Company x Ltd. ,applying individualized costing per work, had 2 unfinished projects on 1/1/2019. Work A (85.000)

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Company x Ltd. ,applying individualized costing per work, had 2 unfinished projects on 1/1/2019.

Work A (85.000) Work B (47.000)

Company allocates the general industrial cost based on machine hours. The budgeted general industrialized cost and the machine hours were expected to be:

EUR 850.000 and 17.000 machine hours respectively.

Company executed 3 works the first quarter. The direct cost, direct work and machine hours used are shown below.

Direct cost Direct work Machine hours
A 22,000 43,000 700
B ? 23,000 500
C 32,000 48,000 1100

The real general industrialized cost for the quarter consists of indirect work EUR 40.000, indirect material EUR 14.000 and various factory costs EUR 105.000, all paid via check, and machines depreciation EUR 19.000.

Company completed work A and B. Work sold and paid via cheque with certain price and profit EUR 29.700 to the company.

Α.Calculate the predefined allocation rate of General Industrialized Cost of production.
B. Prepare the accounting entries on 31/3 for the recording of the following:

• Usage of direct labor and materials in production (2 entries)
• Real general industrialized cost for the quarter
• Allocation of general industrialized cost in production
• Completion of work A and B
• Sale of work A
• Assuming that for work B the general industrialized cost is EUR 30.000, is there an over or sub- allocation of general industrialized cost for the specific work. Prepare the entry related to the over or sub-allocation.

production. B. Prepare the accounting entries on 31/3 for the recording of the following:

• Usage of direct labor and materials in production (2 entries)

• Real general industrialized cost for the quarter

• Allocation of general industrialized cost in production

• Completion of work A and B

• Sale of work A

• Assuming that for work B the general industrialized cost is EUR 30.000, is there an over or sub- allocation of general industrialized cost for the specific work. Prepare the entry related to the over or sub-allocation.