Question 1: Greek group of companies submitted following information on June 30, 2019.

Accounts	$
Sales	650,000
Direct Labor	70,000
Purchase return and allowance	4,500
Applied MOH	39,000
Freight in	1,000
Work-in process, Jul 01, 2018	30,000
Work-in process, Jun 30, 2019	20,000
Purchases	105,000
Raw material inventory, Jul 1, 2018	35,000
Raw material inventory, Jun 30, 2019	25,000
Salaries expense (50% admin, 50% Marketing)	15,000
Advertisement expense	10,000
Rent Expense (30% admin, 70% Marketing)	20,000
Depreciation of office vehicles	7,500
Finished goods inventory, Jul 1, 2018	20,000
Finished goods inventory, Jun 30, 2019	30,000
Purchase discount	2,000

 

Required:

• Prepare Cost of goods sold statement.
• Prepare income statement.

                      (07 Marks)

Question 2: The Marketing department of Smith Corporation Inc. has submitted the following budgeted production units for the upcoming fiscal year;

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted Sale Units	19,000	22,000	25,000	21,000

The selling price of the company’s product is $ 12.00 per unit (All sales are done on credit). Management expects to collect 75% of sales in the quarter in which the sales are made and 25% in the following quarter. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $ 83,000.

The company expects to start the first quarter with 2,500 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,800 units.

Each unit requires 0.80 direct labor-hours and direct labor-hour workers are paid $ 18 per hour.

Requirement 

• A sales budget, including a schedule of expected cash collections.
• A production budget
  
  
• Question 4: Romania Corporation has provided the following data from its activity-based costing system:

  Overheads costs
  Wages and Salaries	$ 400,000
  Other Overheads Costs	150,000
  Total Overheads Costs	$ 550,000

  Activity cost pool	Activity Measures	Total Activity per year
  Supporting Direct Labor	Number of direct labor hours	15,000 DLHs
  Order Processing	Number of customers orders	350 orders
  Customer support	Number of customers	150 Customers
  Others	Sustaining Activities	Not Applicable

                                                                                                                                                                                      

  Distribution of Resource Consumption Across Activities
  	Supporting Direct Labor	Order Processing	Customer Support	Other	Total
  Wages and salaries	50%	30%	10%	10%	100%
  Other overhead costs	40%	20%	10%	30%	100%

   

  REQUIREMENT 

  •  Prepare the second stage of allocation of costs to the activity cost pools.
  • Compute the activity rates for the activity cost pools.
  • Prepare a report showing the overhead costs for the order from a customer Shenzhen Enterprises who has placed two orders for 34 units in a year. Total 68 direct labor hours consumed
  • The revenue from a customer Shenzhen Enterprises was $ 19,000. Prepare a report showing the customer margin from this job.

Answer rating: 100% (QA)

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