Final Term Parallel Quiz 2022/2023

Cost Accounting
Teaching Assistants Team

Instructions
1. Answers are to be made in handwriting ONLY on a sheet of paper. No digital
handwritings are allowed.
2. File format: Scan, PDF
3. File name: ParQuiz_Name_NPM_Class (KKI/Regular)
4. Deadline: Monday, 12 October 2022, 23:59
5. Answers will be submitted through Google Forms provided by the teaching assistants
team.

PROBLEM 1 (20%)
PT Strawtophia is a strawberry plantation and processing company. The processing starts from
picking strawberries, then sorting strawberries into Grade A, B, and C based on size and shape.
Grade A strawberries are further processed into Pasta and Grade B strawberries are processed
into Juice, while Grade C strawberries as Byproduct. Grade C strawberries can be sold at split off
point for Rp8.000 per case.
During October 2019, the total joint cost for the process consisted of material costs of
Rp2.150.000.000 and conversion fees of Rp2.000.000.000. Information on production units and
selling process for October 2022 is as follows.

Stroberi A Stroberi B Stroberi C Pasta Juice

Number of cases 100.000 110.000 25.000 100.000 110.000

Selling price at split off (Rp) 55.000 45.000 8.000

Selling price at final (Rp) 100.000 80.000

Further processing cost (Rp) 25.000 20.000

 1. Determine the allocated joint cost to each joint product if the net realizable value method
is used, assume Company uses production method for the byproduct
2. Based on your answer in question a above, please compute the cost per case for all joint
product
3. Show which joint product that has the highest added value per case if sold after further
processing

PROBLEM 2 (20%)

Farmington Components Inc has two production departments (Machining & Assembly) and two
support departments (Plant Machine & Data Processing). Plant Maintenance (PM) cost are
allocated based on budgeted labor hours and Data Processing (DP) cost are allocated based on
budgeted computer hours. In calculating predetermined overhead rates, machine hours are used
as a base for Machining and number of employees are used as a base for Assembly. During
November, the following costs and service department usage ratio were recorded:

Support Department Production Department

PM DP Machining Assembly

Budgeted overhead $ 500.000 $ 250.000 $ 300.000 $ 150.000

Budgeted labor hours - 3.500 4.000 6.500

Budgeted computer hours 750 - 3.000 1.500

Budgeted number of - - 1.000 9.000

employees

Budgeted machine hours - - 11.700 -

Cost and related data pertaining Job No. 2411 are:

Machining:
Materials ……….……………………………. $ 600
Direct labor (4 hours @) ……………………. $ 30
Machine hours ……………………………… 150
Assembly:
Materials ……….……………………………… $ 350
Direct labor (10 hours @) …………………….. $ 30
Employee ……….……………………………… 50

Required
1. Company agrees to use step-down method in allocating support department cost in which
Plant Maintenance (PM) cost is allocated first. Calculate total budgeted overhead cost for
Machining & Assembly using this method!
2. Developed predetermined factory overhead rates for Machining and Assembly!
3. Compute the total cost of a Job. No 2411!

PROBLEM 3 (30%)
Traje Co is a company that manufactures custom men suits. Traje Co currently has three main
products: Black Suit, Navy Suit, and Gray Suit. Besides the costs of making the suits (COGS),
the company has the following activities:
1. Customer support. The salespeople, designers, and tailor spend time with the customer.
The cost-driver is hour spent with a customer.
2. Customer fittings. Before the suit completed, the customer may come in to make sure it
looks right and fits properly. Cost-driver rate is hour spent on fitting.
3. Rush orders. Some customers want their suits done quickly. The cost-driver is the
number of rush order.
Information about the products for 2022 is as follows. Cost of making each products is 30% out
of the price per unit. The company want to allocate their “Activity Cost” using the ABC system
Black Suit Navy Suit Gray Suit
Unit Produced 275 125 100
Unit Sold 275 125 100
Price per unit $325 $375 $300
 Activity Level Total Activity
Activities
Black Suit Navy Suit Gray Suit Cost

Hours spent on customer 220 104 86 $223

Hours spent on fitting 82 74 64 $192
Number of rush hours 103 202 50 $585
Total Activity Cost $1,000

Required
1. Compute the cost driver rates for each activities
2. Compute the 2022 operating income for each line of products under the ABC system
3. Before Traje Co used ABC system, they allocate the other operating cost (which
currently the activity cost) at the rate of 45% of cost of goods sold. Compute the 2022
operating income for each products under the previous simple costing system
4. Comment on your result from number 2 and number 3

PROBLEM 4 (15%)
Spontan Uhuy Delivery has decided to analyze the profitability of five new customers. It buys
recycled paper at $30 per case and sells to retail customers at a list price of $26 per case. Data
pertaining to the five customers are:

Spontan Uhuy Delivery’s five activities and their cost drivers are:
Required:

1. Compute the customer-level operating income of each of the five retail customers now
being examined (1, 2, 3, 4, and 5). Comment on the results.
2. What insights do managers gain by reporting both the list selling price and the actual
selling price for each customer?
3. What factors should managers consider in deciding whether to drop one or more of the
five customers?

PROBLEM 5 (15%)
During 2021, NPAK.DP reported sales of $16.000.000. NPAK listed the following costs for the
year.

Cost 2021

Lawsuit Claims $ 365,000.00

Machine Calibration $ 85,000.00

Equipment Supplier Selection $ 125,000.00

Raw Materials $ 750,000.00

Materials Testing $ 65,000.00

Order Cost $ 345,000.00

Machine Repairs $ 400,000.00

Machine Depreciation $ 900,000.00

Product Tests $ 230,000.00

 Design Review $ 70,000.00

Plant Expansion $ 1,500,000.00

Design changes $ 200,000.00

Quality Circles Training $ 150,000.00

Warranty repairs $ 300,000.00

Customer Support $ 165,000.00

MoH $ 3,245,000.00

Total $ 8,895,000.00

Required:

1. Prepare a quality cost report for 2021!

2. NPAK plans to change to a better supplier which produces a higher quality machine. This
however will result in a 250% increase in their costs. On the other hand, this
improvement can result in a 30%, 50%, 40% and 70% decrease in machine calibration,
machine repairs, warranty repairs and lawsuits claims needed respectively. What is the
impact of this change on the overall COQ and NAPK’s operating income? What should
NPAK do? Why does this happen? Explain!

Good Luck!