Cost Accounting Assignment

Assignment 1:
a) Complete the manufacture of Job 101.

 Paper Hats are manufactured as follows:
i. Paper is delivered by Materials Handling (requested the job sheet from the Factory General
Manager then picks up the materials from Receiving/Warehouse) to the Assembly Department.
ii. Paper sheets are folded into a cone shape, taped and stapled in the Assembly
Department. Finished hats are moved to the Finishing Department.
iii. Hats are decorated in the Finishing Department using four stickers per hat.
iv. Hats are placed on a table for inspection by Quality Control. Quality control also checks
to ensure that the proper items are included in the order.
 Paper chains are manufactured as follows:
i. Paper is delivered by Materials Handling to the Cutting Department.
ii. Links are cut in to 2”by 8.5” strips. Five strips can be made from one sheet of paper. Cut
strips are moved to the Assembly Department.
iii. Each link is connected to the previous link and then taped and stapled in the Assembly
Department. Completed chains are moved to the Finishing Department.
iv. Chains are decorated in the Finishing Department using eight stickers per completed chain.
v. Chains are placed on a table for inspection by quality control. Chains are then inspected by
Quality Control before being packed for shipment with the completed job.
b) Identify the major elements of the value chain for the Paper Products Factory.
i. Purchasing- involve relationships with suppliers and include all the activities required to receive,
store, and disseminate inputs.
ii. Engineering and Design-
iii. Manufacturing (Warehouse, Materials Handling, Cutting, Assembly, Finishing)- transform inputs
into outputs (products and services).
iv. Quality Control- Responsible for ensuring that products are made according to specification and
checking the accuracy of the final jobs.
v. Sales- activities inform buyers about products and services, induce buyers to purchase them, and
facilitate their purchase.
vi. Customer Service- includes all the activities required to keep the product or service working
effectively for the buyer after it is sold and delivered.
(Reference: Porter’s Value Chain, https://www.ifm.eng.cam.ac.uk/research/dstools/value-chain-/)
c) Identify the various costs involved in making the products.

i. Paper
ii. Stickers
iii. Cutting/Assembly/Finishing
iv. Staples
v. Tape
vi. Quality control labor
vii. Supervisory labor
viii. Other indirect labor (stockroom, materials handling)
ix. Depreciation on tape machines
x. Depreciation on stapling machines
xi. Depreciation on cutting machine
xii. Depreciation on the factory portion of the building
xiii. Taxes on the factory portion of the building
d.)Separate the list of costs identified as product or period costs. Further classify product
costs as direct material, direct labor, and manufacturing overhead.
 Direct materials:
Paper
Stickers
 Direct labor
Cutting/Assembly/Finishing
Manufacturing Overhead:
 Indirect Materials
Staples
Tape
 Indirect Labor
Quality control labor
Supervisory labor
Other indirect labor (stockroom, materials handling)
Other Manufacturing Overhead:
Depreciation on tape machines
Depreciation on stapling machines
Depreciation on cutting machine
Depreciation on the factory portion of the building
Taxes on the factory portion of the building
Assignment 2:
a.) Trace the direct material and direct labor amounts used for each job and mark it on the Job Cost
sheet. Your job consisted of 15 Hats and 10 Chains. The amounts of materials for the job can be
found on the Materials Requisition Report (not included) and the Labor is found on the Labor
time records (not included). These amounts have been input onto the Job Cost Sheet for you. See
Exhibit 3 – Partially Completed Job Cost Sheet.
b.) Using one overhead cost pool and units as the cost driver, allocate the overhead to
each job.
c.) Why is the process of allocating overhead different from tracing direct material
and direct labor costs?
 At the beginning of the accounting period, managers estimate the amount of
manufacturing overhead costs they estimate to incur.
 They then determine a basis on which they will allocate the overhead costs to
their many different products.
 The process of distributing this cost to products is called cost allocation. The
process of allocating overhead reduces the Manufacturing Overhead account
and increases the Work in Process Inventory account.
 Direct materials and direct labor are traced to a product or service
provided. Tracing is the process of specifically identifying the material or labor
cost with a particular product or service.
 Direct costs, by definition, are easy to identify with a particular product or
service.
d.) Complete the Job Cost sheets by identifying the total product cost for each job.
Next compute the cost for a unit of paper hats and a unit of paper chain.
e.) What do you think is the cause of the increase in unit costs for paper hats?
f.) Matt Brady has asked you help him identify some other methods for allocating
overhead in the determination of product cost. Identify at least two other possible
ways of allocating the overhead to each job. Recalculate the product cost and targeted
selling price of each job and each unit using the two methods of allocating overhead
identified in (e).
g.) What are the advantages and disadvantages of the methods identified? Which
method would you recommend?
h.) Write a memo to Brian Clark summarizing your findings and recommendations.

Cost Accounting Assignment

Uploaded by

Copyright:

Available Formats

Cost Accounting Assignment

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Cost Accounting Assignment

Uploaded by

Copyright:

Available Formats

Assignment 1:

a) Complete the manufacture of Job 101.

c) Identify the various costs involved in making the products.

You might also like