Mid Term Examination

Subject: Cost Accounting Program: BBA

Course Instructor: Ulfat Abbas Khan Days: Regular

Total Time: 6 Hours Total Marks: 25 Semester: 5th Section: A

Date: November 26, 2020 Student Name:

Sign of HOD: Reg. #:

Attempt all questions that have equal marks

Question No. 1 Marks 8
A.
Selected account balances for the year ended December 31 are provided below for Superior
Company:
Selling and administrative salaries . . . . . . . . . . . . $350,000
Purchases of raw materials . . . . . . . . . . . . . . . . . . $630,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . $79,750
Applied Manufacturing overhead . . . . . . . . . . . . . . . . . . . . 150% of Direct Labor
Sales commissions . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . $670,000
Inventory balances at the beginning and end of the year were as follows:

The total manufacturing costs for the year were $983,000; the goods available for sale
totaled $836,000; and the cost of goods sold totaled $1060,000. Required: 1. Prepare income
statement if you found underapplied manufacturing overhead $2000 and other case is if you
found overapplied manufacturing overhead $1000. (Hint: Solve it in both cases)
Question No. 2 Marks 8
The Polaris Company uses a job-order costing system. The following data relate to October,
the first month of the company’s fiscal year.
a. Raw materials purchased on account, $420,000 which is issued to factory (60% direct
materials and 40% indirect materials).
b. Direct labor cost incurred, $90,000; indirect labor cost incurred, 120% of direct labor.
c. Depreciation recorded on factory equipment, $40,000. (out of which 20% is related with
office)
d. Other manufacturing overhead costs incurred during October, $70,000 on account.
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e. The company applies manufacturing overhead cost to production on the basis of $6.5 per
machine-hour. A total of 25,000 machine-hours were recorded for October.
f. Production orders costing $520,000 according to their job cost sheets were completed
during October and transferred to Finished Goods.
g. Production orders that had cost $475,365 to complete according to their job cost sheets
were shipped to customers during the month. These goods were sold on account at 25%
above cost.
Required:
Kindly complete the process of job order costing from journal entries to income statement
with proper explanation if you found underapplied or overhead manufacturing overhead if
actual manufacturing overheads are 1. $220,000 2. $150,000 3. $ 120,000
Question No. 3 Marks 5+4
A. Rasheed, Ltd., operates a fleet of delivery trucks in Singapore. The company has
determined that if a truck is driven 105,000 miles during a year, the average operating cost
is 11.4 cents per mile. If a truck is driven only 70,000 miles during a year, the average
operating cost increases to 13.4 cents per mile. (The Singapore dollar is the currency used
in Singapore.)
Required:
1. Using the high-low method, estimate the variable and fi xed cost elements of the annual
cost of the truck operation.
2. Express the variable and fixed costs in the form Y =a +bX.
3. If a truck were driven 80,000 kilometers during a year, what total cost would you expect
to be incurred?
B.
The PVC Company manufactures a high-quality plastic pipe that goes through three
processing stages prior to completion. Information on work in the first department, Cooking,
is given below for May:
Production data:
Pounds in process, May 1: materials 100%
complete; conversion 90% complete . . . . . . . . . . . . . . . . . . . . ........,,,,... . . . 140,000
Pounds started into production during May . . . . . . . . . . . . . . . . . . ....... . 700,000
Pounds completed and transferred to the next department . . . .................. . . . ?
Pounds in process, May 31: materials 75% complete;
conversion 25% complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ .......... . . 80,000

As I recommed in lecture. The company uses the weighted-average method.

Required:

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1. Compute the equivalent units of production.

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