ACC 203 Assignment .

ACC 203 Assignment

Contents
Problem 1 – Costing of products.................................................................................................................2
Problem 2 – Variance analysis.....................................................................................................................4
Problem 3 – Financial Analysis.....................................................................................................................6
Problem 4 –Analysis with constraint financial resources.............................................................................8

Problem 1 – Costing of products
Problem 1 deals with costing. It includes calculating the cost per bottle and further journalizing
the transactions relating to production costs in the work in process inventory account. The
calculation of correct cost per unit produced is an important factor in the accounting, as the
selling price and profit margin are largely dependent on the cost of unit.
In the given case, Cool Brew Ltd has started producing breweries named “Cool Bay Draught” by
packaging them in bottles containing 300 milliliters. The company consists of two departments
named, mixing and bottling and has respective costs. During the period the company produced
48000 litres of product and bottled them.
The first requirement is to calculate the cost per bottle of Cool Bay Drought. For calculation of
cost per bottle, the total cost of both the departments is computed, which is $192,000 ($160,000
for mixing department + $32,000 for bottling department). The bifurcation of said cost is as
below:
Particulars Mixing Bottling
Direct materials $113,000 $17,000
Direct labour $15,000 $6,000
Manufacturing overhead $32,000 $9,000
Total $160,000 $32,000
Hence, the cost per bottle is total cost divided by number of bottles produced, which comes at
$1.20
Total cost / number of bottles
= 192000 / 160000
= $1.20
Hence, the cost of producing one bottle is $1.20.
The second requirement asks us to journalize the transactions. The journal entries are as below:
Particulars Dr./Cr.
Debit
Amount
Credit
Amount
WIP Inventory Dr. $130,000
Accounts payable A/c $130,000
(Direct materials charged to production)
WIP Inventory Dr. $21,000
Wages payable A/c $21,000
(Direct labour cost charged to production)