Process Costing System
Added on 2020-02-19
10 Pages2104 Words135 Views
Question 1 Process costing systemA.Physical flow analysis Units in beginning WIP 600,000 Units started 1,200,000 Total units to accounted for 1,800,000 Units completed and transferred outUnits completed 1,500,000 Units In ending WIP 300,000 Total units to accounted for 1,800,000 B.Calculation of equivalent unitsPhysicalflowEquivalent unitsCabinetsComponentsConversion costUnits completed1,500,000 1,500,000 1,500,000 1,500,000 Units In ending WIP300,000 300,000 300,000 60,000 Total units to accounted for1,800,000 1,800,000 1,800,000 1,560,000 C.Unit cost for assembly departmentCost to be accounted forCabinetsComponentsConversion costTotalBeginning WIP$1,200,000$12,600,000$5,400,000$19,200,000Incurred during the period$2,400,000$25,200,000$8,640,000$36,240,000Total cost$3,600,000$37,800,000$14,040,000$55,440,000Total units to accounted for1,800,0001,800,0001,560,000Cost per unit$2.00$21.00$ 9.00$ 32.00D.Calculation of cost of unit transferred and ending inventoryCost of units transferred outCabinetsComponentsConversion costTotalNumber of units1,500,0001,500,0001,500,000Unit cost$2.00$21.00$ 9.00Cost of units transferred out$3,000,000$31,500,000$13,500,000$48,000,000Cost of ending inventoryCabinetsComponentsConversion costTotalNumber of units300,000300,00060,000Unit cost$2.00$21.00$ 9.00Cost of units transferred out$600,000$6,300,000$540,000$7,440,000
E.Cost reconciliation statementCost to be accounted forBeginning WIP $ 19,200,000 Incurred during the period $ 36,240,000 Total $ 55,440,000 Const accounted forCost of units transferred out $ 48,000,000 Cost of ending inventory $ 7,440,000 Total $ 55,440,000 Question 2 Accounting for sustainabilityA.Financial, environmental, social and Economic issues needs to taken into accountFinancialCost of setup of factory at East Asia $1,200,000Benefit due to reduction in cost of production of off shore pre-processing $0.22 Per KilogramEnvironmentalPurchase cost of improvement of filtering system $290,000 Running cost of improvement of filtering system $17,500 per annumSocialCompany’s reputation due to filtering system will improveCost of reduction of staff redundancies$285,000Cost of external consultant for being mediator among management and staff $43,000 EconomicQuality of product will remain same if the pre-processing is undertaken off shoreB.Additional FactorsThe company should focus regarding the reduction of health related problems and lower wages to the employees. The company should also take care regarding governmental and political issues involvedin off shore pre-processing.The company sold take actions regarding the wrong stories published by the newspaper so that company’s social image will secure.Question 3 Part A Cost behaviorA.Scattered diagram
150020002500300035004000450050005500$- $5,000.00 $10,000.00 $15,000.00 $20,000.00 $25,000.00 $30,000.00 Shipping departmental costShipping departmental costSupplies loaded/UnloadedCostB.Estimation of shipping cost behaviorVariable cost = (26240- 20400)/ (5200-2000) =1.825Fixed cost = 20400- (2000* 1.825) = 16750Equation under high low methodTotal shipping departmental costs = 16750 + (1.825 *Total kilograms of supplies loaded or unloaded)C.Calculation of shipping departmental cost of 5500 kilograms of supplies loaded or unloadedTotal shipping departmental costs = 16750 + (1.825 *Total kilograms of supplies loaded or unloaded)Total shipping departmental costs = 16750 + (1.825 *5500)Total shipping departmental costs = 16750 + (10037.5) = 26787.5Shipping departmental cost of 5500 kilograms of supplies loaded or unloaded is $26,787.50.D.Least square regression analysisLet N= number of data pairs i.e. 12 in the present caseX= Units of data pairs and Y = Total cost of data pairsHence, XY = Multiplication of cost and unit of data pair and 2X= Square of units of datapair
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