UNITY UNIVERSITY COLLEGE

SCHOOL OF DISTANCE AND CONTINUING EDUCATION

Worksheet for Cost and Management Accounting I (Acct 211)

Name________________________
Id. No_______________________
Department __________________
P.O.Box______________________
Region (Zone)_________________
Centre _______________________
Last date of submission ____________

This is a worksheet you are expected to do on your own. It carries 25 points. The
worksheet should be completed and mailed to the School of Distance and
Continuing Education for evaluation. Do not try to complete the worksheet until
you have covered all the readings in the course material.

Any question in the course, that you have not been able to understand, should be
stated on a separate sheet of paper and attached to this worksheet. Your tutor
will clarify them for you either by his/her comments on your worksheet or on
the tutorial programs.
After completing this worksheet, be certain to write your Name, Id.No and
Address on the first page. Only your Name and Id.No on the other pages. Also
do not forget to leave enough margin on the left side of your answer sheet for
comments by your tutor.

Be sure that this worksheet has _8_ pages including the cover page.
PART I. TRUE OR FALSE (5 pts)
INSTRUCTION: Write the word “True” if the statement is correct and the word “
False” if the statement is incorrect. (0.5 point each)

___________1. Cost of finished goods does not include factory overhead costs-since
factory overhead costs can’t be identified cost effectively with a
particular product or job.
________________2. After departments have accumulated manufacturing overhead
costs, they must be allocated to jobs or products.
________________3. Under a job order cost system, the costs are accumulated for each
department with in the factory.
________________4. As a practical matter, in order for costs to be classified as direct
material cost, the cost must only be an integral part of the finished
product.
________________5. Manufacturing cost is the sum of conversion cost and prime cost of
a given period.
________________6. The time card shows the total hours worked by the employee each
day and also the particular job worked on.
________________7. A debit balance in the Manufacturing Overhead account at the end
of a period would mean that overhead was under applied for the
period.
________________8. All the raw materials purchased during a period are included in the
cost of goods manufactured figure.
_________________9. Actual manufacturing overhead costs are charged directly to the
Work in Process account as the costs are incurred.

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PART II. MULTIPLE CHOICES. (5 pts)

INSTRUCTION: Choose the best answer among the given alternatives and encircle
the letter of your choice. (0.5 pt each)

1. In a job order cost system, the basic document for accumulating costs by individual job
is:
A. The material materials requisition form;
B. The job cost sheet;
C. The Work in Process control account;
D. The labor time ticket;
E. None of these
2. Yellow Company bases its predetermined rates on machine hours. Its estimates for
2003 were: overhead, $60, 000; machine hours, 40,000. Actual operating data for 2003
were: overhead, $65,100; machine hours, 42,000. Under or over applied for the year
would be:
A. Under applied, $ 2,100
B. Over applied, $3, 000
C. Under applied, $3,000
D. Over applied, $5,100
E. None of these
3. For a manufacturing company, which of the following is an example of a period cost
rather than a product cost?
A. Depreciation on factory equipment
B. Wages of sales person.
C. Wages of machine operators.
D. Insurance on factory equipment.
E. None of the above

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4. Which of the following is correct referring to a step-down (sequential) method of
allocating service department costs?
A. It is a less accurate method of allocating than the direct method.
B. It can’t be used when a company has more than two service departments.
C. It is a simple allocation method than the direct method.
D. It recognizes partial interdepartmental services.
E. None of these.

Based on the following data answer questions # 5 to 6

Horizon Plc is a medium sized manufacturing business that started operation as of
December 1, 2005(no inventories were available). The following condensed information
is taken from the accounting records of the business maintained for the month of
December 2005:
Raw materials purchased …………………………………… Br.135, 000
Direct labor costs……………………………………………. 50, 000
Inventories, December 31, 2003:
Raw materials inventory…………………………….. 18, 000
Work in process…………………………………….. 70, 000
Finished goods inventory………………………… 45, 000
Factory overhead incurred consists of:
Indirect materials………………………………… 16, 000
Indirect labor………………………………………. 4, 500
Other overhead costs……………………………… 20, 800
Assume no under or over applied manufacturing overhead.

5. Based on the above information, the conversion costs would be:

a. Br.158, 300 d. Br.176, 300
b. Br.91, 300 e.None of the above.
c. Br.86, 300

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6. The cost of goods manufactured amounted to:
a. Br.158, 300 d. Br.176, 300
b. Br.91, 300 e.None of the above.
c. Br.86, 300
7. XYZ Co.’s manufacturing overhead account showed a Br.10, 000 under applied
overhead balance on the December 31. Other accounts showed the following balances on
that date:
Raw materials Br. 50,000
Work in Process 40,000
Finished Goods 60,000
Costs of Goods Sold 100,000
If the company prorates the under applied overhead, the amount allocated to Work in
Process would be:
A. Br.2, 000 C. Br.1, 600
B. Br.4, 000 D. None of these
8. On the schedule of costs of goods manufactured, the final cost of goods manufactured
figure:
A. Represents the amount of cost charged to Work in Process during the period.
B. Represents the amount transferred from Work in Process to Finished Goods
during the period.
C. Represents the amount of cost placed into production during the period.
D. Represents the amount of the costs of goods sold reported on the income
statement during the period.
E. None of these

Answer questions # 9 & 10 based on the following data.

Annual demand of raw materials____________________________20,000 units
Ordering cost per order___________________________________ Br 5
Annual carrying cost per unit________________________________Br 0.2
Purchase price per unit of material___________________________Br 24

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9. The Economic Order Quantity (EOQ) in units is:
a) 1,000 d) 4,000
b) 2,000 e) none of the above
c) 20,000

10. The EOQ in monetary amount is:

a) Br 24,000 d) Br 96,000
b) Br 48,000 e) none of the above
c) Br 480,000
11. .XYZ Company employs a process costing system. The following information applies
to the current period:
The ending work in process (WIP) inventory consists of 9, 000 units. The ending
inventory is 100% complete as to materials and 70% complete as to labor and
overhead. If the production cost per equivalent unit for the period is Br.3.75 for
material and Br.1.25 for labor and overhead, what is the balance of the ending
WIP inventory account?
A. Br.41, 625 C. Br.45000
B. Br.33, 750 D. None of the above

PART III EXERCISES (15 pts)

INSTRUCTION: Show all your steps and computations neatly and legibly.
EXERCISE 1 (4 Points)

Bright Company uses a job order costing system at its manufacturing plant. The plant
had a machining department and assembly department. Manufacturing overhead costs are
allocated based on machine hours in the Machining department, and direct labor cost in
the Assembly department. The 2004 budget for the plant is as follows:

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 Machining Assembly
Manufacturing overhead $1,800,000 $3,600,000
Direct labor cost 140,000 200, 000
Direct labor hours 10, 000 200, 000
Machine hours 50,000 20,000
The company used sa budget rate for allocating overhead to production; machine hour
basis in the machining department and direct labor cost basis in the assembly.
Instructions:
a) Compute the budgeted manufacturing overhead rate for each department.
b) During February, the cost record for Job # 101 contained the following
Machining Dep’t Assembly Dep’t
Direct material $ 45, 000 $70, 000
Direct labor 14,000 15,000
Direct hours 1, 000 1, 500
Machine hours 2, 000 1, 000
Compute the total manufacturing overhead applied to Job # 101.

c) Compute the total manufacturing cost of Job #101 and compute the unit cost if
100,000 units were produced.
d) At the end of 2004, the actual manufacturing overhead costs were $2,100,000 in
machining and $ 3,700,000 in assembly. Assume that 55,000 actual machine
hours were used in machining and that actual direct labor costs in the assembly
were $220,000.
i) Compute the over or under allocated manufacturing overhead for each
department.
department.
ii) Compute the over or under allocated manufacturing overhead for the
factory as a whole.
whole.

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EXERCISE I I (5 Points)
DYNAMIC Manufacturing Company uses a job order costing system. The following
information is a partial transaction completed by the firm during the month of April 2005:
a) Materials were purchased during the year at a total cost of
Br. 90,000 on account.
b) During the month, the cost of materials requisitioned for production amounts Br.
75,000. Of this amount the direct materials costs traceable to the only jobs in
process- Job # 202 and Job # 203 are Br. 40,500 and Br. 30,000, respectively. The
remainder is the cost indirect materials used up during the year on both jobs.
c) Total wages and salaries of the manufacturing employees accrued amounted Br.
112,500 for the year. The wages and salaries traceable to Job # 202 and Job # 203
are Br. 60,000 and Br. 30,000 respectively. The remainder is considered as
indirect labor costs.
d) The company incurred the following general factory costs applicable to both jobs
during the year( credit Accounts Payable)
 Utilities (heat, light, & power)…………Br. 30,500
 Rent on Factory Equipment………… 24,000
 Miscellaneous Factory Costs…………... 4,500
e) During the year the company recognized Br.19,500 in accrued property taxes on
factory building and Br. 13,500 in insurance expired on factory building and non-rented
equipment.
f) The company recognized a depreciation of Br.27, 000 on the factory non-rented
equipment and machinery.
g) The company selected the machine hours as application base for manufacturing
overhead costs. The yearly budgeted manufacturing overhead cost amounts in total Br.
945, 000. The yearly budgeted machine hour requirement for all jobs is 157,500
machine hours. During the given month 15, 000 machine hours were worked on Job #
202 and 7,500 machine hours were worked on Job # 203.

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 Instruction:
Instruction: Make the necessary journal entries to record the above
transactions.

Exercise III (6 points)

Free Zone Business makes super-premium cake mixes that go through two processes,
blending and packaging. The following activity was recorded in the Blending Department
during June:
 Production data:
 Units in process, June 1: 30% complete
as to conversion costs 20,000
 Units started in to production 340,000
 Units completed and transferred to packaging ?
 Units in process, June 31: 40% complete
as to conversion costs 40,000

 Cost data:
 Work in process inventory, June 1:
o Materials cost Br. 17,000
o Conversion cost 9,800 26,800
 Costs added during the month:
o Materials cost 178,800
o Conversion cost 488,400 667,200
 Total cost Br. 694,000
 All materials are added at the beginning of work in the Blending Department
conversion costs are added uniformly during processing.
Required:
1. If the company uses FIFO method, prepare a cost of production report.
2. Prepare journal entries to record the following transaction using FIFO method.
(a) issuance of direct materials
(b) conversion costs
(c) the transfer of completed units from Blending to Packaging.