-line depreciation on factory building…………………………………….. d. Screws used in production furniture…………………………………………… e. Sales staff salaries (salary with commission)………………………………………….. f. Sales commission……………………………………………………. g. Property taxes on factory land………………………………………. h. Insurance on factory building…………………………………….. i. Hourly wages for furniture craftsmen……………………………….. j. Salaries of factory supervisors………………………………… k. Utilities expenses for production…………………………………………… l. Telephone bill for office………………………………………………….. Identify above costs as Fixed Cost, Variable Cost and Mixed Cost 3. Differentiate the Process costing products and Job costing products from the list. Write P for Process cost and J for Job costing. ( 2 X 8 = 16 Marks) Note: Consider the last output given to the customers. Special Delivery truck for a hypermarket.... A swimming pool for Effat University's child development unit..... Newly introduced chocolate bar with Vitamin C.... A readymade T-shirt from your favourite cloth shop...... Wedding cake for and order........ A movie production............ Shampoo for dandruff.......... Plane for a budget airliner… 4. Determine whether each of the following cost of biscuits manufacturing should be classified as direct material, direct labor and manufacturing overhead. (2 X 6 = 12 Marks) Wages to the factory production line workers Salary to the factory supervisor Factory insurance and rent Milk, flour and sugar used for biscuit manufacturing Factory machine depreciation Maintenance staff of factory Part II 1. Speedy Productions reports the following cost category to which the item belongs ( 20 Marks) Indirect Materials 5,400 Indirect Labour 11,000 Depreciation on Factory equipment’s 11,200 Advertising 1,600 Direct labour 5,000 Factory equipment repairs 300 Property taxes on office building 870 Office supplies 650 Supervisor salary (factory) 12,000 Office utilities 990 Insurance for Factory equipment 2,200 Repairs on office equipment 180 Determine the total amount of 1. Product cost …………………………………………………………………………………............................................................................................................................................................................................................................................ …………………………………………………………………………………............................................................................................................................................................................................................................................ 2. Period Cost …………………………………………………………………………………............................................................................................................................................................................................................................................ …………………………………………………………………………………............................................................................................................................................................................................................................................ 2. (20 Marks) The following data were taken from the records of Stellar Manufacturing Company for the fiscal year ended 31 December 2014 Raw Material inventory 01/01/2014 48,000 Raw Material inventory 01/06/2014 39,600 Finished Goods inventory 01/09/2014 96,000 Finished Goods inventory 30/11/2014 95,900 Work in process 01/07/2014 19,800 Work in process 30/08/2014 18,600 Direct labour 149,250 Indirect labour 24,460 Account receivable 27,000 Factory Insurance 4,600 Factory MachineryDepreciation 16,000 Factory utilities 27,600 Office utilities expenses 8,650 Sales 554,000 Sales discounts 4,200 Plant manager’s salary 29,000 Factory property taxes 9,600 Factory repairs 1,400 Raw material purchases 96,400 Cash 32,000 Instructions 1. Prepare a cost of goods manufactured schedule (assume all raw materials used were direct materials) 2. Prepared income statement through gross profit 3. Prepared current asset section of the balance sheet at 31st December 2014 …………………………………………………………………………………............................................................................................................................................................................................................................................…………………………………………………………………………………............................................................................................................. …………………………………………………………………………………............................................................................................................................................................................................................................................…………………………………………………………………………………............................................................................................................. 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Part III Answer the following questions Question 1 (4 Marks) Abdullah is confused. He does not understand why rent on his apartment is a fixed cost and rent on Avis rent a car is a mixed cost. Explain the difference to Abdullah …………………………………………………………………………………............................................................................................................................................................................................................................................…………………………………………………………………………………............................................................................................................. …………………………………………………………………………………............................................................................................................................................................................................................................................…………………………………………………………………………………............................................................................................................. …………………………………………………………………………………............................................................................................................................................................................................................................................…………………………………………………………………………………............................................................................................................. …………………………………………………………………………………............................................................................................................................................................................................................................................………………………………………………………………………………….............................................................................................................