Assignment Part A: Practical Questions
Question 1: Barn Farm Pty Ltd, a pet food supplier, employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. The company's production quantity schedule for June 2019 is as following:
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Units (cans)
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Work in process on 1 June (60% complete as to conversion)
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400
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Units started during June
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700
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Total units to account for
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1100
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Units from beginning work in process, which were completed and transferred out during June
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400
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Units started and completed during June
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360
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Work in process on 30 June (20% complete as to conversion)
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340
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Total units accounted for
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110
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Calculate each of the following amounts:
1. Equivalent units of direct material and conversion during June. Use the FIFO method.
2. Equivalent units of direct material and conversion during June. Use the weighted average method.
Question 2: Green Manufacturing Pty Ltd is a computer manufacturing company. At the beginning of 2019, the following estimates were provided for the coming year:
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Machining
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Assembly
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Direct labor-hours
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1,000
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9,000
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Machine-hours
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10,000
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500
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Direct labor cost
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$8,000
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$72,000
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Manufacturing overhead costs
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$25,000
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$360,000
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The accounting records of the company show the following data for Job order from Elite Education:
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Assembly
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Machining
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Direct labor-hours
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50
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120
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Machine-hours
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170
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10
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Direct material cost
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$2,700
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$1,600
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Direct labor cost
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$400
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$900
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Note: overhead costs are applied on the basis of machine-hours for the Machining Department and on the basis of direct labor-hours for the Assembly Department.
Required:
a. Compute the manufacturing overhead allocation rate for each department.
b. Compute the total cost of Job order from Elite Education.
c. Provide possible reasons why Green Manufacturing Pty Ltd uses two different cost allocation rates.
Assignment Part B: Analytical Question
Critically discuss the concept of a value chain.
Select any major manufacturing company and describe the segments that you think would be included in its value chain.
Provide a brief explanation of the role of each segment and explain how a retailer could focus on the purchasing segment of their value chain to create competitive advantage.
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