Listed below are costs found in a company: (i)Salary paid to doctor working in the hospital
Question:
Listed below are costs found in a company:
(i)Salary paid to doctor working in the hospital
(ii)Telephone charges in the office.
(iii)Chief accountant's salary.
(iv)Depreciation of factory equipment.
(v)Wages of assembly line workers.
(vi)Property tax for the factory.
(vii)Cost of wood used in a furniture factory.
(viii)Heating and lighting paid for the office.
(ix)Insurance paid for the production machine.
(x)Depreciation of office equipment.
Required:
For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, or selling and administrative cost.
(10 marks)
(b)Explain the treatment of normal and abnormal losses in production process.
(8 marks)
(c)Coolty Sdn Bhd manufactures chocolates that passes through two processes: mixing and packaging. The output of mixing is passed to packaging. During January, 50,000 units were completed and transferred to the packaging department while 100,000 units were completed as finished goods. There were no stock or work in process at either the beginning or the end of the period. General overhead for January amounted to RM12,000 and is absorbed into process costs on a process labour basis. The normal output of process mixing is 80% of input, while that of process packaging is 90% of input. Waste matter from process mixing is sold for RM0.25 per unit, while that from process packaging is sold for RM0.35 per unit. Assume that all available waste matter had been sold at the prices indicated. The weighted average method is applied for Coolty Sdn Bhd.
The process costs for the month of January were as follows:
Mixing
Packaging
Material:
80,000 units @ RM0.30 per unit
58,000 units @ RM0.50 per unit
Labour:
RM6,000
RM3,000
Process plant time:
100 hours @ RM31.20 per hour
200 hours @ RM28.40 per hour
Required:
Prepare the ledger accounts to record the process mixing, process packaging, finished goods, normal loss, abnormal loss and abnormal gain for the month of January. Please show all workings.(32 marks)
[Total: 50 Marks]
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer