Assessment
Task
The purpose of Assessment is to establish the skills needed in the workplace for costing products and services using the appropriate processes and tools and apply analytical processes to construct accounting systems and models using workplace tools. Each question uses realistic data and the professional practices similar to that found in workplaces.
QUESTION 1 Inventory systems
Are manufacturing statements an example of periodic or perpetual inventory systems? Explain.
QUESTION 2 Financial report users
Who are the main users of financial reports on profit and financial position of an organisation?
QUESTION 3 Cost concepts
The monthly cost of renting a manufacturing plant is
A. a prime cost and an inventoriable cost.
B. a prime cost and a period cost.
C. a prime cost and a variable cost.
D. a conversion cost and a period cost
E. a conversion cost and an inventoriable cost.
Explain your answer.
QUESTION 4 Manufacturing statement and income statement Spreadsheet. See the Spreadsheet Advice in Interact2 Resources and the examples in you textbook.
See the requirements within the spreadsheet template below.
Hint: The net income is a lucky number.
Check the spreadsheet assignment requirements. Ensure you have separate data and report areas showing only formulas. Use IF functions to allow for the possibility of either a net income or a net loss.
QUESTION 5 Cost concepts
What is meant by:
(a) an overhead cost pool?
(b) a cost driver?
(c) a production cost centre?
(d) a support service cost centre?
QUESTION 6 Understanding the entries in the Materials Control account.
The Materials Control account balances were $30 000 on 1 June and $25 000 on 30 June. Raw materials purchased during June cost $90 000. Direct materials issued to production during June were $40 000.
Required:
Reconstruct the Materials Control T-account and show the general journal entry to record the cost of raw materials issued as indirect materials during June.
QUESTION 7 Understanding the entries in the Accrued Payroll account
Salaries and wages payable to factory employees were $10,000 on 1 March and $4,000 on 31 March. Gross salaries and wages paid during March totalled $30,000. March's direct labour totalled $18,000.
Required:
T-account for Accrued Payroll and general journal entries for recording salaries and wages earned by, and paid to, factory employees during March.
QUESTION 8 Payroll entries
The Passive Company has a gross payroll of $10,000 per day. Withholdings for PAYG taxes are $3,000 per day. There are no other deductions from employees' earnings. The firm works five days per week, Monday to Friday inclusive. The payroll period covers Thursday to Wednesday inclusive and the payroll for the week is paid on the following Friday.
Gross payroll consists of $6,000 direct labour, $1,500 indirect factory labour, $1,500 selling expenses and $1,000 general and administrative expenses each day. The following calendar should be used to answer the questions:
A. What is the total amount to be credited to Accrued Payroll in respect of July earnings?
B. If balance day adjustments are performed at the end of each month, what would be the balance in Accrued Payroll account at the close of business on July 31?
C. Suppose that a single journal entry is made on the last day of each month to record the distribution of total labour costs for the month, but that entries are made each Friday to record payment of wages and withholdings. Also, PAYG taxes withheld are remitted to the Taxation Department at the end of each month.
1. Show the weekly journal entry.
2. Construct the necessary ledger accounts to show all entries in respect of labour costs during the month of July.
QUESTION 9 Activity Based Costing
Your employer is contemplating changing the existing costing systems used in the business to adopt activity based costing (ABC).
Prepare a business report to critically evaluate arguments for and against ABC. Use the Internet as a resource (about 300 words excluding references). The following resource will help you prepare and format your report:
https://bit.ly/FoBAcademic-Writing-Skills
QUESTION 10 Service department cost allocation
Spreadsheet problem. Check the spreadsheet assignment requirements and review the examples in your textbook.
Using template 1 below, re-allocate the service centre costs to the production departments by
(a) the direct method
(b) the step method
(c) the reciprocal services method
(d) complete the T accounts shown in the second template for EACH method. Add this template to the first template such that all solutions are created automatically.
(e) Assume you are the manager with the task of choosing one only of these methods to implement. With reference to the outcomes of each method, outline the criteria relevant to your decision.
Template 1
Template 2. Create a solution for EACH method. See your text for examples.
Rationale
This assignment is designed to assess your application of knowledge, understanding and skills in certain topics including cost flows in management accounting, functions, terminology, manufacturing statements, spreadsheet construction, product costing, materials acquisition systems, labour payment systems, accounting for overhead, activity based costing, (ABC) and the allocation of overhead including service department costs.