FATέH UNIVERSITY
FACULTY OF ECONOMIC AND
ADMINISTRATIVE SCIENCES
DEPARTMENT OF
MANAGEMENT
MAN 305 COST ACCOUNTING
FINAL EXAM
Instructor: Ali COSKUN
Duration: 80 Minutes February 13, 2006
Question 1. (25 points)
Jordana Woolens is a manufacturer of wool
cloth. It has two departments that process items, Cutting and Finishing. The
information for Cutting Department for March is as follows:
Beginning
work-in-process
6,000 units
Units started
14,000 units
Units
completed
16,000 units
Cost of beginning work-in-process
Direct materials
.
$ 6,000
Conversion
.
$ 2,600
Costs added during month:
Direct materials
.
$ 22,800
Conversion
$ 29,800
Degree of Completion:
Beginning work-in-process is 65% as to
direct materials and 40% as to conversion costs.
Ending work-in-process is 80% as to direct
materials and 50% as to conversion costs.
Required:
a. Prepare a production cost worksheet
using the weighted average method.
b. Prepare
a journal entry for March transfers from Cutting to Finishing
Department.
PLEASE CHOOSE 3 (THREE)
OF THE FOLLOWING QUESTIONS AND ANSWER
Question 2. (25 points)
Clark Company had the following activities
during 2005:
Direct materials:
Direct material inventory (31/12/2005) $
23,000
Direct material inventory (01/01/2005) 25,000
Purchases during 2005 97,000
Direct manufacturing labor 20,000
Indirect manufacturing costs 15,000
Ending work-in-process inventory
5,000
Beginning work-in-process inventory
1,000
Ending finished goods inventory 20,000
Beginning finished goods inventory
30,000
Required:
a. What is Clark's cost of direct materials
used during 2005?
b. What is Clark's cost of goods
manufactured during 2005?
c. What is Clark's cost of goods sold
during 2005?
Question 3. (25 points)
General Hospital
uses a job cost system for all patients who have surgery.
In January, the
pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation
bases of 2,000 nursing hours and 1,000 nursing hours, respectively.
The budgeted
nursing overhead charges for each department for the month were $84,000 and
$66,000, respectively.
The hospital
floor for surgery patients had budgeted overhead costs of $600,000 and 7,500
nursing hours for the month.
For patient Jim
Carter, actual hours incurred were eight and four hours, respectively, in the
PRE-OP and OR rooms.
He was in the
hospital for 4 days (96 hours). Other costs related to Carter were:
PRE-OP OR In-room
Patient medicine costs $ 100
$ 250
$1,200
Direct nursing costs $
2,400 $ 3,500 $5,400
The hospital uses
a budgeted overhead rate for allocating overhead to patient stays.
Required:
a. Determine the
budgeted nursing overhead rate for PRE-OP Cost.
b. Determine the
budgeted nursing overhead rate for OR Cost.
c. Determine the
budgeted overhead rate for the hospital floor for surgery.
d. What is the
total cost of the stay of patient Jim Carter?
Question 4. (25 points)
Yakima Manufacturing
purchases trees from Cascade Lumber and processes them up to the split-off
point. The products are then sold to an independent company that markets and
distributes them to retail outlets. The following information was collected for
the month of October.
Trees
processed: 50 trees (yield is 30,000
sheets of paper and 30,000 pencil casings and no scrap)
Production: paper 30,000 sheets
pencil casings 30,000
Sales: paper 29,000
at $0.04 per page
pencil casings 30,000 at $0.10 per casing
Cost of
purchasing 50 trees and processing them up to the split off point to yield
30,000 sheets of paper and 30,000 pencil casings is $1,500.
Yakima
Manufacturing's accounting department reported no beginning inventories;
however, ending inventory amounts reflected 1,000 sheets of paper in stock.
Required:
a. What is the
approximate production cost per unit for each pencil casing and each sheet of
paper if the sales value at split off method is used?
b. How much is
the cost of goods sold .
c. How much is
the cost of the ending inventory.
Question 5. (25 points)
Jake's Battery
Company has two service department's Personnel and Maintenance. The
Maintenance's Department costs of $160,000 are allocated on the basis of standard
hours used. The Personnel Department's costs of $40,000 are allocated based on
the number of employees. Costs of Department A and B are $90,000 and $230,000,
respectively.
Data on standard
service hours and number of employees are as follows:
Maintenance Personnel Production
Depts
Standard
service Department Department A
B
Hours used 300 300 600 300
Number of
Employees 25 25
75 150
What is the cost
of the Department A and B using the step-down method if the service department
with the highest percentage of interdepartmental support service is allocated
first? (Rounded up)
Question 6. (25 points)
Flyer Corporation
manufactures two products, Product A and Product B.
The company
estimated manufacturing overhead would incur $396,000 in manufacturing overhead
costs and produce 5,500 units of Product B and 22,000 units of Product A during
the current year. Unit costs for materials and direct labor are:
Product A Product B
Direct material ............ $9
$20
Direct labor ................. $7
$15
The company's overhead
costs can be allocated to four major activities. These activities and the
amount of overhead cost allocatable to each for the current year are given
below:
Estimated
Expected
Activity
Overhead
Product Product
Activity Cost
Pools Costs A
B Total
Machine setups
required ... $170,000 700
1,000 1,700
Purchase orders
issued .... 37,000
300
200
500
Machine-hours
required .... 91,000
4,000 9,000
13,000
Maintenance
requests issued 98,000 400
600 1,000
$396,000
Using the data
above and an activity-based costing approach, determine the unit product cost
of each product for the current year.