Cost Accounting Concepts for Management Accounting

Running Head: Cost Accounting Concepts
MANAGEMENT ACCOUNTING

Cost Accounting Concepts 1
Question 1
Part a
Mixing Bottling Total
Direct Material $ 113,000.00 $ 17,000.00 $ 130,000.00
Direct Labour $ 15,000.00 $ 6,000.00 $ 21,000.00
Manufacturing overhead $ 32,000.00 $ 9,000.00 $ 41,000.00
Total Cost $ 160,000.00 $ 32,000.00 $ 192,000.00
1 litre 1000 ml
4800 litres 4800000
Per bottle capacity 300 ml
Total number of bottles 16000
Cost per bottle= Total Cost
Number of bottles
$ 192,000.00
16000
$ 12.00
Part b
Journal Entries Debit Credit

Cost Accounting Concepts 2
Raw Material Inventory
$
130,000.00
Cash
$
130,000.00
Raw Material Purchased for cash
WIP Inventory
$
130,000.00
Raw Material Inventory
$
130,000.00
Being raw material used.
Factory Payroll
$
21,000.00
Cash
$
21,000.00
Being wages paid in cash.
WIP Inventory
$
21,000.00
Labour
$
21,000.00
Recording of direct labour
Manufacturing Overhead
$
41,000.00
Cash $

Cost Accounting Concepts 3
41,000.00
Being manufacturing overhead paid in cash.
WIP Inventory
$
41,000.00
Factory Overhead
$
41,000.00
Recording of factory overhead
Cost of goods sold
$
192,000.00
WIP Inventory
$
192,000.00
Being WIP transferred to COGS account
Assumed that payment for all the production costs has been
made.
Question 2
Actual Purchases 6000
Actual Rate 7.4
Standard Data
Material
Quantity per unit 2 kg
Price 7.20 per kg