Cost Accounting-I

EXAMPLES
Cost Accounting
Exercise 1:
The reported inventory costs and the financial events of ABC Co. met in December 2014 are as follows:

DATE Event
1.12.2014 Cost of Beginning Raw Material is 3000 TL
1.12.2014 Cost of Beginning Work-in Progress is 5.000TL
1.12.2014 Cost of Beginning Finished Goods is 8.000TL
2.12.2014 Purchased raw material priced at 10.000 TL, and paid 3.000 TL transportation for acquired
raw material.
5.12.2014 Issued raw material cost is 7.000 TL.
15.12.2014 Paid 15.000 TL direct labor and 5.000 TL indirect labor in cash.
20.12.2014 Paid 3.000 TL factory electricity in cash.
21.12.2014 Paid 800 TL lubricant cost in cash.
23.12.2014 The depreciation cost is 2.200 TL.
31.12.2014 The cost of Ending Work-in Progress is 4.000 TL
31.12.2014 The cost of Ending Finished Goods is 5.000 TL
Cost Accounting
Exercise 1:
Required:
1) Ascertain the cost of finished goods and cost of goods sold.
2) Prepare the statement of cost of goods sold.
3) Present the financial information about cost/expense in financial statements.
 Cost Accounting
Exercise 2: Find the prime cost, cost of production, cost of sales (total cost) and profit from the
following:

 Direct Materials 95.000 TL

 Direct Labor 65.000 TL

 Factory Overheads 154.000TL

 Administration Expenses 36.500TL

 Marketing Expenses 100.000TL

 Distribution Expenses 95.000 TL and

 The manufactured goods are totally finished and sold at the current period.

 Sales 600.000 TL.

Cost Accounting
Exercise 2-Solution:
Prime Cost= Direct Materials+ Direct Labor
= 95.000+ 65.000= 160.000TL
Cost of Production = Prime Cost+ Factory Overhead Exp.
= 160.000+ 154.000= 314.000 TL

Cost of Production + General& Administrative Exp.+

Total Cost of Business Activities=
Marketing, Selling& Distr. Exp.
= 314.000+ 36.500+ 100.000+ 95.000= 545.500 TL
Gross Profit= Sales- Cost of Goods Sold
= 600.000- 314.000= 286.000 TL

Operating Profit/Loss= Sales – (Cost of Goods Sold + Gen. Ad. Exp.+ Marketing, Selling&
Distr. Exp.
=600.000 – (314.000+36.500+195.000) = 54.500 TL
Cost Accounting
Exercise 3:Calculate Prime Cost, Factory Cost, Cost of Production, Cost of
Sales (Total Cost) and profit from the following particulars:
COST COMPONENTS TL COST COMPONENTS TL
Oil Consumption 250 Direct Wages 86.650
Salaries of Salesmen 15.100 Management Salaries 10.000
Net Purchase of Raw Materials 120.540 Depreciation of Delivery Trucks 1.600

Insurance Expense of Finished 2.500 Beginning Inventory of Raw 3.260

Goods Materials
Factory Rent 8.300 Lightening of Showroom 1.500
Depreciation of Factory Building 3.800 Ending Inventory of Raw Materials 1.100

Office Salaries and Expenses 7.000 Commission to Salesmen 2.850

Transportation to Customer 2.800 Wages of Maintenance Workers 12.600

Electricity of Office Building 3.800 Sales 350.000

Exercise 3- Solution:
Direct Material Cost   122.700
Cost of Beginning Raw Materials 3.260  
Net Purchases 120.540  
Cost of Ending Raw Materials (1.100)  
Direct Labor Cost   86.650
PRIME COST   209.350
Factory Overhead Cost   24.950
Wages of Maintenance Workers 12.600  
Factory Rent 8.300  
Depreciation of Factory Building 3.800  
Grease Oil Consumption 250  
COST OF PRODUCTION   234.300
General and Administrative Expenses   20.800
Management Salaries 10.000  
Electricity of Office Building 3.800  
Office Salaries and Expenses 7.000  
Marketing, Selling And Distribution Expenses   26.350
Salaries of Salesmen 15.100  
Transportation to Customer 2.800  
Depreciation of Delivery Trucks 1.600  
Cost Accounting
Exercise 4: Find the cost of raw material, work-in progress, finished goods, cost of production and cost
of sales (total cost) and profit from the following:
 The cost of beginning raw material is 105 TL. Company purchased 1.000 kg. of raw material priced at
165 TL and the acquisition cost of it is 25 TL.
 The cost of ending raw material is 95TL.
 Direct labor cost is 110 TL, indirect labor cost is 35 TL.
 The cost of indirect material is 30 TL.
 The depreciation cost of factory building and machinery is 30 TL.
 The rent of store is 100 TL and the packing material used in store is 20 TL.
 The office salaries are 90 TL and the office supply consumed in administrative department is 25 TL.
 The cost of beginning work-in progress is 120 TL, ending is 95 TL.
 The cost of beginning finished goods is 150 TL, ending 80 TL.
 The amount of total sales is 1.200 TL.
Cost Accounting Recording System-Example
The economic events that ABC Furniture met in May are as follow:
 The material priced 200.000 TL has been purchased on account.
 The raw material cost 50.000 TL and other material cost 30.000
TL has been issued and has been issued.
 Direct labor cost 30.000 TL, indirect labor cost 10.000 TL has been
accrued.
 The factory amortization cost is 6.000 TL, machinery amortization
cost is 4.000 TL, sales outlet amortization cost is 3.000 TL.
 The wages and salaries for selling department cost 4.000 TL has
been accrued.
 The office supplies used in selling department cost 1.000 TL.
Cost Accounting Recording System-Example
 Beginning Work-in Progress cost is 30.000 TL, Ending Work-in Progress cost
is 30.000 TL.
 Beginning Finished Goods cost is 10.000 TL (1.000 kg x 10 TL).
 2.000 kg. goods has been started to manufactured and finished in May.
 1.000 kg finished goods with %30 profit margin on cost has been sold on
account.
Requested:
1) Ascertain total and unit cost.
2) Prepare the statement of cost of goods sold.
3) Present the cost/expense in financial statements (Balance Sheet/Income
Statement)
 Cost Accounting
ABC Co. uses the Weighted Average inventory valuation method. The
financial information about inventory movements for 20X1 are as follows:
  20X1 Required:
  Unit Q1: Ascertain total and unit
Quantity Total Cost
Cost cost of raw material purchases
Beginning Raw Material 125 unit 16 750 and direct material cost by
Purchases 475 unit 20 9.500 using the information stated
Purchasing Insurance     1.200 above.
Returns     200  
Discounts     50 Q2: Ascertain the total and
Ending Raw Material 100 unit ? ? unit production cost of current
Direct Labor Cost     6.777 period by using the information
Current Period Production 500 kg.     stated above.
Factory Overheads   3.890    
Beginning Work-in Progress 500 kg. 38 19.000 Q3: Compute the Cost of Goods
Ending Work-in Progress 200 kg. ? ? Sold by using the information
Beginning Finished Goods 700 kg. 36 25.200 stated above.
Cost Accounting
ABC Co. uses the Weighted Average valuation method to ascertain the material cost. The financial
information about raw material movements for 20X1 and 20X2 are as follows:
Required: a) Compute the direct material cost and cost of ending inventory for 20X2
b) Present the journal entries of inventory movements for 20X2.

  20X1 20X2
  Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Beginning Raw Material 125 unit 14,2 1.775 100 ? ?
Purchases 475 unit 17,8 8.455 600 19,5 11.700
Transportation Cost     900     1.200
Discounts     330     -
Ending Raw Material 100 unit ? ? 160 unit ? ?

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