C.A.P.

E Accounting
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6U

1. During the month of February the following receipts and issues of the component
SMH/19 took place:

Receipts of SMH/19 Issues of SMH/19

2 February 8 @ $10
7 February 6
9 February 9 @ $11
16 February 10
24 February 7 @ $12
27 February 6
a) Calculate the value of closing inventory of component SMH/19 using the first-in-first-out
method of inventory valuation

Answer:

FIFO ISSUED BALANCE

2 February
8 @ $10 8 @ $10
7 February
Bal b/d 8 @ $10 6 @$10 2 @$10
9 February
Bal b/d 2 @$10 2 @$10
9 @ $11 9 @ $111
16 February
Ball b/d 2 @$10 2 @ $10
9 @ $11 8 @ $11 1 @$11
24 February
Bal b/d 1 @$11 1 @$111
7 @ $12 7 @ $12
27 February
Bal b/d 1 @$11 1@$11
7 @ $12 5@$12 2 @$12
Closing stock- 2 x $12 24
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b) Janice Jersey’s first 6 months of trading showed the following purchases and sales of
stocks:

1990 Purchases Sales

January 280 @$65 each
February 140 @ $82 each
March 100 @ $69each
April 190 @ $85 each
May 220 @$72 each
June 200 @$90 each

a) Calculate Janice Jersey’s profit for the 6 months ended 30 June 1990 using the following
methods of stock valuation:

FIFO (First-In-First-Out)

Answer:

FIFO ISSUED BALANCE

January
280 @$65 280 @$65
February
Bal b/d 280 @$65 140 @$65
140 @ $65
March
Bal b/d 140 @ $65 140 @ $65
100 @ $69 100 @ $69
April
Bal b/d 140 @ $65 140 @$65
100 @ $69each 50 @$69 50 @$69
May
Bal b/d 50 @$69 50 @$69
220 @$72 220 @$72
June
Bal b/d 50 @$69 50 @$69
220 @$72 150 @$72 70 @ $72
Closing Stock- 70 x 72 = 5 040
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b) LIFO (Last-In- First-Out)

Answer:

LIFO ISSUED BALANCE

January
280 @$65 280 @$65
February
Bal b/d 280 @$65 140 @$65 140 @ $65
March
Bal b/d 140 @ $65 140 @ $65
100 @ $69each 100 @ $69each
April `
Bal b/d 140 @ $65 90 @$65
100 @ $69each 100 @$69 50 @$65

May
Bal b/d 50 @$69 50 @$69
220 @$72 220 @$72

June
Bal b/d 50 @$69 50 @ $69 20 @$72
220 @$72 200@$72
Closing Stock- 20 x $72 = $ 1 440
C.A.P.E Accounting
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3) Henry manufacturing Inc. manufactures thermostats that the company uses In several of
its products. Management is considering whether to continue manufacturing the
thermostats or to buy them from an outside source. The account balances for the quarter
ending March 31, 2008 are presented below:

Direct material inventory (Jan 1) 80 500

Direct raw material inventory (March 31) 75 000
Work-in-progress (January 1) 245 700
Work-in-progress inventory (March 31) 299 250
Finished goods inventory (January 1) 945 000
Finished goods inventory (March 31) 892 500
Direct material purchased 656 000
Indirect materials used 147 000
Direct manufacturing labor 840 000
Indirect manufacturing labor 325 500
Property taxes on manufacturing plant building 50 400
Salespersons’ company vehicle costs 21 000
Depreciation of manufacturing equipment 462 000
Depreciation of office equipment 216 300
Miscellaneous plant overhead 236 250
Plant utilities 161 700
General office expenses 534 450
Marketing distribution costs 52 500

P.S. I didn’t see any sales figure, so I just insert one.

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a) Prepare a schedule of costs of goods manufactured. (19 marks)

Answer:

Henry Manufacturing Incorporation

Cost of good manufactured
For the period ended March 31

Direct material @ Jan 1 80 500

Add: Direct material 656 000
purchases
Direct material available for 736 500
use
Less: Direct material (75 000)
inventory @ March 31
Direct material used in 661 500
production
Add: Direct labor 840 000
Add: manufacturing
overhead:
Indirect labor 325 500
Indirect material used 147 000
Miscellaneous plant overhead 236 250
Depreciation on
manufacturing equipment 462 000
Depreciation on office 216 300
equipment
Total manufacturing 1 387 050
overhead
Add: Work-in-progress @ Jan 245 700
1
Work-in-progress during the 1 632 750
period
Less: Work-in-progress @ (299 250)
March 31
Cost of goods manufactured 1 333 500
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b) Prepare a schedule of cost of goods sold. (6 marks)

Answer:

Henry Manufacturing Incorporation

Cost of good manufactured
For the period ended March 31
$ $
Sales 4 786 250
Finished goods 945 000
Add: Cost of goods 1 333 500
manufactured
Cost of goods available 2 278 500
Less: Finished good @ March 892 500
31
Cost of goods sold 1 836 000

Gross profit 3 150 250

Less: general office expenses

TOTAL EXPENSE 534 450

Net Income 2 616 200

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4. Moruga Company’s beginning inventory and the purchases of a particular product during
August are shown below:

Aug 1 Inventory 1 400 units x 12.00

Aug 21 Purchases 1 500 units X 12.28
Aug 31 Purchases 12 000 units X 12.54

On august 31, 1 000 units remain in inventory

a. Calculate the cost of the ending inventory (1 marks)

Answer: Closing inventory= $ 1 000 x $12.54
= $ 12 540.00

b. Calculate the cost of goods sold using the Last-in-First-Out (LIFO) method (2 marks)
Answer: Cost of goods sold: most recent inventory x inventory sold.
(12 000 -1 000) = 2 000- the unit of goods sold

Therefore: $12.54 x 2 000= $ 28 050.00

5. Paula Cole-Bourne is a part-time employee of Atlantic Consulting Services. She is paid
$140 per hour for regular and $210 per hour for all authorized work in excess of 40 hours
per week. The supervisor authorized Paula to work eight hours in overtime to complete
an urgent job.
i. Identify the remuneration method that is used to pay Paula.
Answer: The type of remuneration method is time rates. However, she is also being paid
additional hour(s) reward for her unsocial or overtime work done.

a. Suggest an alternative remuneration method that could be used to pay Paula

Answer: An alternative could be a performance rate or the piece rate of payment method.

b. Calculate the amount of wages paid to Paula

Answer: $140 x 40 + $210 x 48=

$5 600 + $10 080= $ 15 680

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6. The following information was taken from the accounting records of Horsford Company
for the year ended December 31, 2010:

$
Direct material purchases 880 000

Indirect material used 175 000

Direct labor 940 000
Other factory overheads 295 000
Selling expenses 250 000
Administrative expenses 360 000
Sales 4 200 000

Inventories Jan 01 Dec 31

Raw materials 230 000 140 000
Work-in-progress 75 000 60 000
Finished goods 200 000 300 000
C.A.P.E Accounting
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a) Prepare a schedule for cost of goods manufactured for the year ended December 31, 2010
(11 marks)
Answer:

Horsford Company
Cost of goods manufactured
For the year ended December 31 2010

$ $
Opening inventory @ Jan 1 230 000
2010
Add: Direct material 880 000
purchases
Direct Material available for 1 110 000
use
Less: Direct material (140 000)
inventory @ Dec 31 2010
Direct material used in 970 000
production
Add: Direct labor 940 000
Add: manufacturing 295 000
overhead:
Total manufacturing cost 1 235 000
Add: Work-in-progress @Jan 75 000
1 2010
Work-in-progress during the 1 310 000
period
Less: Work-in-progress @Dec (60 000)
31 2010
Cost of goods manufactured 1 250 000
C.A.P.E Accounting
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b) Calculate Horsford Company’s cost of goods sold for the year ended December 31, 2010
(4 marks)
Answer:

Horsford Company
Statement of Comprehensive Income (Extract)
For the year ended Dec 31 2010
$ $
Sales 4 200 000
Finished goods 200 000
Add: Cost of goods
manufactured 1 250 000
Cost of goods available 1 450 000
Less: Finished goods @Dec
31 2010 (300 000)
Cost of goods sold (1 150 000)
Prime cost 3 050 000

Less: Selling expenses 250 000

Administrative expenses 360 000
Total expenses (610 000)
Net Income 2 440 000

Answer: COGS: BEGINNING INVENTORY OF FINISHED GOODS + COST OF

GOODS MANUFACTURED- ENDING INVENTORY OF FINISHED GOODS

Cost of goods sold= $(200 000 + 1 250 000 – 300 000)

= $ 1 150 000

(i) Identify THREE major elements in the cost of manufactured product. (3 marks)

Answer: THREE major elements include: manufacturing overhead, direct material and direct
labor.

ii. Explain EACH of the following and give ONE example of EACH:

Product cost:

Answer: Product costs are the costs directly incurred from the manufacturing process. For
example, direct labor and direct material.

Period cost:
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Answer: Costs that are not incurred to manufacture a product and, therefore, cannot be assigned
to the product Examples of period costs are general and administrative expenses, such as rent,
office depreciation, office supplies, and utilities.

Mixed cost:

Answer: Mixed costs are costs that contain a portion of both fixed and variable costs.

Common examples include utilities and even your cell phone.
(6 marks)

(ii) Distinguish between prime cost and conversion cost. (2 marks)

Answer: Prime costs are defined as the expenditures directly related to creating finished
products, while conversion costs are the expenses incurred when turning raw materials into a
product.

(iii) Identify ONE method that is used to separate mixed cost into components.

1. Answer: One possible method would be the method of least squares.

BISHOP GIBSON HIGH SCHOOL

C.A.P.E Accounting
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CAPE ACCOUNTING
Progress Test

Name: ______________________________________________________
Grade: _____ )
Teacher: Joan Hewitt

Date: November 2020 Duration 1 Hour 30 Minutes

INSTRUCTIONS TO STUDENTS

1. This exam has two sections. Answer all questions in each section.

2. When you are told to begin, turn the page and work as quickly and as carefully as you

can. If you cannot answer an item, omit it and go on to the next one. You can come back

to the harder item later.

C.A.P.E Accounting
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SECTION A

Answer all questions

1 (a) Hodge Tec Manufacturing company (HTMC) had the following cost and expense data for
the year ending December 31, 2009:

Direct materials, January 1, 2009 $60, 000.00

Direct materials, December 31, 2009 $40, 000.00
Direct materials purchases $410,000.00
Indirect materials purchases/ used $30,000.00
Work in Progress, January 1, 2009 $160,000.00
Work in Progress, December 31, 2009 $100,000.00
Finished Goods, January 1, 2009 $220,000.00
Finished Goods, December 31, 2009 $240,000
Direct Labour $700,000.00
Factory manager’s salary $70,000.00
Insurance, factory $28,000.00
Property taxes, factory building $12,000.00
Sales (net) $3,000,000.00
Delivery expenses $200,000.00
Sales Commission $300,000
Indirect labour $180,000.00
Factory machine rent $80,000.00
Factory utilities $130,000.00
Depreciation, factory building $48,000.00
Administrative expenses $600,000.00

(i) Prepare a cost of goods manufactured schedule for Hodge Tec Manufacturing
Company for the period ending December 31, 2009. [11 marks]
(ii) Prepare a statement of comprehensive income for Hodge Tec Manufacturing
Company for the period ending December 31, 2009. [7 marks]

(i) Answer:
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Hodge Tec Manufacturing Company

Cost of goods manufactures
For the period ended December 31, 2009
$ $
Direct Material: Inventory @
Jan 1 2009 60 000
Add: Purchases 410 000
Direct materials available for
use 470 000
Less: Direct Material (40 000)
inventory Dec 31, 2009
Direct material used in
production 430 000
Add: Direct labor 700 000
Add: Manufacturing
overhead
Factory utilities
130 000
Depreciation: Factory 48 000
equipment
Indirect materials 30 000
Indirect labor 180 000
Machine rent 80 000
Managers salary 70 000
Property Taxes 12 000
Factory Insurance 28 000
Total manufacturing overhead 578 000
Total manufacturing costs 1 708 000
Add: Work-in-progress Jan 1 160 000
2009
Work-in-progress during the 1 868 000
period
Less: Work-in-progress @Dec
31 2009 (100 000)
Cost of goods manufactured 1 768 000
C.A.P.E Accounting
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(ii) Answer:

Hodge Tec Manufacturing Company

Statement of Comprehensive Income
For the period ended December 31, 2009
$ $
Sales 3 000 000
Finished goods 220 000
Add: Cost of goods
manufactured 1 786 000
Cost of goods available 1 988 000
Less: Finished goods @ Dec (240 000)
31
Cost of goods sold (1 748 000)
Gross profit 1 252 000

Less: Operating expenses

Administrative expenses 600 000
Delivery expenses 200 000
Sales commission 300 000
Total expenses (1 100 000)
Net income 152 000

2. Mary Smith first six months of trading showed the following purchases and sale of stock.

2000 Purchases Sales

January $300@$70 each

February $200 @ $$90each

March $100@ $72 each

April $190 @$95 each

May $220 @ $75 each

June $200 @ $100 each

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(i) Compute the gross profit using FIFO and LIFO [9 marks]

Answer:

FIFO ISSUED BALANCE

January
300 e $70 300 e $70

February
Bal b/d 300 e $70 200 e $70 100 @ $70

March
Bal b/d 100 e $70 100 e $70
100 e 72 100 e $72
April
Bal b/d 100 e $70 100 e $70 10 e $72
100 e $72 90 e $72
May
Bal b/d 10 e $72 10 e $72
220 e $ 75 220 e $ 75

June
Bal b/d 10 e $72 10 e $72 30 e $75
220 e $ 75 190 e $75

CLOSING STOCK (30 x $2 250

75) = 2 250
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Answer:

LIFO ISSUED BALANCE

Jan.
300 @ $70 300 @ $70
Feb.
Bal b/d 300 @ $70 200 @ $70 100 @ $70

Mar.
Bal b/d 100 @ $ 70 100 @ $ 70
100 @ $72 100 @ $72
Apr.
Bal b/d 100 @ $ 70 90 @ $70 10 @ $70
100 @ $72 100 @ $72
May
Bal b/d 10 @ $70 10 @ $70
220 @ $75 220 @ $75
June
Bal b/d 10 @ $70 10 @ $70 20 @ $75
220 @ $75 200 @$75
CLOSING STOCK ( 20 X $1 500
75)= $ 1 500

(ii) State three principles of material control. [3 marks]

Answer: Three principles of material control include determining the requirements to
meet planned production, to decide on materials to be stocked and to keep a general
stock list with quantity, description and other technical data.

SECTION B- MULTIPLE CHOICE

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This section consists of ten questions. One mark will be allotted for each correct
answer. Answer all questions

1. In a Manufacturing account, which of the following is not a fixed asset?

(A) Finished goods

(B) Delivery van
(C) Assembly plant
(D) Loose tools and equipment

2. What is prime cost?

(A) Total of all direct material cost, direct labour cost and direct expenses
(B) Total of all direct costs and manufacturing overhead
(C) Total of all direct material costs and direct labour costs
(D) Total cost of all important costs

3. The purpose of preparing a manufacturing account is to calculate:

(A) Gross profit

(B) Manufacturing Profit
(C) Net Profit
(D) Production Cost

4. What does production costs include in the manufacturing account?

a) Factory power
b) Purchase of raw material
c) Carriage inwards
d) All of the above

5. The costs of a Manufacturing firm are as follows:

Raw material $5,000.00
Direct Labour $3,000.00
Cost of Raw material Consumed $7,000.00
Factory overhead $2,000.00
What is the prime cost?
a) $10,000.00
b) $15,000.00
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c) $12,000.00
d) $17,000.00

6. Which of the following is not included in the manufacturing account?

a) Foreman’s wages
b) Depreciation of factory equipment
c) Indirect wages
d) Depreciation of office equipment

7. A firm that sells a single product had a beginning inventory of 4,000 units with a total
cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO,
what is the value of the ending inventory of 3,000 units?
a) $27,000.00
b) $24,000.00
c) $21,000.00
d) $36,000.00.

8. A firm that sells a single product had a beginning inventory of 4,000 units with a total
cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using LIFO,
what is the value of the ending inventory of 3,000 units?
a) $27,000.00
b) $24,000.00
c) $31,000.00`
d) $36,000.00

9. The role of management accounting does not normally include the function of?
(a) Cash management. 
(b) Decision making. 
(c) Planning and control
(d) Product costing
10. The role of financial management does not normally include responsibility for

(a) Corporate finance

(b) Risk management
(c) Compliance with accounting standards
(d) Treasury management
(10 Marks)

Total 40 Marks

End of Test