Cost Accounting Project Report Analysis and Solutions - Finance 101

This comprehensive project report delves into various aspects of cost accounting, providing detailed solutions and analyses. It begins with direct material control and work-in-process calculations for job costing, including journal entries and formula-based solutions. The report then explores process costing, presenting a production report and equivalent unit calculations. Furthermore, it covers joint costing, offering solutions for product cost allocation and decision-making regarding further processing. The project also includes a detailed variance analysis, calculating material price and usage variances, as well as labor rate variances. Finally, it culminates in a business report that examines variance analysis, its importance, and overhead variance analysis, with a budget and calculations for cost of goods sold and purchase budget.

Running Head: Cost Accounting
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Project Report: Cost accounting

Cost Accounting
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Job costing:
Normal Solution:
Direct material control
Debit credit
Particulars amount Particulars amount
balance b/d 25898 WIP 820
Purchase 4922 balance c/d 30000
30820 30820
Work in process
Debit credit
Particulars amount Particulars amount
Balance b/d 9700
Direct Material 820 Finished goods 21120
Labour 7400 balance c/d 8800
Factory
overhead 12000
29920 29920
Finished Goods
Debit credit
Particulars amount Particulars amount
Balance b/d 12780 Sales 48000
WIP 21120 balance c/d 18900
gross profit 33000
66900 66900
Accounts Payable
Debit credit
Particulars amount Particulars amount
Cash 8700 Balance b/d 5678
balance c/d 1900
Direct material
(purchase) 4922
10600 10600
Cost of goods sold
Debit credit
Particulars amount Particulars amount
sales 88000 Gross profit 33000

Cost Accounting
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Balance c/d 55000
88000 88000
Formula solution:
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B C D E
Debit credit
Particluars amount Particluars amount
balance b/d =C9-C7 WIP =C15
Purchase =E32 balance c/d 30000
=E9 =SUM(E6:E7)
Debit credit
Particluars amount Particluars amount
Balance b/d 9700
Direct Material =C18-(C16+C17+C14) Finished goods =C24
Labor =3700*2 balance c/d =(1200+7000+600)
Factory overhead 12000
=E18 =SUM(E15:E16)
Debit credit
Particluars amount Particluars amount
Balance b/d 12780 Sales 48000
WIP =C26-(C23+C25) balance c/d 18900
gross profit =88000*(60/160)
=E26 =SUM(E23:E24)
Debit credit
Particluars amount Particluars amount
Cash 8700 Balance b/d 5678
balance c/d 1900 Direct material (purchase) =E34-E31
=SUM(C31:C32) =C34
Debit credit
Particluars amount Particluars amount
sales 88000 Gross prrofit =C25
Balanc c/d =E41-E39
=C39 =C41
Direct material control
Work in process
Finished Goods
Accounts Payable
Cost of goods sold

Cost Accounting
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Cost Accounting
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Management accounting & history:
Roman Coliseum is an ancient place which is a massive stone amphitheatre. It was
commissioned around by Emperor Vespasian in AD 70-72 as a gift to People of Roman. It
has been opened for public in Ad 80 by the Vespasian’s son. After 4 great centuries of use,
this magnificent arena has been ignored and neglected by the people. After that until 18th
century, this place was just used by the people for source of building materials. Two third of
Coliseum has been destroyed by the people till that time (History, 2018).
This case explains that no changes have been done in the building for a longer period
and thus people have started neglecting and ignoring it. The same principle applied for the
cost accounting. Earlier, the entire production house used to take the help of cist accounting
techniques to measure the total cost of the production and other related data. But with the
time, people have started losing their interest in the old cost accounting techniques and
looking forward for the change. So, the new changes have been done in the cost accounting

Cost Accounting
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tools and modern techniques and tools have been introduced. These tools have helped the
people to rely again on the cost accounting process of the company.
.
Figure 1
Process costing:
Normal Solution:
Casablanca Limited
Production Report
Process 1 Physical Equivalent Units Total
Flows Material Labour
Units to account for:
From beginning WIP 5600
Units started during the year 45600
Total units to account for 51200
Units accounted for:
Completed and transferred
out 45600 45600 45600
Ending WIP

Cost Accounting
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Total units accounted for 51200
Total equivalent Units 45600 45600
Summary of cost to be
accounted for
Cost of beginning WIP 45600
Cost incurred during the period 118700 187700
Total cost to be accounted for 45600 118700 187700
Calculation of cost per
equivalent unit
Total cost to be accounted for 45600 118700 187700
Total equivalent units 45600 45600
2.60 4.12
Assign cost to unit transferred
out and units in ending WIP
Cost assigned to unit transfer out 118700 187700 306400
cost assigned to ending WIP
inventory 25614 40504 66118
Total cost accounted for 372518
Work in process a/c
Opening balance 5600
Closing
balance 28560
transfer 22960
28560 28560
Formula solution:

Cost Accounting
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C D E F G H
Process 1 Physical Total
Flows Material Labour
Units to account for:
From begining WIP 5600
Units started during the year 45600
Total units to account for =E11+E12
Units accounted for:
Completed and transferred out 45600 =E16 =F16
Ending WIP
Total units accounted for =E13
Total equivalent Units =F16+F17 =G16+G17
Summary og cost to be accounted for
Cost of begining WIP 45600
Cost incurred during the period 118700 187700
Total cost to be accunted for =E23 =F24 =G24
Calculation of cost per equivalent unit
Total cost to be accounted for =E25 =F25 =G25
Total quivalent units 45600 45600
=F29/F30 =G29/G30
Assign cost to unit transferred out and units in ending WIP
Cost assigned to unit transfer out =F31*F16 =G31*G16 =F35+G35
ost assined to ening WIP inventory =(32800*30%)*F31 =(32800*30%)*G31 =F36+G36
Total cost accounted for =H35+H36
Opening balance 5600 Closing balance =D42+D43
transfer =32800*70%
=D42+D43 =F42
Casablanca Limited
Production Report
Equivalent Units
Work in process a/c

Cost Accounting
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Joint costing:

Cost Accounting
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Normal Solution:
A)
Product A Product B
Material 60000 40000
Cost
$
1,87,500
$
1,62,500
Further
Processing
$
45,000
$
25,000
Total cost
$
2,32,500
$
1,87,500
Total units 60000 40000
Cost (per unit)
$
3.88
$
4.69
Selling price (per
unit)
$
4.50
$
5.44
Gross margin rate 16.13% 16.13%
B)
If the firm receives on option of selling the product A for $ 2 per kg before
processing it further than the offer should not be accepted by the company as the total cost of
product A at that level would be $ 3.13 and if the company would sell it in just $ 2 than the
company would have to face a great loss of 36%. Thus it is suggested to the company to
process further and must not sell the product at split off point.
Product A Product B
Material 60000 40000
Cost
$
1,87,500
$
1,62,500
Total cost
$
1,87,500
$
1,62,500
Total units 60000 40000
Cost (per unit)
$
3.13
$
4.06
Selling price (per
unit)
$
2.00
$
4.72
Gross margin rate -36.00% 16.13%

Cost Accounting
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Formula solution:
A)
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B C D
Product A Product B
Material 60000 40000
Cost 187500 =350000-C5
Further Processing 45000 25000
Total cost =C5+C6 =D5+D6
Total units =C4 =D4
Cost per unit =C7/C8 =D7/D8
Sellinf price per unit 4.5 =D9*116.13%
Gross margin rate =(C10-C9)/C9 =(D10-D9)/D9
b)
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G H I
Product A Product B
Material 60000 40000
Cost =C5 =D5
Total cost =H5+H6 =I5+I6
Total units =H4 =I4
Cost per unit =H7/H8 =I7/I8
Sellinf price per unit 2 =I9*116.13%
Gross margin rate =(H10-H9)/H9 0.1613
=H8*(H10-H9)

Cost Accounting
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Suggestions: