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  • Correction of "EAZY": Indirect Cost Allocation

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    jaskovac
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    This document summarizes the correction of an indirect cost allocation exercise. It shows the primary and secondary allocations of indirect costs like administration, purchasing, and production across multiple cost objects. It also includes details of direct material purchases and costs, cost of goods manufactured, cost of goods sold, and full costs for two products.

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    Original Title

    C-EAZY

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    This document summarizes the correction of an indirect cost allocation exercise. It shows the primary and secondary allocations of indirect costs like administration, purchasing, and production across multiple cost objects. It also includes details of direct material purchases and costs, cost of goods manufactured, cost of goods sold, and full costs for two products.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    6 views1 page

    Correction of "EAZY": Indirect Cost Allocation

    Uploaded by

    jaskovac
    This document summarizes the correction of an indirect cost allocation exercise. It shows the primary and secondary allocations of indirect costs like administration, purchasing, and production across multiple cost objects. It also includes details of direct material purchases and costs, cost of goods manufactured, cost of goods sold, and full costs for two products.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Correction of EAZY

    Indirect cost allocation

    Primary allocation
    Secondary allocation

    Administration
    20,000
    -20,000
    0

    Drivers
    Number of drivers

    Purchasing
    14,000
    +4,000
    18,000
    Kg of DM
    purchased

    Production
    98,000
    +12,000
    110,000
    DLH

    Distribution
    10,000
    +4,000
    14,000
    Sales
    Revenue

    1,800

    2,200

    200,000

    10

    50

    0.07

    Driver cost
    Direct materials used in production
    Quantity
    Purchases
    1,800
    + Purchasing cost
    1,800
    = Direct material purchased
    1,800
    + Beginning inventory
    0
    = Direct material available
    1,800
    - Ending inventory
    0
    = Direct materials used
    = 1,800

    DM
    Unit cost
    10.00
    10.00
    20.00
    20.00
    20.00

    Total cost
    18,000
    + 18,000
    36,000
    +0
    = 36,000
    -0
    = 36,000

    Cost of goods manufactured, cost of goods sold and full cost

    DM used
    + Direct labor cost
    + Production indirect cost
    = Cost of goods
    manufactured
    + Beginning inventory
    = Cost of goods available
    - Ending inventory
    = Cost of goods sold
    + Distribution cost
    = Full cost

    Quantity
    1,000
    1,000
    1,000
    1,000
    +0
    1,000
    -0
    = 1,000
    100,000
    1,000

    Correction of management accounting exercises

    Product P1
    Unit cost
    20.00
    20.00
    50.00
    90.00
    90.00
    90.00
    0.07
    97.00

    Total cost
    20,000
    + 20,000
    + 50,000
    = 90,000

    Quantity
    800
    1,200
    1,200
    400

    +0
    90,000
    -0
    = 90,000
    + 7,000
    = 97,000

    +0
    400
    -0
    = 400
    100,000
    400

    Product P2
    Unit cost
    20.00
    20.00
    50.00
    250.00
    250.00
    250.00
    0.07
    267.50

    Total cost
    16,000
    + 24,000
    + 60,000
    = 100,000
    +0
    100,000
    -0
    = 100,000
    + 7,000
    = 107,000

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