Reference no: EM133064277

ACCG2000 Management Accounting - Macquarie University

Process costing: calculation of product costs

Question 1: Pencil Ltd produced 60 000 pencils in August, with the following costs incurred.

Direct labour $1 000
Direct materials $1 800

Manufacturing overhead costs allocated to the 60 000 pencils were $2 600. There is no beginning and ending WIP.

Calculate the cost per pencil produced in August:

Question 2: Stanmore Chemicals Ltd produces chemical called Super Clean, in two- litre containers. In July the company produced 140 000 liters of Super Clean mixture, which was packed into 70 000 containers. Production takes place in two departments: Mixing and Packing. The manufacturing costs for each department for July were provided in the table. There is no beginning and ending WIP inventory. All finished inventories in July were sold out.

Cost item	Mixing	Packing
Direct Materials	$50 000	$10 000
Direct Labour	24 000	8 000
Manufacturing Overhead	14 400	4 800

Required:

1. What is the cost per container for Super Clean?

2. Complete the T-accounts provided and prepare journal entries to record the production costs for July.

Question 3:

During January 10 000 cameras are placed into production. Only 9000 cameras are fully completed and transferred out at the end of the month. Percentage of completion of remaining 1000 cameras is: Direct material (DM) cost - 100% and conversion cost - 50%.

What are the total equivalent units for DM and conversion cost?

Question 4:

ABC Ltd produces toys with the following information relating to activities in March: Beginning WIP: 4000 units (Degree of completion: DM - 100% and conversion cost-75%). Costs include: DM $220,000; Conversion cost $66,000.
Production started: 25,000 units
Production completed and transferred out: 24000 units
Ending WIP inventory: DM- 100% completed and conversion cost 40% completed.
During March DM used $1404,000; Conversion cost incurred: $506,000.
The company uses weighted average cost to allocate costs to production.

Determine the cost of goods completed during the month and cost of the WIP inventory on 31March.

Question 5: Smith Toys Ltd manufactures wooden toys. The following information relate to its production activities in May.

WIP on 1 May: 225 units (DM 100% completed; Conversion costs 60% completed); Costs include: DM $1800, Conversion cost $810.

Production started: 275 units
Production completed and transferred out: 400 units
Ending WIP inventory: DM 100% completed; Conversion costs 50% completed. During May DM used $1980; Conversion costs incurred $1638;

Required: Determine the cost of goods completed during the month and cost of the WIP inventory on 31st May.