Você está na página 1de 15

ACTIVITY BASED COSTING 1.

Following date relates to Beta Manufacturing Company which currently produces two products; X and Y. Product X Units produced p.a Material cost per unit Direct Labour per unit Direct labour time per unit Direct of set ups p.a Number of purchase orders Overhead costs: Set Up Purchasing Labour supervision 45,000 $ 1.50 $ 7.00 1Hr 30 70 $ 20,000 16,000 23,750 Product Y 5,000 $ 4.00 $ 3.50 30 Min 10 10

Required: Calculate the unit cost of products X and Y using Activity Based Costing. 2. Plant Y produces about one hundred products. Its largest selling product is Product A; its smallest is Product B. Relevant data is given below. Product X Units Produced p.a Material cost per unit Direct labour per unit Machine time per unit Number of set ups p.a Number of purchase order Number of times material handled Direct labour cost per hour Overhead costs: Set up Purchasing Material handling Machines 50,000 $ 1.00 15 min 1 hr. 24 36 200 $ 1.00 15 min 1 hr. 2 6 15 Product Y 1,000 Total Proucts 500,000

500 2.800 12,000 $5

$ 280,000 145,000 130,000 660,000 1,215,000

Total machine hours are 600,000 hours. Required: (a) Calculate the unit cost of Product A and B using Absorption costing based on machine hours. (b) Calculate the unit cost of Product A and B using Activity Based Costing. 3. The following information provides details of the costs. Volume and transaction cost drivers for a period in respect of XYZ Ltd. Products A Sales and production (Units) Raw materials usage (units Direct materials cost ( ) Direct Labour hours Machine hours Direct labour cost ( ) Number of production runs Number of deliveries Number of receipts 90,000 10 30 2.5 5 20 5 18 50 7 70 30 10 50 700 40 3 3 10 50 B 30,000 7 15 1.5 7.5 C 15,000 14 Total 135,000 1,320,000 4,125,000 337,500 652,500 2,850,000 65 75 820

JOINT PRODUCTS & By-PRODUCTS COSTING

1.

Three joint products are manufactured in a common process, which consists of two consecutive stages, Output from process 1 is transferred to process 2, and output from process 2 consists of three joint products, Hans, Nils and Bumps daisies. All joint products are sold as soon as they are produced.

Data for period 2 of 20x6 are as follows. Process 1 None 60,000 76,500 10% of input 0.50 per unit 26,000 units Process 2 None 226,200 10% of input 2 per unit 10,000 units of Han 7,000 units of Nil 6,000 units of Bumpsy daisy

Opening & closing stock Direct material (30,000 units @ 2 per unit) Conversion costs Normal loss Scrap value of normal loss Output

Selling price are 18 per unit of Han, 20 per unit of Nil and 30 per unit of Bumpsydaisy. Required: (a) Prepare the process 1 account (b) Prepare the process 2 account using the sales value method of apportionment (c) Prepare a profit statement for the joint products 2. During November 20X3, Splatter Ltd recorded the following results. Opening Stock Cost of Production Main product P, Nil By product Z, Nil 120,000

Sale of main product amounted to 90% of output during the period , and 10 % of production was held as closing stock at 30 November. Sales revenue from the main product during November 20X2 was 150,000. A by-product Z is produced, and output had a net sales value of 1,000 of this output 700 was sold during the month, and 00 was still in stock at 30 November. Required: Calculate the profit for November using the four methods of accounting for by products.

3.

A company operates a manufacturing process which produces joint products A and B, and by product C. Manufacturing costs for a period total 272,926 incurred in the manufacture of. A-16,000 kgs (selling price 6.10/kg) B-53,200 kgs (selling price 7.50/kg) C-2,770 kgs (selling price 0.80/kg)

Product

Required: Calculate the cost per kg (to 3 decimal places) of product A and B in the period, using market values to apportion joint costs. DIVISIONAL PERFORMANCE MEASUREMENT 1. A company compares results of its two divisions as follows: Division 1 160,000 Division 2 120,000

Sales

Cost of Sales Direct material Direct labour Production overhead Marketing overhead

40,000 40,000 22,000 42,000 144,000 Profit 16,000 Evaluate the performance of the two divisions 2. Following data is available for two divisions of a company, A And B.

20,000 30,000 20,000 35,000 105,000 15,000

A Sales 100,000 Profit 5,000 Capital employed 50,000 Calculate the ROI of two divisions and comment. 3.

B 100,000 5,000 25,000

At the end of 2010, Division S (part of a group) had a book value of non-current assets of Rs. 300,000 and net current assets of Rs. 40,000 Net profit before tax was Rs. 64,000.

The non-current assets of Division S consist of five separate items each costing Rs. 60,000 which are depreciate to zero over 5 years on a straight-line basis. For each of the past five years on 31 December it has brought a replacement for the asset that has just been withdrawn and it proposes to continue this policy, Because of technological advances, the asset manufacturer has been able to keep his prices constant over time, The groups cost of capital I 15%. Required: Assuming that, except, where otherwise stated, there are no changes in the above data, deal with the following separate situations: (a) Division S has the opportunity of an investment costing Rs. 60,000 and yielding an annual profit of Rs. 10,000. (i) Calculate its new ROI and Residual Income (on net book value) if the investment was undertaken. (ii) State whether the manager of Division S would recommend that the investment be undertaken. (b) Division S has the opportunity of selling, at a price equal to its written-down book value of Rs. 24,000 and asset that current earns Rs. 3,900 p.a (i) Calculate its now ROI and Residual Income (On net book value) if the asset was sold. (ii) State whether the manager of Division S would recommend the sale o the asset. A division with capital employed of $ 400,000 currently earns a ROI of 22% it can make an additional investment of $ 50,000 for a 5-year life with nil residual value. The average net profit from this investment would be $ 12,000 after depreciation. The division cost of capital is 14%.

4.

Calculate the residual income before and after the investment. 5. An investment centre has reported operating profit of Rs. 21 million. This was after charging Rs. 4 million for the development and launch costs of a new product that is expected to generate profit for four years. Taxation is paid at the rate of 25% of the operating profits. The company has a risk adjusted weighted average cost of capital of 12% per annum and is paying interest at 9% per annum on a substantial long term loan.

The investment centres non-current set value is Rs. 50 million and the net current assets have a value of Rs. 22 million the replacement cost of the non-current assets is estimated to be Rs. 64 million. Required: Calculate the investment centres EVA for the period. DIVISIONAL PERFORMANCE MEASUREMENT 1. A company compares results of its two divisions as follows: Division 1 160,000 Division 2 120,000

Sales Cost of sales

Direct material Direct labour Production overhead Marketing overhead

40,000 40,000 22,000 42,000 144,000 Profit 16,000 Evaluate the performance of the two divisions. 2.

20,000 30,000 20,000 35,000 105,000 15,000

Following date is available for two divisions of a company, A and B. A B Sales 100,000 100,000 Profit 5,000 5,000 Capital Employed 50,000 5,000 Calculate the FOI of two divisions and comment. 3. At the end of 2010, Division S (pat of a group) had a book value of non-current assets of Rs. 300,000 and net current assets of Rs. 40,000. Net profit before tax was Rs. 64,000. The non-current assets of Division S consist of five separate items each costing Rs. 60,000 which are depreciate to zero over 5 years on a straight-line basis. For each of the past five years on 31 December it has brought a replacement for the asset that has just been withdrawn and it proposes to continue this policy. Because of technological advances, the asset manufacturer has been able to keep his prices constant over time. The groups cost of capital is 15%. Required: Assuming that, except where otherwise stated, there are no changes in the above data, deal with the following separate situations: (a) Division S has the opportunity of an investment costing Rs. 60,000 and yielding and annual profit of Rs. 10,000. (i) Calculate its new ROI and Residual Income (on net book value) if the investment was undertaken. (ii) State whether the manager of Division S would recommend that the investment be undertaken. (b) Division S has the opportunity of selling, at a price equal to its written-down book value or Fs. 24,000 an asset that currently earns Rs.3,900 p.a. (i) Calculate its new ROI and Residual Income (On net book value) if the asset was sold. (ii) State whether the manager of Division S would recommend the sale of the asset. 4. A division with capital employed of $400,000 currently earns a ROI of 22% it can make an additional investment of $50,000 for a 5-year life with nil residual value. The average net profit from this investment would be $ 12,000 after depreciation. The division cost of capital is 14%. Calculate the residual income before and after the investment. 5. An investment centre has reported operating profit of Rs. 21 million. This was after charging Rs.4 million for the development and launch costs of a new product that is expected to generate profit for four years. Taxation is paid at the rate of 25% of the operating profits. The company has a risk adjusted weighted average cost of capital of 2% per annum and is paying interest at 9% per annum on a substantial long term loan. The investment centres non-current asset value is Rs. 50 million and the not current assets have a value of Rs. 22 million. The replacement cost of the non-current assets is estimated to be Rs. 64 million. Required: Calculate the investment centres EVA for the period.

PROCESS COSTING Input to a process is 1,000 units at a cost of $ 4,500. Normal loss is 10% and there are no opening or closing stocks. Determine the accounting entries for the cost of output and the cost of the loss if actual output were as follows: (a) 860 units (so that actual loss is 140 units) (b) 920 units (so that actual loss is 80 units) 2. During a four-week period, period 3, costs of input to a process were $ 29,070. Input was 1,000 units. Output was 850 units and normal loss is 10%. During the next period, period 4, costs of input were again $ 29,070. Input was again 1,000 units, but output was 950 units. There were no units of opening or closing stock. Required: 1. Prepare the process account and abnormal loss or gain account for each period. 3. Input to a process costs $ 1,370, normal loss in 10% and units srapped sell for $ 2 each. 100 units are input and 90 units output. Required: Show the process account and the scarp account. 4. Nan Ltd has a factory which operates two production processes. Normal spoilage in each process is 10% and scrapped units out of process I sells for 50p per unit whereas scrapped units out of process 2 sell for $ 3. Output from process I is transferred to process 2: output from process 2 is finished output ready for sale. Relevant information about costs for period 5 are as follows. Process1 Units $ 2,000 8,100 Process2 Units

$ Input materials Transferred to process 2 1,750 Material form process 1 1,750 Added material 1,250 1,900 Labour and overheads 10,000 22,000 Output to finished goods 2,800 Required: Prepare the following cost accounts (a) Process 1 (b) Process 2 (c) Abnormal loss (d) Abnormal gain (e) Scrap 5. Input to a process was 1,000 units at a cost or $ 4,500. Normal loss is 10% and there are no opening and closing stocks. Actual output was 860 units an loss units had to be disposed of at a cost of $ 0.90 per unit. Required: Prepare the process and abnormal loss account. 6. Columbine Ltd is a manufacturer of processed goods, and that results in process 2 for April 2003 were as follows. Opening stock Nil Material input form process 1 4,000 units Costs of input: Material from process 1 . $ 6,000 Added material in process 2 . $ 1,080 Conversion cost . $ 1,720 Output is transferred into the next process, process 3. Closing work in process amounted to 800 units, complete as to: Process 1 material Added material Conversion costs Required: Prepare the account for process 2 for April 2003. 7. Information relating to process 1 of a two-stage production process is as follows, for August 2002:

100% 50% 30%

Opening stock 500 units: degree of completion Cost to date Cost incurred in August 2002 Direct materials (2,500 units introduced) Production overheads Closing stock 300 units: degree of completion There was no loss in the process.

60% $ 2,800 $ 13,200 % 6,600 % 6,600 $ 26,400 80%

Required: Prepare the process 1 account for August 2002 using FIFO method. 8. The following information relates to process 3 of a three-state production process for the month of January 2004.

Opening stock: 300 units complete as to Material from process 2 Added material Labour Production overheads $ 4,400 1,150 540 810 6,900

100% 90% 80% 80%

In January 2004, a further 1,800 units were transferred form process 2 at a valuation of $ 27,000. Added materials mounted to $ 6,600 and direct labour to $ 3,270. Production overhead is absorbed at the rate of 150% of direct labour cost. Closing stock at 31 January 2004 amounted to 450 units, complete as to:

Process 2 material Added materials Labour and overheads

100% 60% 50%

Required: Prepare the process 3 account for January 2004 using FIFO valuation principles. 9. Magpie Ltd produces as item, which as manufactured in two consecutive processes. Information relating to process 2 during September 2003 it as follows. Opening stock 800 units Degree of completion: Process 1 material Added materials Conversion costs

100% 40% 30%

$ 4,700 600 1,000 6,300

During September 2003 3,000 units were transferred from process 1 at a valuation of $ 18,100. Added material cost $ 9,600 and conversion costs were $ 11,800. Closing stock at 30 September 2003 amounted to 1,000 units which were 100% complete with respect to process 1 materials and 60% complete with respect to added materials. Conversion cost work was 40% complete.

Required: Prepare the process 2 account for September 2003. 10. Data concerning process 2 last mount was as follows:

Transfer form process 1 Material added Conversion costs Output to finished goods Output scrapped Normal loss

400 kg at a cost of 3,000 kg 2,800 kg 400 kg

$ 2,150 $ 6,120 $ 2,344

10% of material added in the period

The scrapped units were complete in material added but only 50 per cent complete in respect of conversion costs. All scrapped units have a value of $ 2 each.

There was no opening work in progress, but 200 kg were in progress at the end of the mount, at the following stages of completion: 80% complete in materials added 40% complete in conversion costs

Required: Prepare the process 2 account, abnormal loss account and scrap account. 11. The following information is available for Process 3 in June: Units Cost $ 692 Process 2 Inputs % $ 100 176 100 Degree of Completion Material Added % $ 60 300 70

Opening Stock Closing stock Input Cost: Input From Process 2 Material Added Conversion Cost

100 80 900

Conversion % $ 30 216 55

1600 3294 4190

Normal loss is 10 per cent of input from Process 2; 70 units were scrapped in the month and all scrap units realize $ 0.20 each. Output to the next process was 850 units. The Company uses weighted average cost method for its processes. Required : Complete the Process 3 account for June. 12. The following informationis available for process 2 in October: Units Cost $ 1480 Process 2 Inputs % $ 100 810 100 Degree of Completion Material Added % $ 80 450 90

Opening Stock Closing stock

600 350

Conversion % $ 40 220 30

Input Cost: Input From Process 1 Material Added Conversion Cost

4000

6280 3109 4698

Normal loss is 5 per cent of input from Process 1, 300 units were scrapped in the month. The scrapped units had reached the following degree of completion: Material added 90% Conversion Cost 60% All scrapped units realized $ 1 each . Output to the next process was 3,950 units. Required: Complete the account for Process 2 and for the abnormal loss or abnormal gain in October. 13. The follwong data relates to Process 2 for one accounting period. Process 2 receives units from Process 1 and , after processing, transfers them to Process 3. Opening work in process (600 Units) $ % Complete 720 100 500 60 340 50 270 40

Process 1 material Added material Labour Overheads

Transfers in from Process 1: 4,100 units valued at $ 5,200 Transfers out to Process 3: 3,500 units Added Material Labour Overheads $ 2,956 $ 2,200 $ 1900

Closing stock 800 units at the following stage of completion Process 1 Material Added Material Labour Overheads 100% complete 100% complete 10% complete 30% complete

The normal scrap is 390 units and the scrapped units realized 40p each. Required: Prepare the Process 2 account using a) b) FIFO method Average cost method.

14. The following information relates to a manufacturing process for a period Material costs $16,445 Labour $ 28,596 10,000 units of output were produced by the process in the period, of which 420 failed testing and were scrapped. Scrapped units normally represent 5% of total production output. Testing takes place when production units are 60%

complete in terms of labour and overheads. Materials are input at eh beginning of the process. All scrapped units were sold in the period for $ 0.40 per unit. Required: Prepare the process accounts for the period including those for process scrap and abnormal losses/gains.

Variance Analysis

A.

MATERIAL VARIANCES
Total Material Variance Xxx units should cost Actual Cost (Actual units x standard material cost/unit) (Actual units x Actual material cost/unit) Fav Rs. 100,000 98,600 1400

1. Material Price Variance xxx kg should cost But did use (Actual quantity x Standard rate/kg) (Actual quantity x Actual rate/kg) Fav 117,000 98,600 18,400

B. Labour Variances
Total Labour Variance xxx units should cost Actual Cost (Actual units x Standard labour cost/unit) (Actual units x Actual labour cost/unit) Adv. 1. Labour Rate Variance (Actual hours x Standard rate/hr) ( Actual hours x Actual rate /hr) Adv. 2. Labour Efficiency Variance xxx units should have used But did use 15,400 17,500 2,100 15,000 17,500 2,500

xxx hrs should cost But did cost

(Actual units x Standard hours/unit) (Actual productive labour hours) Fav in hrs Fav in Rs.

3,000 hrs 2,980 hrs 20 hrs x Rs. 5/hr 100

3.

Idle Time Variance 3,080 hrs 2,980 hrs Adv in hrs Adv. In Rs. 100 hrs x Rs. 5/hr 500

Total Labour hours Productive labour house Idle time x Standard labour rate/hr

C.

Variable Overhead Variances Total Variable overhad Variance xxx units should cost Actual cost (Actual units x Standard variale OH cost/ unit) (Actual units x Actual variable OH cost/unit) Adv. 1. Variable ouverhead expenditure Variance xxx hrs should cost But did cost

Rs. 1,200 1,230 30

(Actual prod. Hours x Standard variable OH rate/ hr) (Actual prod. Hours x Actual variable OH rate/hr)

1,140 1,230

Adv. 2. Variable OH Efficiency Variance xxx units should have used But did use

90

(Actual units x Standard hours/unit) (Actual productive labour hours) Fav in hrs. Fav . in Rs.

800 hrs 760 hrs 40hrs x Rs. 1.5 /hr 60

D. Fixed
Variances

Overhead

Total fixed overhead Variances Fixed overhad absorbed Fixed overhead incurred 1. Fixed Overhead Expenditure Variacne Budgeted fixed overheads Actual Fixed overheads Adv. 2. Fixed overhead Variance Budgeted units Actual Units x standard Fixed OH/unit Fav. In Rs. E. SALES VARIANCES 1, Selling Price Variance xxx units should be sold for But did sold for 2. Sales Volume Profit Variance Budgeted sales volume Actual sales Volume Adv. In units Adv. In Rs. Or 2 Sales Volume Contribution Variance Budgeted sales volume Actual sales volume Adv in units x Standard contribution / unit Adv. In Rs. ( Actual units x Standard selling price/unti) (Actual untisx Actual selling price/unit) Fav 30,000 300,600 600 8000 units 7,700 units 300 units x Rs. 5/unit 1,500 Volume 1,000 units 1,100 units Fav. Ion units. 100 units x Rs. 20/ unit 400 (Actual units x Standard Fixed OH cost/unit) (Actual Fixed Overheads) Fav. 22,000 20,450 1550

(Budgeted units x Standdard fixed OH Cost/unit)

20,000 20,450 450

8,000 units 7,700 units 300 units x Rs. 3/ unit 900

Standard Costing 1. Bloggs Ltd. Makes one product, the Joe. Two types of labour are involved in the production of Joe, skilled and semiskilled. Skilled labour is paid $10 per hour and semi-skilled $5 per hour. Twice as many skilled labour hours as semiskilled labour hours are needed to produce a Joe, four semi-skilled labour hour being needed. A Joe is made of three different direct materials. Seven kilograms of direct material A, four liters of direct material B and three meters fo direct material C are neeed. Direct material A costs $1 per kilograms, direct material B $2 perliter and direct material C $3 per meter. Variable production overheads are incurred at Bloggs Ltd at the rate of $2.50 per direct labour (skilled) hours. A system of absorption costing is in operation at Bloggs Ltd. The basis of absorption is direct labour (skilled) hours. For the forthcoming accounting period, budgeted fixed production overheads are $250,000 and budgeted production of the Joe is 5,000 units. Administration, selling and distribution overheads are added to products at the rate of $10 per units. A mark-up of 25% is made on the joe. Required: Using the above information draw up a standard cost card for the joe.

BASIC VARIANCE ANALYSIS 1. Product X has a standard direct material cost as follows: 10 Kilograms of material Y at $10 per kilogram = $100 per unit of X During period 4, 1,000 units of X were manufactured, using 11,700 kilograms of material Y which cost $98,600 Required: Calculate the following variances 1. 2. 3. Direct material total variance Direct material price variance Direct material usage variance

2. The standard direct labour cost of Product X is as follows: 2 hours of grade Z labour at $5 per hour = $10 per unit of product X During period 4, 1,000 units of X were made, and the direct labour cost of Grade Z labour was $ 8,900 for 2,300 hours of work Reguired: Calculate the following variances: (a) Direct labour total Variance (b) Direct labour rate variance (c) Direct labour efficiency (productivity ) variance

3. The standard direct labour cost of product X is as follows: 2 hours of grade Z labour at $5 per hour = $10 per unit of product X During period 5, 1,500 units of product X were made and the cost of grade Z labour was $ 17, 500 for 3,080 hours. During the period, However, there is a shortage of customer orders and 100 hours were recorded as idle time. Required: Calculte the following variances (a) Direct labour total Variance (b) Direct labour rate variance (c) Idle Time variance (d) Direct labour efficiency (productivity ) variance

4. Growler Ltd. Is planning to make 100, 000 untis per period of produt AA. Each unit of A should required hours to produce, with labour being paid $11 per hour. Attainable work hours are less than clock hour so 250,000 hours have been budgeted in the period. Actual data for the period was :

Units produced Direct labour cost Clock hours Required: Calculate the following variances (a) Direct labour rate Variance

120,000 $3,220,000 280,000

(b) Direct labour efficiency variance (c) Idle Time variances.

5. The variable production overhead cost of product X is as follows: 2 hours $1.5 per hour = $3 per unit of product X During period 6, 400 units of X were made. The labour force worked 820 hours , of which 60 hours were recorded as idle tiem. The variable overhead cost was $1,230. Required: Calc ulate the following variances: 1. 2. 3. Variable overhead total variance Variable production overheads expenditure variance Variable production overhead efficiency variance

6. A company budgets to produce 1,000 units of product E during August 2003. The expected time to produce a unti of E is five hours, and the budtgeted fixed overhead is $20,000. The standard fixed overhead cost per unit of product e will therefore be as follows. 5 hours at $4 per hour = $20 per unti Actual fixed overhead expenditure in Autgust 2003 turns out to be $20,450. The labour force manages to produce 1,100 units of product E in 5,400 hours of work. Required: Calculate the following variances 1. 2. 3. 4. 5. Fixed overhead total variance Fixed overheads expenditure variance Fixed overheads volume variance Fixed overhead volume efficiency variance Fixed overhead volume capacity variance

7. The alternative Burger chain operates a group of burger restaurants specializing in unusual tastes and flavours. One of their best-selling lines is the Upside-Down Burger containing kangaroo meat. Because of the high volumes and closely specified recipes and procedures, they are considering the use of standard costing and variance analysis. Contents of a cooked, ready-to-eat Upside-Down Burger; 1 bun

110 grams meat and herb mix 55 grams buffalo cheese 25 grams relish It is a company policy to guarantee the cooked weight of meat to be aminimum of 110 grams. There is a 20% loss of meat weight during cooking. Losses due to accidental damage, dropped burgers etc are estimated to be 3% of completed burgers. Anticipated prices for raw materials for the next period are: Buns Meat and herb mix Buffalo cheese Relish 4.5 each $2.80 per kg $4.00 per kg $1.40 per kg

During the period, usage of meat and herb mix was 7,368 kg at a cost of $20,262 and 49,725 burgers were sold. There were no opening or closing stocks in the period. Required: a) Prepare the standard material cost of 1 Upside-Down Burger. b) Calculate the usage variance for the meat and herb mix in the period. 8. XYZ Ltd is planning to make 120,000 units per period of new product. The following standards have been set. Per unit 1.2 kgs at $11 per kg 4.7 kgs at $6 per kg

Direct material A Direct material B Direct labour: Operation 1 Operation 2 Operation 3

42 minutes 37 minutes 11 minutes

Overheads are absorbed at the rate of $ 30 per labour hour. All direct operatives are paid at the rate of $8 per hour. Attainable work hours are less than clock hours, so the 500 direct operatives have been budgeted for 400 hours each in the period. Actual results for the period were: Production 126,000 units Direct labour cost $ 1.7m for 215,000 clock hours Material A cost $ 1.65m for 150,000 kgs Material B cost $ 3.6 m for 590,000 kgs Required: 1. Calculate the standard cost for one unit. 2. Calculate the labour rate variance and a realistic efficiency variance. 3. Calculate the material price and usage variance