Professional Documents
Culture Documents
Instructions:
1
You are required to finish each of these questions, total 40 marks. Please give the solutions in
detail, show calculations and submit the solutions to Moodle using a single file, it can be Excel
format, Word format or PDF format, no requirement on word limits, if use any references, please
refer to Harvard style.
Question 2: Schedules of cost of goods manufactured and sold; income statement (10 Marks)
The following data refer to Flintoff Fashions for the current year:
Sales revenue $570 000
Work in process inventory, 31 December 18 000
Work in process inventory, 1 January 24 000
Selling and administrative expenses 90 000
Income tax expense 54 000
Purchases of raw materials 108 000
Raw material inventory, 31 December 15 000
Raw material inventory, 1 January 24 000
Direct labour 120 000
Electricity: plant 24 000
Depreciation: plant and equipment 36 000
Finished goods inventory, 31 December 30 000
Finished goods inventory, 1 January 12 000
Indirect material 6 000
Indirect labour 9 000
Other manufacturing overhead 48 000
Required:
1 Prepare the schedule of cost of goods manufactured for Flintoff Fashions.
2 Prepare the schedule of cost of goods sold for Flintoff Fashions.
3 Prepare the income statement for Flintoff Fashions.
4 Construct an Excel® spreadsheet to solve all the preceding requirements. Include formulas in your
spreadsheet wherever possible. Show how both cost schedules and the income statement will change if:
(a) raw material purchases amounted to $110 400.
(b) indirect labour was $9600.
Question 3: Job costing; department overhead cost allocation: tour operator (10 Marks)
Asian Adventure Holidays offers a series of holiday packages aimed at families, seniors and corporate groups.
The financial controller, Jack Tallis, is preparing for the annual board meeting and is concerned about the loss
that the business sustained in the past year. He has examined the profits for each of the three departments of
the business—family, seniors and corporate—and it seems that the corporate department is the source of the
problem.
Jack has asked you to assist him to look more closely at the three packages offered by the corporate department
to see which holiday packages are yielding profits and which are not. The three packages are to Thailand,
Malaysia and Indonesia. The sales and direct costs of each corporate package for last year are as follows:
To calculate the profitability of each package, a proportion of the overhead costs of running the corporate
department needs to be allocated to the three packages. Jack has suggested that these costs could be allocated
to each package in proportion to actual sales revenue. For last year these overhead costs were as follows:
Phone 2 000
Utilities 2 000
Required:
1. Calculate the profit per package and the total profitability of each of the three corporate packages.
2. Compare the profitability of the three corporate packages.
3. Do you consider that the allocation of the corporate department overhead to packages using actual sales
revenue is appropriate? Can you suggest a better method?
4. Suggest what actions the company could take in regard to the three corporate packages.
The only job still in process on 28 February was job number GT108, with costs of $2800 for direct material and
$1800 for direct labour.
Required:
1 Calculate the cost of goods manufactured for February.
2 Calculate the amount of overapplied or underapplied overhead to be closed to cost of goods sold on 28
February.