HAWASSA UNIVERSITY

COST AND MANAGEMENT ACCOUNTING- ASSIGNMENT

For Accounting & Finance Students

Chapter one and Two

1. Write the definition and the difference between management accounting, financial accounting and
cost accounting
2. What are direct costs and indirect costs? Explain by giving examples
3. What are variable costs and fixed costs and explain each of them by having examples
4. What is cost driver?
5. Explain the total costs and unit costs

Q6. Han plc is nine month old since established to manufacture different parts of a manual irrigation
pump. The company owners failed to maintain a formal accounting record for the nine months of
operation with the presumption that the volume of activity is small and can thus be effectively
administered by them. Lately, they have discovered the importance of maintaining an accounting record.
Assume that the firm hires you and your first duty is to prepare a six month income statement covering
the period from January 1, to June 30. The company management is capable of supplying actual data on
some items but the rest are estimates. You are given the following actual data.
1 Sales for the first six month is Br.240, 000
2. Inventory January 1.
Direct material --------------- 12,000
Work in process -------------- 8,800
Finished goods ---------------28,500
3. The gross margin is fairly estimated at 40% of sales, and direct labor is estimated to be one third of
conversion cost and one fourth of prime cost.
4. The period cost is totally estimated at 54,000 and marketing cost is estimated to be 40%.
5. Physical count of all inventories made as of June 30 reveals the following.
Direct material --------------- 9,000
Work in process --------------7,500
Finished goods --------------52,000
Required
a) Calculate the cost of goods sold
b) Calculate the cost goods manufactured
c) Calculate the direct labor cost
d) Calculate the direct material cost
e) Calculate the direct MOH cost

BY: A&M
Q7. Assume that Addis Ababa university press is wholly owned by the university and performs the bulk
of its work for other university department, which pay as though the press were an outside business
enterprise. The press also publishes and maintains a stock of books for general sale. A job costing
system is used to cost each job. There are two direct cost category (direct material and direct labor) and
one indirect cost pool ( MOH cost, allocated on the basis of direct labor cost). During the year 2008,
the following transactions occurred:
1. Raw materials of Br. 800,000 was purchased on account
2. Raw material of Br. 810,000 was used in the production of which Br.100,000 is indirect material.
3. Labor cost of Br. 2,200,000 was incurred of which Br. 900,000 is indirect labor.
4. Actual MOH cost other than indirect material and indirect labor is Br.750,000
5. MOH is applied at a rate of 160% of direct labor cost.
6. Cost of goods manufactured in the year is Br. 4,120,000
7. Revenue from sale of finished goods is Br. 8,000,000 for which cost of goods sold is Br.
4,020,000.All sales are on account.
Required:
a) Record the above transactions using controlling account
b)Calculate the under or over applied MOH cost
c) Close the under or over applied MOH cost to cost of goods sold
CHAPTER TWO (Job Order Costing System)

Q8. Assume Bishoftu Furniture Company manufactures chair for different hotels. The total
manufacturing cost for January is as follows.
A) The company purchases materials (direct and indirect) on credit, $200,000
B) It uses direct materials, $150,000, and indirect materials, $80,000
C) Manufacturing payroll for February: direct labour, $80,000, and indirect labour, $30,000, paid in cash.
D) Other manufacturing overhead costs incurred during February, $80,000, consisting of supervision and
engineering salaries, $60,000 (paid in cash); plant utilities, repairs, and insurance, $20,000 (paid in
cash); and plant depreciation, $20,000.
E) Allocation of manufacturing overhead to jobs, $180,000
F) Completion and transfer of individual jobs to finished goods, $340,800
G) Cost of goods sold, $430,000
H) Marketing costs for February, $80,000, and customer service costs for February, $20,000 paid in cash.
I) Sales revenues, all on credit, $500,000
Instruction: Prepare a journal entry

BY: A&M
CHAPTER Three (Process Costing System)
Q9. In January 2015, Dell Computers Company places another 1000 units of Laptops into production.
Because all units placed into production in December were completely assembled, there is no beginning
inventory of partially completed units in the assembly department on January. Additionally Only 450
units are completed and transferred to the testing department.
Data for the assembly department for February 2012 are as follows:
Physical Units Direct Conversion
(Car Seats) Materials Costs
Work in process, January 2015 0 $1,250,000 $ 402,750
Started during January 2015 1000
Completed and transferred out during January 450
Work in process, ending inventory (January 31) 550
Degree of completion of ending work in process 100% 60%
Total costs added during October 2012 $800,000 $300,000
Required: Perform the process costing by following the five steps of process costing system.
Q10. Assume ABC Company manufactures car seats in its X’s plant. Each car seat passes through the
assembly department and the testing department. This problem focuses on the assembly department. The
process-costing system at ABC Company has a single direct-cost category (direct materials) and a single
indirect-cost category (conversion costs). Direct materials are added at the beginning of the process.
Conversion costs are added evenly during the process. When the assembly department finishes work on
each car seat, it is immediately transferred to testing. Data for the assembly department for October 2014
are as follows:
Physical Units Direct Conversion
(Car Seats) Materials Costs
Work in process, October 2014 5,000 $1,250,000 $ 402,750
Started during October 2014 20,000
Completed during October 2014 22,500
Work in process, October 31 2,500
Total costs added during October 2012 $4,500,000 $2,337,500
Assume Degree of completion for October 1: direct materials, 100%; conversion costs, 60%.
Degree of completion for October 31: direct materials, 100%; conversion costs, 70%.
Assume ABC Company uses the weighted-average and FIFO method of process costing.
A) For each cost category, compute equivalent units in the assembly department.
B) Show physical units in the first column of your schedule.

BY: A&M
 C) For each cost category, summarize total assembly department costs for October 2014 and
calculate the cost per equivalent unit.
D) Assign total costs to units completed and transferred out and to units in ending work in process.
E) Prepare a set of summarized journal entries for all October 2012 transactions affecting Work in
Process- Assembly.

BY: A&M