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    Marivel Amarille
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    1. The document provides information on basic cost accounting concepts including variable costs, fixed costs, direct costs, and indirect costs. 2. It includes 3 practice problems calculating total costs, unit costs, fixed costs, and variable costs under different fee schedules for hiring a speaker and for a manufacturing company. 3. The key lessons are that unit costs decrease as attendance increases due to fixed costs being spread over more people. Managers should use the lowest unit cost when predicting total costs. Cost accounting helps calculate important metrics like cost of goods manufactured and cost of goods sold.

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    1. The document provides information on basic cost accounting concepts including variable costs, fixed costs, direct costs, and indirect costs. 2. It includes 3 practice problems calculating total costs, unit costs, fixed costs, and variable costs under different fee schedules for hiring a speaker and for a manufacturing company. 3. The key lessons are that unit costs decrease as attendance increases due to fixed costs being spread over more people. Managers should use the lowest unit cost when predicting total costs. Cost accounting helps calculate important metrics like cost of goods manufactured and cost of goods sold.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    66 views4 pages

    Cost Terms

    Uploaded by

    Marivel Amarille
    1. The document provides information on basic cost accounting concepts including variable costs, fixed costs, direct costs, and indirect costs. 2. It includes 3 practice problems calculating total costs, unit costs, fixed costs, and variable costs under different fee schedules for hiring a speaker and for a manufacturing company. 3. The key lessons are that unit costs decrease as attendance increases due to fixed costs being spread over more people. Managers should use the lowest unit cost when predicting total costs. Cost accounting helps calculate important metrics like cost of goods manufactured and cost of goods sold.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    Basic Cost Accounting

    VAR, FIXED
    DIRECT, INDIRECT

    Problem 1
    Total cost and unit cost(10 minutes)
    A student association has hired a music group for a graduation party. The cost will be a fixed
    amount of P40 000.

    Required:
    1. Suppose 500 people attend the party. What will be the total cost of the music group? The unit
    cost per person? 40,000; 40,000/500= 80

    2. Suppose 2000 people attend. What will be the total cost of the music group? The unit cost per
    Person? 40,000; 40,000/2,000= 20

    Exclude 3. For prediction of total costs, should the manager of the party use the unit cost in requirement
    1? The unit cost in requirement 2? What is the major lesson of this problem?

    Problem 2

    George Mathenge is a well-known motivational speaker.


    The Europe Speaker’s Bureau (ESB) wants Mathenge to be the sole speaker at an all-day seminar.
    Mathenge’s agent offers ESB the choice of three possible fee arrangements:

    Schedule 1: €8000 fee

    Schedule 2: €20 per person + €2000 fixed fee

    Schedule 3: €50 per person.

    Each attendee will be charged a €200 fee for the all-day seminar.

    Required
    1 What is ESB’s fixed cost and variable cost for hiring Mathenge under each alternative schedule?

    Fx c vc

    schedule1 8000 0

    Sch. 2 2000 20

    sch.3 0 50
    2 For each schedule, calculate the total cost and unit cost per seminar attendee if (a) 50 attend, (b) 200
    attend, and (c) 500 attend. Comment on the results.

    schedule attendees fxc vc TC UC

    1 50 8000 0 8000 160

    1 200 8000 0 8000 40

    1 500 8000 0 8000 16

    sch2 attendees fxc vc TC UC

    50 2000 20 2000+20(50)= 60
    3000

    200 2000 20 6000 30

    500 2000 20 12000 24

    sch3 attendees fxc vc TC UC

    50 0 20 1000 20

    200 0 20 4000 20

    500 0 20 10000 20
    Problem 3
    Calculating Cost of Goods Manufactured:

    Calculate cost of goods manufactured and cost of goods sold from the following account balances relating to
    2015 (in € millions):

    Property tax on plant building 0.45


    Marketing, distribution and customer-service costs 5.55
    Finished goods stock, 1 January 2015 4.05
    Plant utilities 2.55
    Work-in-progress stock, 31 December 2015 3.90
    Depreciation of plant building 1.35
    General and administrative costs (non-plant) 6.45
    Direct materials used 13.05
    Finished goods stock, 31 December 2015 5.10
    Depreciation of plant equipment 1.65
    Plant repairs and maintenance 2.40
    Work-in-progress stock, 1 January 2015 3.00
    Direct manufacturing labour 5.10
    Indirect manufacturing labour 3.45
    Indirect materials used 1.65
    Miscellaneous plant overhead 0.60

    WIP,beg. 3

    TMC

    DM used 13.05

    DL 5.10

    IL 3.45

    IM 1.65

    PRP TAX .45

    DEP-PLANT B 1.35

    DEP-PLANT EQ 1.65

    MISC. OH .60 27.3

    TC 30.3

    WIP, END 3.9


    CGM 26.4

    FG, BEG. 4.05

    TGAS 30.45

    FG, END. 5.1

    COS 25.35

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