Cost Accounting And Inventory Management Questions

The best method for the stated purposes would be the Activity Based Costing technique.

For direct tracing, the traditional method costing could be used whereas for driver tracing, activity based costing technique could be used

Salary of cell supervisor-the number of hours spent on each product could be used
Power to heat and cool the plant in which the cell is located-the number of unit consumed in the electricity could be used
Materials used to produce the motors-the direct materials consumed could be used
Maintenance for the cell’s equipment (provided by the maintenance department)-the direct costs incurred could be used
Labour used to produce the motors-the direct labour hours spent could be used
Depreciation on the plant- the number of units manufactured from that plant could be used
Deprecation on equipment used to produce the motors- the number of units manufactured from that equipment could be used
Ordering costs incurred by the Purchasing department for ordering raw materials for all of Hummer’s products- the number of orders made from each department could be used

1	Cost of Raw materials purchased during November
	Closing Inventory Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	as on 30 Nov	$20,000.00
	Less: Opening Inventory	as on 1 Nov	$17,000.00
	Increase in Inventory	during Nov	$3,000.00
	Add: Raw materials drawn during production	$39,000.00
	Raw materials purchased		$42,000.00

2	A total of 300 hours of direct labour time had been expended on the jobs in the beginning Work in Process inventory. Calculate the direct materials cost in the beginning Work in Process inventory.
	Work in Process	as on 1 Nov	$9,000.00
	Less: Direct Labour Cost
	(300 hours)	$10 per hour	$3,000.00
	Less: Overhead
	(300 hours)	$8 per hour	$2,400.00

	Raw materials in Work in Process	$3,600.00


3	Calculate the actual direct labour hours worked during November

	Allocated Overheads	during Nov	$26,400.00	a
	Predetermined Overhead Rate	per Direct Labour hour	$8.00	b

	No. of direct labour hours worked	3300	a/b

4	The ending Work in Process inventory contained $4,700 of direct materials cost. Calculate the amount of direct labour cost in the ending Work in Process inventory
	Work in Process	as on 30 Nov	$11,000.00
	Less: Direct Materials		$4,700.00
	Cost of Direct Labour and Overheads in Work in Process	$6,300.00	a

	Direct Labour Hour Rate	per Direct Labour hour	$10.00
	Predetermined Overhead Rate	per Direct Labour hour	$8.00
	Total Labour & Overhead Rate	per Direct Labour hour	$18.00	b

	No. of Direct Labour Hours		350	c = a/b
	Hourly Rate		$8.00	d
	Direct Labour Cost		$2,800.00	c*d

5	Calculate the cost of goods manufactured in November

	Process Account
	Description	Amount in $		Description	Amount in $
	To Opening Work in Process				By Finished Goods Account
	– Raw Materials	3600			– Raw Materials	37900
	– Direct Labour	3000			– Direct Labour	32500
	– Overheads	2400	9000		– Overheads	26000	96400


	To Raw Materials drawn in production		39000
	(given in question)
	To Direct Labour		33000		By Closing Work in Process
	(3300 hours as calculated in Q3 @ $10 per hour)				– Raw Materials	4700
	To Overheads		26400		– Direct Labour	3500
	(3300 hours as calculated in Q3 @ $8 per hour)				– Overheads	2800	11000


			107400				107400

	Cost of Good Manufactured during November $96,400

6
a	Calculate the amount of manufacturing overheads under or over allocated (applied), stating clearly whether the amount is under or over allocated

	Overhead Applied in November	$26,400.00
	Overhead Incurred in November	$28,000.00

	Under applied / allocated Overheads	$1,600.00

b	Prepare the journal entries to adjust for the overheads under or over allocated. No explanation is required.
	Manufacturing Overhead Control A/c	$1,600.00
	To Costing Profit & Loss A/c		$1,600.00

Answer 3:

Part 1:

Process costing is used in automobiles, food industries

And it is used in petroleum, coal mining industries.

Part 2:

For the service industries, job costing is sued. From the purposes of accounting, the process costing differs from the job costing. The job costing tracks in all the costs along with the profits for each and every job and this helps in accounting of all the expenses for each job for the taxation purposes and also for analysis.

On the other hand, the process of process costing helps in tracking of all the costs that are associated with the manufacturing of the products. For example, a company manufactures the plastic combs, now the plastics is put in the mild in the molding department and then the same is painted before the same is packed. As these combs move from one department to another, more costs are added to production (Lumen learning, 2018).

Answer 4:

Part a:

Particulars	Production Departments
	MA	SA

Direct overhead costs	9,00,000.00	8,00,000.00

Computing department allocation	1,10,000.00	90,000.00
200000 would be divided into 385:315

Engineering department allocation	2,12,000.00	1,88,000.00
400000 would be divided into 530:470

Total costs	12,22,000.00	10,78,000.00

Part b:

Particulars	Service departments	Production Departments
	Computing	Engineering	MA	SA

Direct overhead costs			9,00,000.00	8,00,000.00

Computing department allocation	-2,00,000.00	18181.81818	1,00,000.00	81,818.18
200000 would be divided into 70:385:315		400000
		418181.8182	100000	81818.18182
Engineering department allocation			2,21,635.93	1,96,545.07
418181 would be divided into 530:470

Total costs			3,21,635.93	2,78,363.25

Answer 5:

Part 1:
Annual demand	40,000.00
Delivery time	5.00
Ordering costs per order	100.00
Carrying costs per bottle per year	0.50


EOQ	Sq root of (2Ordering costs per orderDemand/Holding costs)


	160,00,000.00

EOQ	4,000.00

Part 2:

Inventory costs when 4000 bottles are ordered	2,000.00
costs before	3,000.00

Cost savings	1,000.00

Part 3:
Annual demand	52500
Delivery time	5
Ordering costs per order	100
Carrying costs per bottle per year	0.5


EOQ	Sq root of (2Ordering costs per orderDemand/Holding costs)


	210,00,000.00

EOQ	4852.57

References:

3.1 Process Costing Vs. Job Order Costing | Managerial Accounting. (2018). Retrieved from https://courses.lumenlearning.com/tcc-managacct/chapter/chapter-1/

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