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KOJADI INSTITUTE DIPLOMA IN BUSINESS ADMINISTRATION CA203 COST ACCOUNTING TASK SET 1 Submission Date: 31/1/2012 Part A 1. 2.

Define and illustrate a cost object. Describe the 3 purposes for which cost information is required. 3. Classify each of the following as being usually fixed (F), variable (V), semi-fixed (SF) or semi-variable (SV): a. b. c. d. e. f. g. h. i. a. b. c. d. a. b. c. d. Direct labour Depreciation of machinery Factory rental Supplies and other indirect materials Advertising Maintenance of machinery Factory managers salary Supervisory personnel Royalty payments 4. Prime cost is: All costs incurred in manufacturing a product The total cost of direct costs The material cost of a product The cost of operating a department 5. Fixed costs are conventionally deemed to be: Constant per unit of output Constant in total when production volume changes Outside the control of management Those unaffected by inflation 6. Calculation of earnings a. A company is proposing to introduce an incentive scheme into its factory. Required: Three advantages and three disadvantages of individual incentive schemes.

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b. The company is undecided on what kind of scheme to introduce. Required: From the following information calculate for each employee his earnings, using: i. Guaranteed hourly rates only (basic pay) ii. Piecework, but with earnings guaranteed at 75% of basic pay where the employee fails to earn this amount
A Actual hours worked Hourly rate of pay Output (units) 38 RM3.00 42 72 92 Employees B C 36 RM2.00 120 76 40 RM2.50 50 D 34 RM3.60 120 270 -

X Y Z

Standard time allowed (per unit): X: 6 minutes Y: 9 minutes Z: 15 minutes Each minute earned is valued at RM0.05 for piecework calculation.

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Part B 1.A cost that changes with the number of units produced, but that can never be zero, is what kind of cost? 2. Manufacturing overhead is allocated as what kind of cost? 3. A cost that changes with the number of units produced and is zero when no units are produced is what kind of cost? 4. A cost that remains unchanged across the relevant range of units produced is what kind of cost? 5. The costing system that tracks costs to a department or work group and assigns the cost to products produced by that department or work group is which kind of costing system? 6. A costing system that tracks costs to a specific lot of a product is which kind of costing system? 7. The costing system that initially assigns all costs to Cost of Goods Sold and then removes them to the appropriate inventory values is which kind of costing system? 8. In an Activity Based Costing (ABC) system, plant insurance is most likely to be which level of cost?

aemy2010@gmail.com CA203 Jan 2012

Part C 1. A company makes one product, which has variable manufacturing costs of $3.25 per unit and variable selling and administrative costs of $1.17 per unit. Fixed manufacturing costs are $42,300 per month, and fixed selling and administrative costs are $29,900 per month. The company wants to earn an average monthly profit if $15,000, and they expect to produce and sell an average of 40,000 units of the product per month. What is the minimum selling price management can be expected to set to meet their profitability goals? 2. A company has the following cost data for the month: Beginning Raw Materials Inventory: $12,500 Raw Materials Purchases: $47,000 Ending Raw Materials Inventory: $8,200 Beginning Work in Process Inventory: $4,700 Ending Work in Process Inventory: $2,800 Beginning Finished Goods Inventory: $27,600 Ending Finished Goods Inventory: $29,200 Direct Labor Costs: $64,400 Manufacturing Overhead Costs: $14,500 What is the Cost of Goods Sold for the month?

aemy2010@gmail.com CA203 Jan 2012

Part D In the course of running the operations of a business, many different kinds of transactions take place. In a manufacturing business, transactions are often classified as manufacturing or non manufacturing. In making decisions, it is important to distinguish between manufacturing accounts and non manufacturing accounts. This distinction is necessary in order to prepare the cost of goods manufactured statement and the income statement. A list of account items is given below. For each account item, indicate by check mark ( / ) the category in which the account item is normally classified. There are a few items in the list that do not fall into the manufacturing and non manufacturing categories and should not be checked. Only one column for each item should be checked. Manufacturing Non Manufacturing Cost/Expense Time Materials Labor OH Selling General and Expenses Administrative Executive salaries Material X purchases Factory supplies Advertising Depreciation, factory equipment Freight-in - material X Finished goods Factory labor, cutting department Sales people training cost Supervision labor factory Sales people salaries Factory labor, assembling department Secretarial salaries Office expense Utilities, factory Material Y purchases Sales people travel expense Cash Allowance for bad debts Factory workers training cost -The End-

aemy2010@gmail.com CA203 Jan 2012

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