Sub: Cost Accounting

PROBLEMS Problem 1: Luna Company estimates its factory overhead for the nex units will be produced at a direct material Rhp 2.5 with 120,000 machine hours. Co 1. Direct Material Cost 2. Direct Labor Cost 3. Prime Cost 4. Direct Labor Hours 5. Machine Hours 6. Units Of Production Problem 2: t period at Php 375,000. It is estimated that 10,000 cost of Php 500,000. Conversion cost will require 25 hours per unit at mpute for the predetermined factory rate based on: Terra Company has two service departments: security departments and maintenance departm services to two producing departments: machining department and assembling department, Security department costs will be allocated using the number of employees and maintenance department costs will be allocated using direct labor hours. For calculation of predetermined rate, machine hours and direct labor hours are used for machining and assembling departments respectively ents that give Machining Assembling Security Maintenance Budgeted FOH 350,000.00 200,000.00 75,000.00 80,000.00 Direct Labor hours Number of employees Machine Hours Machining Assembling - Security Maintenance 180,000 120,000 5,000 3,000 ' 2,000 100,000 100,000 Services provided by Security Maintenance 35% 40% 45% 30% 30% 20% , 100% 100% ) Allocate the cost of the service department and compute for the total overhead and overhead rates of the producing departments under the following method. 7. Direct Method 8. Step Method 9. Reciprocal Method Problem 3: 10. Kamiseta Company has two product lines, T-shirt Line and Hoodie Line. The company's customer support department answers client's requests and complaints through calls. Last month the department handled 3,500 calls for 126,000. If 42% of these calls were for the company's hoodie line, costs allocated to the t-shirt line using ABC costing is Problem 4: Tindahan ni Aleng NINA Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's costs and other data for each department prior to allocation of service department costs appears below. Labor Costs Material Costs Overhead Direct Labor Hours Number of Employees Square footage occupied Fabrication General Factory Factory Factory Maintenance Cafeteria Assembly 1,950,000.00 2,050,000.00 90,000.00 82,100.00 87,000.00 3,130,000.00 9,500,000.00 - 65,000.00 91,000.00 1,650,000.00 1,850,000.00 70,000.00 56,100.00 62,000.00 562,500 437,500 31,000 27,000 42,000 280 200 12 N 20 88,000 72,000 1,750 2,000 4,800 - f the General Factory Administration Department, Factory Mainten.ance Department, and Factory e eia are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. ' Assuming that the company elects to distribute service department costs to other service departments using the step method of cost allocation and that the order of distribution is based on the peso amount of costs originating in the service departments, : a. How much of the total Factory Cafeteria cost would be allocated to the Factory Maintenance Department? b. How much of the Factory Maintenance Department costs would be allocated to the Factory Cafeteria? Problem 5 XIOAMIRICE Company has two service departments and three production departments, each producing a separate product. In the past years, XIOAMIRICE used sales as a basis of allocation of the costs of service department to production department. However, external auditors believed that such allocations may lead to inconsistent financial report. It was recommended that maintenance and engineering service hours be used as a better service cost allocation basis. For illustration purposes, the following information was appended to the audit report: Production Department =~~~ Department 1 Department 2 Department 3 Maintenance Engineering Maintenance hours used 800 200 200 ; 400 Engineering hours used 800 400 400 . 400 A Department direct costs 80,0000 90,0000 5000000 1200000 54,000.00 A. Using the simultaneous method, what would be the total Engineering Department cost after allocation of interservice department costs, but before allocation to the Maintenance and Production Departments? : B. Using the simultaneous method, what would be the total Maintenance Department cost after allocation of interservice department costs, but before allocation to the Engineering and Production Departments? ; C. Using the step method of cost allocation, what amount of maintenance cost would be allocated to Department A, assuming that the service departments are distributed in the order of total o f direct departmental costs? _ ' . D. Using the step method of cost allocation, what amount of engineering cost woylg be allocated directly to Department A, assuming that the service departments gre distributed in Gevider o total peso of direct departmental costs