Sample Accounting Essay Paper on Cost Accounting

Cost Accounting

Question One

1. On what documents would these costs be recorded?

Purchase requisition note: This is a document for recording which provides written records and materials with the date for purchase according to the identified needs or required materials.

• How much cost should have been recorded on each of the documents for Job ES34?

Direct materials cost:

(8×25) + (8×9.20)       =  273.60

Direct labour

(18×3.15) + (19×2.15)    = $ 97.55

Question Two

Company’s predetermined overhead rate = estimated total manufacturing overhead ÷ total                                                                                     number of hours estimate                                

=$586000÷40 000hrs

=14.65 dollars per hour       

Total overhead applied = $713 400 ÷ 41 000hrs

= 17.4 dollars per hour

Over or under applied

=17.4 – 14.65 (dollars per hour)

=2.75 dollars per hour (under applied)

Question Three

1. Compute the amount of overhead cost that would have been charged to each project during May.

Williams= ($4 800+ $2 400)÷ 200

= $ 36 per hour

Chandler = ($1800 + $1000) ÷ 80 hrs

= $ 35 per hour

Nguyen = ($3600 + $1500) ÷ 120hrs

= $ 42.5 per hour

2. Prepare a journal entry showing the completion of the Williams and Chandler projects and the transfer of costs to the Completed Projects (i.e., Finished Goods) account.

= overheads + direct cost of materials + direct cost of labor

= $7200 + $2800 + $ 16 000

=$ 26 000

3. What is the balance in the Work in Process account at the end of the month?

= $ 3600 + $ 1500

= $ 5100

• What is the balance in the Overhead account at the end of the month? What is this balance called?

= 200hrs + 120hrs + 80hrs = 400hrs

Predetermined overhead = 400 × 45

= $ 18 000

Balance = $18 000 – $ 16 000

=$ 2000 over applied

Question Four

Total no of kgs = 240000kgs

WIP by May 1^st = 15 000kgs

Completed = 55/100 ×15000kgs = 8250kgs

Not completed = 6750kgs

WIP by May 31 = 10000kgs

Completed = 9000kgs

 Not completed = 1000kgs

Weighted average Method = 240 000÷ (8250 + 9000)kgs

= 13.91

Question 5

1. Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for November for the first process

WIP inventory November 1^st

Units completed with respect to materials = 50/100 × 80 000

= 40 000 units

Units completed with respect to conversion = 25/100 × 80 000

= 20 000 units

WIP inventory November 30^th

Units completed with respect to materials = 45/100 × 60000

= 27 000 units

Units completed with respect to conversion = 20/100 × 60000

= 12 000 units

• Compute the costs per equivalent unit for November for the first process.

Costs per equivalent unit

Materials = ($ 76 600 ÷ 40 000 units) + ($76 600 ÷ 27 000 units)

= $ 4.75 per unit

Conversion = ($ 34 900 ÷ 20 000units) + ($ 34 900÷ 12 000units)

= $ 4.65 per unit

• Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in November

Total cost of ending work in process inventory = $ 4.75 × 300000 + $ 4.65 × 300 000 + $ 410 000 + $ 234 500

= $ 3 464 500

Total cost pf units transferred = $ 4.75 × 320 000 + $ 4.65 × 320 000

=$ 3 008 000

References

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Jasch, C. (2009). Environmental and material flow cost accounting: Principles and procedures. New York: Springer.

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Rajasekaran, V., & Lalitha, R. (2011). Cost accounting. Delhi: Pearson.

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