Cost Accounting Assignment: LIFO, FIFO, and Overhead

This cost accounting assignment covers several key topics, including inventory valuation using LIFO and FIFO methods, overhead analysis and apportionment across production and service departments, process costing with a focus on the refining process, and contract accounting for a construction project. The assignment includes detailed calculations for inventory records, overhead absorption rates, process accounts, and contract accounts. It also requires the preparation of financial statements such as the contract account, calculation of profit or loss, and valuation of work-in-progress. The assignment also includes scenarios for cost allocation, depreciation, and other accounting principles, providing a comprehensive understanding of cost accounting concepts and practical application.

ACCT 219 COST ACCOUNTING ASSIGNMENT
Submit Assignment
Due Friday by 17th March
ACCT 219 – COST ACCOUNTING
Question 1
The following information relates to item Q002 stocked by Mutaka products Ltd for the month of April
2004:
Receipts Issues
Date Units Units Unit cost (Sh)
April3 2,400 20
4 3,200
6 2,600 18
12 2,700
14 3,000 24
18 2,800 22
20 2,200
22 2,600 21
25 3,800
26 3,100 23
27 2,500 24
28 3,200 27
29 6,900

The closing balance for March 2004 was a batch of 2,900 units received at a unit price of Sh 21.
Required:
Stores perpetual inventory record for item Q002 for April 2004 under LIFO and FIFO systems of stores
issues. (14 marks)
Closing stock valuation under the two systems (6 marks)
(Total: 20 marks)
Question 2
Tom ltd has two production departments, A and B, and two service departments, stores and General
Services.
The company has budgeted the following costs for the forthcoming period.
Shs
Maintenance 100
Depreciation of plant 60
Plant insurance 60
Heat and light 75
Canteen cost 30
Rent 50
Supervision 120
The following information is also available
A B Stores General
Floor Area Square meters 15,000 8,000 3,500 3,500

Employees 50 25 15 10
Plant book value 200,000 100,000 50,000 40,000
Machine hours 80,000 60,000
Direct material usage 300,000 400,000
Overheads are absorbed in both production departments on a machine Hour basis.
Required:
a) Prepare an overhead analysis sheet for the period, using suitable bases apportionment
(15 marks)
b) Calculate the Overhead absorption rates for each department (5 marks)
QUESTION 3
Timau Ltd produces a detergent which passes through two processes namely mixing and refining to
completion. The following data relate to the refining process for the month of June 2000.
Cost of opening stock: Shs.
Materials 100,000
Labour 25,000
Overheads 60,000
During the month 20,000 units were passed from the mixing to the refining process. Costs incurred
during the month were:

Shs.
Labour 125,000
Overheads 108,100
Other materials 45,300
At the end of the month 21,000 units had been completed and passed to finished goods while 4,000
were still in process having reached the following stages:
Materials - 100%
Labour - 40%
Overheads - 60%
Required:
Refining Process Account. (15marks)
QUESTION 4
On 4 May 1999, Watamu Construction Company was contracted by Makoha Ltd. to construct a leisure
park in Nairobi at a contract price of Sh. 950,000,000. Work commenced on the contract on 28 July
1999. Retention money was agreed at 10% of work certified. At the end of the first year, no profits
were declared as the contract was considered to be in its infancy
The following details relate to the contract for the year ended 31 December 2000:
Sh’000
Balances brought forward 1.1.2000
Materials on site 4,500
Accrued wages 1,250
Plant (cost) 150,000

Cost of work done 158,000
Work certified to 31 December 1999 160,000
Transactions during the year.
Materials delivered to site:
Ex-stores 14,600
By suppliers 128,400
Additional plant (cost) 120,000
Subcontractors fees 18,450
Consultancy fee 28,000
Inspection fee 500
Salaries and wages 160,000
Head office expenses 1,200
Material transfers out 15,000
Materials sales (cost Sh 19,800) 22
Plant hire 250
Direct expenses 2,600
Total cash received from contractee 580,000
Work certified during the year 660,000
Cost of work uncertified 42,000
Balances carried forward:

Materials on site 51,000
Wages accrued 2,800
Plants have been purchased for use on this contract. Watamu Construction Company provides for
depreciation on plant at 12 1/2% per annum on cost.
Required:
(i) Contract account for the year to 31 December 2000, clearly showing the profits/ (losses) on contract
for the year. (10 marks)
(ii) Valuation of work-in-progress (5marks)