Prepare the cost of goods manufactured statement

Assignment Help Accounting Basics

Reference no: EM133062362

Discussion Questions:
1. Explain the difference between a cost and an expense.
2. What is meant by meant by the phrase different costs for different purposes.

Exercises:
1. Classify the following items as either product costs or period costs:
a) depreciation on a vehicle used by the entity's general manager
b) containers used to package finished goods
c) salaries of workers handling inventory during production
d) general manager's salary
e) lease payments on a motor vehicle used by sales representatives
f) superannuation contributions for production workers by the entity.

Problems:
1. Swan Ltd is a manufacturer with the following information available at year-end:

Direct material used	$ 400,000
Salary of the managing director	70,000
Direct labour	180,000
Administrative cost	140,000
Manufacturing overhead	40,000

Required
a) Calculate the total prime costs for the year.
b) Calculate the total conversion costs for the year.
c) Calculate the total period costs for the year.
d) Calculate the total product costs for the year.

2. Information from the records of Kerley & Co. for the year ended 30 June 2018 is given below.

Factory overhead , 100% of direct labour cost	$120,000
Direct labour	109,091
Raw materials inventory, 1 July 2017	18,000
Cost of goods manufactured	520,800
Raw materials inventory, 30 June 2018	15,500
Work in process inventory, 30 June 2018	50,500
Raw materials purchased during the year	210,000

Required
Prepare the Cost of Goods manufactured Statement and calculate the cost of work in process inventory on 1 July 2017.

3. Jetboats Ltd uses the high-low method to estimate the cost function. Jetboat operates jet boat rides on Sydney Harbour. The number of hours the engines are run in each month is provided below along with the labour costs for maintaining the jet boats for 2018.

Month	Machine (engine) Hours	Labour costs
January	180	$4,300
February	110	$2,510
March	140	$3,040
April	120	$2,780
May	80	$1,750
June	50	$1,200
July	60	$1,500
August	110	$2,470
September	155	$3,480
October	160	$3,590
November	170	$3,800
December	175	$3,950

Required
a) What is the cost function?
b) What is the estimate of Jetboats's labour costs when:
i) 130 machine hours are used?
ii) 220 machine hours are used?

Reference no: EM133062362

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