FATİH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

DEPARTMENT OF MANAGEMENT

MAN 305 COST ACCOUNTING

FINAL EXAM

Instructor: ALI COSKUN                                                                                                                                                                   January 12, 2004

Duration: 90 Minutes

QUESTIONS

QUESTION 1.

Red Tomato Company processes tomatoes into tomato juice, tomato sauce and tomato paste. During June 2003, the joint costs of processing the tomatoes were $720,000. There was no beginning or ending inventories for the summer. Production and sales value information for June were as follows:

Product                          Cases            Separable Costs         Selling Price

Tomato Sauce              120,000           $5.00 per case            $20 per case

Tomato Juice               200,000             6.00 per case              18 per case

Tomato Paste               150,000             4.00 per case              12 per case

Required:

a. Determine the amount allocated to each product if the constant gross-margin percentage net realizable value method is used.

b. Compute the cost per case for each product in June.

 

QUESTION 2.

Spring Company produces chairs. It has two departments that process products: cutting and assembly. Direct materials are all added in cutting department, in assembly department no more direct materials are added. During June, beginning work-in-process in the assembly department was 60 percent complete as to conversion. In the Assembly Department beginning inventories included $7,000 for transferred-in costs and $10,000 for conversion costs. Ending inventory was 30 percent complete. Additional information about the two departments follows:

                                                                Cutting           Assembly

   Beginning work-in-process units                 5,000                4,000

   Units started this period                              14,000                        ?

   Units transferred this period                       16,000               18,000

   Ending work-in-process units                                                 2,000

   Material costs added                                    $18,000         

   Conversion costs                                            32,000          $ 19,440

   Transferred-out cost                                      50,000

Required:

Prepare a production cost worksheet using first in first out (FIFO) costing for the assembly department.

 

QUESTION 3.

Kline Company manufactures two products, X and Y. Kline Company uses activity based costing. Its costing system has two direct cost categories and three indirect cost pools. Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information:

                                  Number of                                    Number of                              Number of

Product                Material Requisitions               Product Inspections               Orders Shipped

     X                                     24                                                  100                                       420

     Y                                     36                                                  100                                       280

Costs per pool              $15,600                                           $46,300                             $17,500

 

Product                  Direct material costs                   Direct labor costs

     X                              $85,000                                            $75,000

     Y                              100,000                                               90,000

Required:

Compute the manufacturing costs of each product line.

 

QUESTION 4.

SPR Company had the following account balances:

 

For year 2003                                                                        For specific date                                                                  

Administration salaries                       $  14,000                 Direct materials, December 31 2002                  $ 17,000

Depreciation, factory building               17,000                 Direct materials, December 31, 2003                     22,000

Direct materials, Purchased                    79,000                 Finished goods inventory, Dec. 31, 2002            16,500

Factory utilities                                          7,500                 Finished goods inventory, Dec. 31, 2003            13,000

Indirect manufacturing labor                  13,000                 Work-in-process, December 31, 2002                  11,000

Direct manufacturing labor                     50,000                 Work-in-process, December 31, 2003                    9,000

Indirect materials                                       7,000

Marketing expenses                                35,000

Selling commissions expenses                 4,000

Revenues                                                250,000

 

Required:

Prepare the income statement and supporting schedule of cost of goods manufactured for SPR Company for the year 2003?

 

QUESTION 5.

Flex Company has two departments, X and Y. Overhead is applied based on direct-labor cost in Department X and machine hours in Department Y. The following additional information is available:

 

   Budgeted Amounts         Department X       Department Y

   Direct-labor cost                  $180,000             $165,000

   Machine hours                         51,000                 40,000

   Factory overhead                 $225,000             $180,000

 

Actual data for Job #10 are as follows:

                                                                                    Department X       Department Y

   Direct materials requisitioned                  $10,000                     $16,000

   Direct-labor cost                                          $11,000                $14,000

   Machine hours                                                 5,000                    3,000

Required:

a. What is the total overhead cost of Job 10?

b. If Job 10 consists of 50 units of product, what is the unit cost of this job?

 

 

QUESTION 6.

Tim Rossy is the owner and the operator of Rossy Bottling, a bulk soft-drink producer. A single production process yieldstwo bulk soft drinks: RDL (the main product) and TSK (the byproduct). Both products are fully processed at the split off point, and there are no seperable costs.

 

For October 2003, the cost of thesoft drink operations is $120,000. Production and sales data are as follows:

 

 Production               Sales                   Selling price         

(in Gallons)            (in Gallons)            per Gallon

Main Product: RDL                 10,000                      8,000                         $20

Byproduct: TSK                       2,000                       1,400                            2

 

There were no beginning inventories on October 1, 2003.

 

Required

What is the gross margin for Rossy Bottling under under production by-product method (method A).