Cost Accounting Project Report: Job Costing and Variance

This cost accounting project report provides a detailed analysis of various cost accounting techniques. The report includes solutions for job costing problems, demonstrating the calculation of direct materials, direct labor, and overhead costs. It also covers process costing, joint costing, and variance analysis, including material price and usage variances, and labor rate variances. Additionally, the report presents a business report with an executive summary, introduction, and analysis of overhead variance. The project further incorporates budgeting exercises, including the creation of a purchase budget and cost of goods sold calculations, along with formula solutions and managerial suggestions. This comprehensive report is designed to aid in understanding key cost accounting principles and their application in financial management.

Running Head: Cost Accounting
1
Project Report: Cost accounting

Cost Accounting
2
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
3
Balance c/d 55000
88000 88000
Formula solution:
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
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
4

Cost Accounting
5
Management accounting & history:
Roman colesium is one of the ancient places of Roman. It was a theatre and it was
known for its architecture and the various activities which have been played in the place.
History (2018) explains that in former time, the building was one of the highest visited place
in the roman but with the time, people have lose their interest in the place and until 18th
century, people were using the place for building material. In 18th century, two third part of
the place had been destroyed and then the related parties made few changes into the place to
make it attractive again and made it in such a manner that people could use it.
It explains that the changes are the part of everything in the world. Every place, thing,
item, tool, techniques, machineries etc must be changed with time. If it doesn’t happen than

Cost Accounting
6
the thing loses its importance. Same has happened with the cost accounting, in last few
decades, the managers have lost their interest in the cost accounting techniques due to its non
practice tools and techniques. But few innovation and the modern technologies have helped
the manager to develop the trust again and manage the better performance of the company on
the basis of modern cost accounting.
.
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

Cost Accounting
7
Units accounted for:
Completed and transferred out 32800 32800 32800
Ending WIP 18400 5520 1656
Total units accounted for 51200 0 0
Total equivalent Units 38320 34456
Summary of cost to be accounted for
Cost of beginning WIP 45600
Cost incurred during the period 118700 187700
Total cost to be accented for 45520 118700 187700
Calculation of cost per equivalent
unit
Total cost to be accounted for 45520 118700 187700
Total equivalent units 45680 49544
2.60 3.79
Assign cost to unit transferred out and
units in ending WIP
Cost assigned to unit transfer out 85231.17 124264.5 209496
cost assigned to ending WIP inventory 25569 37279 62849
Total cost accounted for 272344
Formula solution:

Cost Accounting
8
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
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 32800 =E16 =F16
Ending WIP =E13-E16 =E17*0.3 =F17*0.3
Total units accounted for =E13 =F13 =G13
Total equivalent Units =F16+F17 =G16+G17
Summary of cost to be accounted for
Cost of begining WIP 45600
Cost incurred during the period 118700 187700
Total cost to be accunted for =E12+F17-E11 =F24 =G24
Calculation of cost per equivalent unit
Total cost to be accounted for =E25 =F25 =G25
Total quivalent units =E18-F17 =E18-G17
=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
Casablanca Limited
Production Report
Equivalent Units

Cost Accounting
9
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
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
10

Cost Accounting
11
Joint costing:
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)

Cost Accounting
12
The case explains that the company has received an offer which says that if the
company wants to sell the product A without any further processing than $ 2 per product
would be paid to the company. However, through the analysis, it has been measured that the
cost per unit of the company before any further processing is $ 3.13, so if the company would
sell the product A to the dealing company without any further cost than the company would
have to face -36% losses.
It suggests that the offer must not be accepted by the company.
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%
$ -
67,500.00
Formula solution:
A)
3
4
5
6
7
8
9
10
11
12
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)

Cost Accounting
13
3
4
5
6
7
8
9
10
11
12
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
14
Suggestions:

Cost Accounting
15
According to the above calculations, it has been found that the current cost of the
product A and Product B of the production house is $ 4.50 and $ 5.44 per unit. And the gross
profit margin of the company is 16.13% per product. If a new deal is offered to the firm about
selling price of product A in $ 2 than the cost per unit of the product would be $ 3.12 and the
deal price is $ 2 only. It explains that the deal must not be accepted by the company and the
company should process further.
Variance analysis:
Normal Solution:
Standard cost variance analysis - JEDI limited
Data
Standards
Calculation of material purchase price variance
Standard Price (A)
$
7
Actual Price (B)
$
6.36
Actual quantity (C) 3,20,000
DM purchase price variance
(A-B)*C
$
2,04,000.00
Favourable
Calculation of material usage variance
Standard Quantity (A) 2,64,000
Actual Quantity (B) 2,03,000
Standard Price (C)
$
7.00
DM material usage variance
(B-A)*C
$ -
4,27,000.00
Unfavourable

Cost Accounting
16
Calculation of actual direct labour rate per hour
Direct Labour Variance 2378
Standard rate
$
30
Actual Hours 60,000
Actual direct labour rate per
hour 45.06
Formula solution:
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
B C D E
Standard cost varinace analysis - JEDI llimited
Data
Standards
Kg/ hour Per unit Total
Material 12 7 =C9*D9
Direct Labour 3 30 =C10*D10
Monthly Production Data
Units Produced 22000
Material Used 203000 kg
Labour Worked 60000 Hours
Material Purchased 320000 Kg
Total Material Purchased 2036000 =C18/C17
Total Direct labour variance -2378
Standrad Price (A) =D9
Actual Price (B) =C18/C17
Auctual quantity (C) =C17
DM purchase price varinace (A-B)*C =(C25-C26)*C27
=IF(C28>=0, "Favorable", "Unfavourable")
Standrad Quantity (A) =C14*C9
Actual Quantity (B) =C15
Standard Price (C) =C25
DM material usge varinace (B-A)*C =(C34-C33)*C35
=IF(C36>=0, "Favorable", "Unfavourable")
Direct Labour Variance =-D20
Standrad rate =D10
Actual Hours =C16
Actual direct labour rate per hour =((C43*C42)+C41)/40000
Calculation of material purchase price varinace
Calculation of material usage varinace
Calculation of actual direct labor rate per hour

Cost Accounting
17
Business report:

Cost Accounting
18
Executive summary:
This report says the user about the variance analysis, its purpose, the importance of
variance analysis in an organization and the various types of variances in an organization. In
this report, overhead variance has also been studied to measure the performance of the
company.
Introduction:
Variance analysis is mathematical tool which also includes the science and art
characteristic. This tool explains that an organization must be evaluated that budget of the
company. Variance analysis helps the managers to do the same. It evaluates the budgeted
figure of the company which has been estimated a period before and the actual data which
has been received by the company after a period of time to measure the differences and the
reasons behind the differences.
Variance analysis purpose:
The main purpose of the variance analysis study is to measure the changes into the
budgeted and the actual figures as well as variance analysis makes it easier for the company
to identify the points due to which the comapny has failed to achieve the target. The main
purpose of the company is to set the relationship among the budgeted and actual figures of
the company and measure the future performance of the company on the basis of current year
variance analysis and the budgetary process of the cost accounting (Weygandt, Kimmel &
Kieso, 2015).
There are various tools of variance analysis which measure the material price variances,
material usage variances, labour price variance, labour hour variances, overhead variances.
All the variances are calculated by the company to measure the different result.
Variance analysis importance:
Variance analysis is one of the important factors to measure the performance of the
company. variance analysis study assist the management of the company to make better
decision about the position of the company as well as it also assist the company to identify
the current differences among the expected and actual performance of the company.
Overhead variance analysis:

Cost Accounting
19
Overhead variance is a part of variance analysis which measures the differences among
the overhead rate of an organization, the total overhead amount, total time of the production
etc. Overhead variance study makes it easier for the organization to identify the total cost of
the company and the differences among the cost of the company.
Overhead variance analysis formulas of the company are as follows:
(Kaplan & Anderson, 2013)
The overhead variance study makes it easier for an organization to control over the
overhead cost of the company and measure the performance of the company to a great level.
Conclusion:
To conclude, variance analysis is a crucial part of an organization which is useful for
the companies to identify the main reasons due to which the company is not able to meet all
the expenses of the company. this study is quite easier to calculate and analyze.
Budgeting:
Normal Solution:
Cost of goods sold
Mar June Sept Total
Total Sales 1,37,500 1,09,346 1,19,456 3,66,302
Cost of goods sold (Sales
*60%) 82,500.0 65,607.6 71,673.6 2,19,781

Cost Accounting
20
Purchase Budget
Mar June Sept Total
Total Cost of goods sold 82,500 65,608 71,674 2,19,781
Less: Opening inventory
-
47,890
-
54,682
-
56,502
-
1,59,074
Ass: closing inventory
(35000+ 30% of next month
sales) 54,682 56,502 56,600 1,67,784
Total Purchase amount 89,292 67,427 71,772 2,28,491
Inventory Budget
Mar June Sept Total
Opening inventory 47,890 54,682 56,502 1,59,074
Add: Purchase 89,292 67,427 71,772 2,28,491
Less: Cost of goods sold
-
82,500.0
-
65,607.6
-
71,673.6
-
2,19,781.2
Closing inventory 54,682 56,502 56,600 1,67,784
Formula solution:

Cost Accounting
21
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
C D E F G
Mar June Sept Total
Total Sales =D7 =E7 =F7 =SUM(D16:F16)
Cost of goods sold (Sales *60%)=D16*0.6 =E16*0.6 =F16*0.6 =SUM(D17:F17)
Mar June Sept Total
Total Cost of goods sold =D17 =E17 =F17 =SUM(D23:F23)
Less: Opening inventory -47890 =-D25 =-E25 =SUM(D24:F24)
Ass: closing inventory (35000+ 30% of next month sales)=35000+(30%*E23) =35000+(30%*F23) =35000+(30%*(60%*120000))=SUM(D25:F25)
Total Purchase amount =SUM(D23:D25) =SUM(E23:E25) =SUM(F23:F25) =SUM(G23:G25)
Mar June Sept Total
Opening inventory =-D24 =-E24 =-F24 =-G24
Add: Purchase =D27 =E27 =F27 =G27
Less: Cost of goods sold =-D17 =-E17 =-F17 =-G17
Closing inventory =SUM(D33:D35) =SUM(E33:E35) =SUM(F33:F35) =SUM(G33:G35)
Purchase Budget
Cost of goods sold
Inventory Budget

Cost Accounting
22
Budgeting as a choice process:

Cost Accounting
23
Preparing the budget is always a choice for the individuals, offices, organizations,
government etc. Budgeting reports are prepared by them to make a strategy and plan for the
future of the company. It explains that how much profit could be generated by the company
and how much cost would be occurred into the financial performance of the company.
Garrison et al, (2015) explains that the budgeting is an internal forecasting report which is not
published by the companies and used by the companies for the policy and strategy making,
According to the below picture, it has been found that n individual is planning for next
month budget and it is estimated by the individual that she would be able to make $ 30 in a
month and which is quite better for her to manage the entire expenses of a month. It explains
that she has already planned about the future revenue of the company.
Figure 2