Cost Accounting Questions
1. From the following, prepare a schedule highlighting;
- Prime cost
- Production cost
- Total cost
|(i)||Expenses of the administration function||60,000.00|
|(ii)||Materials used in producing products||220,000.00|
|(iii)||Depreciation in Sh.|
|Office equipment 5,000.00|
|Machinery (production) 29,000.00|
|Delivery vans 18,000.00|
|Show rooms 6,000.00||58,000.00|
|(iv)||Direct labour costs incurred||155,000.00|
|(v)||Indirect factory expenses||17,000.00|
|(vi)||Wages of truck driver||30,000.00|
|(vii)||Salaries and expenses of salesmen||100,000.00|
|(viii)||Salaries of the administration staff||40,000.00|
|(ix)||Salaries of the production staff||30,000.00|
|(x)||Expenses of delivering goods||50,000.00|
Papermaking Ltd. Makes paper which is cut and packed before being transferred into the finished goods store. The paper is moved from department to department by a fork lift truck. Each pack of finished product contains one ream of paper. The paper is loaded onto wooden pallets before delivering to customers. The following cost information related to papermaking Ltd. For period ended 31st March 19x4
|Wrapping paper (used in packing dept.)||3,500.00|
|Spare knives for cutting machines||800.00|
|Cleaning rags for machines||500.00|
|Making dept. wages to packages||38,000.00|
|Cutting dept. wages for machine crew||26,000.00|
|Packing dept. wages to packages||20,000.00|
|Fork lift truck driver wages||8,000.00|
|Factory managers salary||11,000.00|
|Dispatch dept. wages||17,000.00|
|Delivery vehicle driver wages||9,600.00|
|Sales managers salary||17,500.00|
|Sales office wages||18,500.00|
|General Managers salary||30,000.00|
|Production managers salary||21,500.00|
|Maintenance fitter wages||25,000.00|
|Maintenance workshop costs||17,000.00|
|Maintenance engineers salary||18,000.00|
|Electricity costs (See note 1)||18,000.00|
|Administration office machine rental||1,000.00|
|Sundry other costs;|
Electricity is charged to each function area as follows; production 75%, administration 5%, selling 5%, distribution 15%.
Maintenance costs should be totaled before a cost summary is prepared and charges to each function making use of the maintenance service as follows; production 80%, administration 3%, selling 3%, distribution 14%.
- Prepare a cost summary for the period ended 31 March 19x4 analyzing costs into
- prime costs, production costs and total cost.
- (Give all subtotals of classified costs). (24 marks)
Lorenzo Company operates a brushless car wash; incoming vehicles are put on an automatic, continuously moving conveyer belt. Cars are washed as the conveyor belt carries the car from the start station to the finish station. After the car moves off the conveyor belt, it is dried manually. Workers then clean and vacuum the inside of the car. Workers are managed by a single supervisor. Lorenzo serviced 80,000 cars in 2000.
Lorenzo reports the following costs for 2000:
Account description Costs (sh) Car wash labour 240,000,000 Soap, cloth and supplies 32,000,000 Water 28,000,000 Power to move conveyor belt 72,000,000 Depreciation 64,000,000 Supervision 30,000,000 Cashier 16,000,000
- Classify each account as variable or fixed with respect to cars washed.
- Lorenzo expects to wash 90,000 cars in 2001. Use the cost classification you developed in (a) to estimate Lorenzo’s total costs in 2001.
- Calculate the average cars of washing a car in 2000 and 2001. (Use the expected 90,000 car wash level for 2001)
The following data has been provided by a catering company that prepares banquets and parties for both individuals and business functions through the year. The data indicates that overhead expenses vary with the direct labour hours expended.
Month Labour hours Overhead costs(sh.)
January 2,500 55,000
February 2,700 59,000
March 3,000 60,000
April 4,200 64,000
May 4,500 67,000
June 5,500 71,000
July 6,500 74,000
August 7,500 77,000
September 7,000 75,000
October 4,500 68,000
November 3,100 62,000
December 6,500 73,000
Total 57,500 805,000
- Using regression analysis, calculate the variable cost per person for a cocktail party, if the following additional information is given. The cost structure on a person basis is;
- Food and beverages sh.15.00
- Labour (0.5) 5.00
- The company has asked you to prepare a bid for a 200 person cocktail party to be given next month. Determine the minimum bid price the company would be willing to submit to earn a profit.
- Compute the value of: (i) r and(ii) r squared. Explain the significance of the values giving their names.
CMB Company has budgeted factory overhead for four volumes of operations as follows:
- Indicate whether each of the four overhead cost budgeted is fixed, variable or semi variable
- Using the high low method, determine the cost estimating formula for each of the four factory overhead costs.