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Batch 6. Assessment. The following costs have been accrued for ABC Company for the month. Direct labor $210000 Indirect labor 85000 Supervision 32000 Sales commission 40000 Sale Salaries 18000. Classify the following 1. period costs 2. product costs 3. fixed costs

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batch 6

Batch 6

Assessment

slide2
The following costs have been accrued for ABC Company for the month.
  • Direct labor $210000
  • Indirect labor 85000
  • Supervision 32000
  • Sales commission 40000
  • Sale Salaries 18000
slide3
Classify the following
  • 1. period costs
  • 2. product costs
  • 3. fixed costs
  • 4. variable costs
slide4
Solution
  • 1. Period costs= marketing costs+ admin costs.
  • Ie
  • Sales commission + Sales salaries
  • = 40000+18000= 58000
slide5
Product cost = D.labor+ In. Labor+ Supervision
  • = 210000+ 85000+ 32000= 327000
  • 3. Fixed costs= Sales salaries+ Supervision
  • = 32000+ 18000= 50000
slide7
Question 2
  • The following information is from the books of a company at the end of the period.
  • Direct labor 140000
  • Sales commission 30000
  • Property tax on factory building 50000
  • Var. manf. Overhead 70000
  • Advertising expense 100000
slide8
Factory depreciation 60000
  • Direct materials used 130000
  • Required
  • 1. Fixed manfacturing overhead
  • 2. prime cost
  • 3. Manufacturing cost for the period
  • 4. Conversion cost
slide9
5. Variable manufacturing cost
  • 6. Total variable cost
  • 7. Direct product cost
  • 8. Total period cost.
slide10
Solution
  • 1. Fixed manf. Cost = property tax+ depreciation
  • = 50000+60000= 110000
  • 2. Prime cost= DM+ DL
  • 130000+140000= 270000
  • 3. M. cost= DL+DM+ PT+VOH+Dep
  • = 140000+130000+50000+70000+60000=450000
slide11
4. Conversion cost= OH+ DL

= PT+VOH+Dep+DL

50000+70000+60000+140000=320000

5. VM cost= DM+DL+VOH

130000+140000+ 70000= 340000

6. Total V.C= DM+DL+VOH+Sales commission

= 130000+140000+ 70000+30000= 370000

slide12
Direct product cost= DM+ DL
  • = 130000+140000= 270000
  • Total period cost= Sales com+ Advertising
  • = 30000+100000= 130000
slide13
Question 3
  • The following are from the books of a company at the end of April ( all figures are in thousands).
  • 1 April 30. April
  • Cash 56 42
  • Accounts reci. 200 220
  • WIP 120 116
  • Materials 41 47
slide14

The following are from the books of a company month of April ( all figures are in thousands).

  • 1 April 30. April
  • Cash 66 40
  • Accounts reci. 180 220
  • WIP 100 116
  • Materials 41 47
slide15
F.Goods 135 100
  • Acc. Payable 15 18
  • Raw.Mat.Purcahse - 80
  • Direct Lab.Payable 30 35
  • D.labor - 140
  • In.production cost - 93
  • Selling Expense - 85
  • Admin Expense - 90
  • Sales - 510
slide16
Required
  • 1. Prepare the CGS statement
  • 2. Prepare the income
  • 3. How much is paid to suppliers?
  • 4.How much is paid to direct labor?
  • 5. How much is collected form customers?
slide17

1. CGS

  • Direct Material 1.4 41
  • +Purchases 56
  • Direct material available 97
  • -Direct material 30.4 47
  • D. Material used 50
  • +D. Labor 140
  • D.cost of Man 190
  • +OH 93
  • Man.cost for the period 283
slide18
+WIP 1.4 120
  • -WIP 30.4 116
  • Cost of completed goods 287
  • +FGI 1.4 105
  • Cost of goods available for sale 392
  • -FGI30.4 110
  • CGS 282
slide19
2. Sales 510
  • -CGS 282
  • Gross margin 228
  • -Selling exp. 85
  • -Admin 90
  • Profit 53
slide20
3.Material purchase= 56
  • Acc. payable balance increase = 18-15= 3
  • Therefore the amount paid is
  • 56-3= 53
  • 4. DL cost = 140
  • DL payable increase = 35-30= 5
  • DL paid= 140-5= 135
slide21
Collections
  • Sales = 510
  • Increase in receivables= 220-200= 20
  • Collections= 510-20= 490
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