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Cost Accounting 2 Final Exam

This document contains 6 questions from a final exam in cost accounting. It asks the student to: 1) Calculate gross margin and inventory costs for a bottling factory using production method costing. 2) Allocate joint costs to three products using the NRV method and calculate operating income. 3) Calculate price and efficiency variances for direct materials and labor for a sunglasses manufacturer. 4) Compute spending and efficiency variances for variable and fixed overhead. 5) Use process costing to calculate costs of completed units and ending work in process for a paint manufacturer. 6) Explain the purpose of standard costs and why companies calculate price and efficiency variances, and define the

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Cynthia Yeung
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3K views6 pages

Cost Accounting 2 Final Exam

This document contains 6 questions from a final exam in cost accounting. It asks the student to: 1) Calculate gross margin and inventory costs for a bottling factory using production method costing. 2) Allocate joint costs to three products using the NRV method and calculate operating income. 3) Calculate price and efficiency variances for direct materials and labor for a sunglasses manufacturer. 4) Compute spending and efficiency variances for variable and fixed overhead. 5) Use process costing to calculate costs of completed units and ending work in process for a paint manufacturer. 6) Explain the purpose of standard costs and why companies calculate price and efficiency variances, and define the

Uploaded by

Cynthia Yeung
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Islamic university Gaza

Faculty of commerce
Accounting department
Final exam
Cost accounting 2
( 2 hours )

Name :
Id : . Class : ...

Question 1 :
Mohammad is the owner of Gaza bottling , a bulk soft drink producer . a single production process
yield two bulk soft drink : rainbow dew( the main product) and resi dew ( the byproduct) . both
product are fully processed by a splitoff point . and there are no separable cost .
For September 2006, the cost of the soft drink operation is $ 240.000 production and sales data are
as follows :
Production(in Sales(in gallons) Selling price per gallon
gallons)
Main product: rainbow dew 20.000 16.000 $40
Byproduct: resi- dew 4.000 2.800 4

A- What is the gross margin for bottling factory under production method ?
b- what are inventory costs reported in the balance sheet on September 30.2006 for two products ?

: Question 2
Sinclair oil & gas , jointly process purchase hydrocarbons to generate three nonsaleable
intermediate products A,B, and C . these intermediate products are further processed separately to
: produce AA1, BB1, and CC1 . an overview of process and result for august 2007 are shown
AA1
PROCESSING GALLONS 300
A $ 350 @ 36 PER
GALLON

Processing PROCESSING BB1


B $ 210 gallons @ 100
30 $ per gallon

C PROCESSING CC1
$ 420 gallons 1600
@2.6 $ per
gallon

joint cost $3.600 .


a - allocate the august 2007 joint cost among the three products using NRV method .
b assuming the inventory is half of production for each product show the operating income for
product AA1 .

Question 3 :
Horizon unlimited manufactures a full line of well known sunglasses frames and lenses. Horizon
using a standard costing system . manager will be asked explain the following performance report
for 2007:
Actual result Static budget amount
Unit sold 9.700 10.000
Revenue $795.400 $800.000
Variable manufacturing cost 469.286 432.000
Fixed manufacturing cost 144.530 150.000
Gross margin 181.584 218.000
Manager collected the following information:

1. three items comprised the standard variable manufacturing cost in 2007 :

- direct materials: frames. Static budget cost of $ 66.000 the standard input for 2007 is 6.00
ounces per unit.
- direct materials: lenses. Static budget cost of $186.00 . the standard input for 2007 is 12.00
ounces per unit.
- direct manufacturing labor: static budget cost of $ 180.000. the standard input for 2007 is 2.4
hours per unit.

2. the actual variable manufacturing cost in 2007 were :

- direct materials: frames. actual cost of $ 74.496 . actual ounces used were 6.4 ounces per unit.
- direct materials: lenses. actual cost of $ 200.984 . actual ounces used were 14 ounces per unit.
- direct manufacturing labor: actual cost of $ 193.806. the actual labor rate was 29.6 per hour

required : prepare report include price and efficiency variances for :


(1) direct material frames , (2) direct manufacturing labor.

Question 4:
Ahmad has the following information:-
Budgeted variable manufacturing overhead rate $400 per hour
Budgeted fixed manufacturing overhead rate $480 per hour
Budgeted cutting time per part 3 hours
Budgeted production and sales for May 2007 10.000 parts
Budgeted fixed manufacturing over head costs for May2007 $3.600.000

actual results for May 2007 are:-


parts produced and sold 9.600 units
cutting- hours used 16.800 hours
Variable manufacturing over head cost $2.956.800
fixed manufacturing overhead costs $3.664.400
Required:-
1-Compute the spending variance and the efficiency variance for variable manufacturing overhead
2-Compute the spending variance and the production-volume for fixed manufacturing overhead

Question 5 :
M. Alashi manufactures paints in two department : preparing and mix the following information for
October 2007 is available :
preparing department :
units
beginning work in process (60% completion level) : 20.000
units start during the period : 120.000
good completed unit : 125.000
ending work in process (60% completion level) : 5.000

costs :
Beginning work in process cost :
direct material : $ 20.000
conversion cost : $ 20.000

Period cost :
direct material : $ 243.000
conversion cost : $ 240.000
NOTES :
1.direct material adding at the beginning
2. conversion cost adding evenly during the process.
3. inspection point at 55%
4. accept 10 % of good units pass the inspection point as normal spoilage .

required :
1.using process costing system ( WA method ) compute cost of good completed units , and cost of
ending work in process .

QUESTION 6:

1. WHAT IS A STANDARD COST , AND WHAT ARE ITS PURPOSE ?


2. WHY SHOULD COMPANY CALCULATE PRICE AND EFFIECIENCY VARIANCES ?

3. HOW DO JOINT PRODUCT DIFFER FROM BYPRODUCT ?

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