Cost and Managerial Accounting I

Assignment I
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General instruction: This worksheet is a group assignment and the number of members in a group
should be maximum of five. Please, also note that the total marks allotted to this assignment is
10% and you should attempt all questions as neatly as possible and to the possible perfection to
score the maximum mark. The submission date of the assignment will be December 6 (Monday, at
class time while late submission will result in a penalty of 1 mark/day delayed.
Question #1 (4 points)
• Minco Company at the beginning August 2014 had the following account balances: -
- Raw material inventory 4,000 Birr
-Work in process inventory 7,000
- Finished goods inventory 9,200
• During august the following transactions have been taken place: -
1. Raw materials were purchased on account 30,200 Birr
2. Direct materials of 17,300 Birr and indirect materials of 7,000 Birr were issued to
the production.
3. Factory payroll consisted of 32,000 Birr for direct labor employees and 9,000 Birr
for indirect labor employees.
4. Office salaries totaled 21,100 Birr for the month.
5. Utilities of 6,300 Birr were incurred. Of which 70% of the utilities are for the
factory area.
6. Depreciation of 9,000 Birr was recorded on plant assets. Of which 70% of the
depreciation is related to the factory plant assets.
7. Rent of 12,000 Birr was paid on the building. The factory occupies 60% of the
building.
8. At the end of August, the work in process inventory balance was 8,300 Birr
9. At the end of august, the balance of finished goods inventory was 8,900 Birr.
Required: -
1. Compute the cost of goods manufactured for August 2014.
2. Compute the cost of goods sold for August 2014.
3. What level of august sales would have generated net income before tax of 12,200 Birr?
Question #2: (3 points)
The New Bedford Plumbing Company manufactures water pumps and filters and uses a job cost
order accounting system. Cost data for 19X2 are given below.
Raw Materials, January 1, 19X2 $348,542
Raw Materials, December 31, 19X2 361,417
Work in Process, January 1, 19X2 283,463
Work in Process, December 31, 19X2 308,182
Finished Goods, January 1, 19X2 221,932
 Finished Goods, December 31, 19X2 201,647
Raw Materials Purchases 631,917
Direct Labor 1,082,680
Manufacturing Overhead 714,530
Net Sales 4,608,917

Required: Based on the above information

1. Prepare the cost of goods manufactured and cost of goods sold schedule
2. Determine the prime and conversion cost after identifying the cost of direct material,
direct labor, and manufacturing overhead costs.
3. Prepare the income statement for the year ended January 31, 2006

Question # 3 (1.5 points)

The Agricultural Products Company maintains a raw material inventory account for all
materials used in its factory operations. Purchases of both direct and indirect materials are
debited to this account. The balance on January 1, 19X4, for the raw materials account was
$250,738. Purchases of raw materials for the year were $762,910 and purchase returns totaled
$23,853. The ending inventory on December 31, 19X4, was $238,649. Calculate the following:
a. What was the total amount of the raw materials available for use?
b. What was the cost of raw materials used in factory operations?
c. Materials requisitions show that of the total raw materials used during the year,
indirect materials amounted to $63,071. What was the amount of direct materials
used during the year?
Question 4 (1.5 points)
The following amounts relate to the Bio-Tech Corporation:

✓ Finished Goods Inventory, April 1, 19X2 $58,480

✓ Finished Goods Inventory, April 30, 19X2 52,219
✓ Costs of Goods Manufactured 81, 507
✓ Net Sales 127,493

a. Calculate the cost of goods sold

b. Calculate the gross profit on sales.