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Cost I Assignment 2023

This document provides an individual assignment on cost and management accounting for third year extension management students. It includes discussion questions on differentiating management accounting from financial accounting, cost drivers, variable and fixed costs, manufacturing costs, inventory costs, direct and indirect costs, job-costing vs process-costing systems, under- or over-allocation of indirect costs, adjusted allocation rates, joint costs, and product sales decisions. It also includes a work out question requiring students to prepare journal entries to record manufacturing transactions for a job-order costing company.

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25 views2 pages

Cost I Assignment 2023

This document provides an individual assignment on cost and management accounting for third year extension management students. It includes discussion questions on differentiating management accounting from financial accounting, cost drivers, variable and fixed costs, manufacturing costs, inventory costs, direct and indirect costs, job-costing vs process-costing systems, under- or over-allocation of indirect costs, adjusted allocation rates, joint costs, and product sales decisions. It also includes a work out question requiring students to prepare journal entries to record manufacturing transactions for a job-order costing company.

Uploaded by

danielnebeyat7
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AKSUM UNIVERSITY

College of business and Economics


Department of Accounting and
Finance
Individual assignment: Cost and management accounting I
For Year: III Extension Management students Min. weight; 20%

Dear students, this assignment is a basis for your final exam and it has also credit for
your final grade so please attempt all questions and try to understand it.

Part I : Discussion questions


1. Differentiate management accounting from financial accounting and cost management?
2. Explain cost drivers, variable costs and fixed costs
3. What are the manufacturing costs
4. What are the three major categories of the inventorial costs of a manufactured product?
5. Define the following: direct materials costs, direct manufacturing labor costs, indirect
manufacturing costs, prime costs and conversion costs.
6. Give three factors that will affect the classification of a cost as direct or indirect.
7. How does a job-costing system differ from a process-costing system?
8. Give two reasons for under- or over allocation of indirect costs at the end of an
accounting period
9. Why might a company prefer the adjusted allocation rate approach over a proration
approach to under- or over allocated indirect costs?
10. Why might the number of products in a joint-cost setting differ from the number of
outputs? Give an example.
11. Managers must decide whether a product should be sold at split-off or processed further.
The sales value at split-off method of joint-cost allocation is the best method for
generating the information managers need.’ Do you agree? Why?

1
Part II: Work out questions

1. Hogle Corporation is a manufacturer that uses job-order costing.

The following transactions were recorded for the year:


a) Raw materials were purchased on account, $410,000.
b) Raw materials were requisitioned for use in production, $380,000 ($360,000 direct
materials and $20,000 indirect materials).
c) The following costs were accrued for employee services: direct labor, $75,000; indirect
labor, $110,000; sales commissions, $90,000; and administrative salaries, $200,000.
d) Sales travel costs were $17,000.
e) Utility costs in the factory were $43,000.
f) Advertising costs were $180,000.
g) Depreciation was recorded for the year, $350,000 (80% relates to factory operations, and
20% relates to selling and administrative activities).
h) Insurance expired during the year, $10,000 (70% relates to factory operations, and the
remaining 30% relates to selling and administrative activities).
i) Manufacturing overhead was applied to production. Due to greater than expected demand
for its products, the company worked 80,000 machine-hours during the year.
j) Goods costing $900,000 to manufacture according to their job cost sheets were
completed during the year.
k) Goods were sold on account to customers during the year for a total of $1,500,000. The
goods cost $870,000 to manufacture according to their job cost sheets.
Required:
1) Prepare journal entries to record the preceding transactions.

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