Costing An introduction: Students’ Manual by Colin Drury

By Colin Drury

The purpose of the second one variation of this ebook is to supply an creation to the speculation and perform of price and administration accounting. a value accounting process accumulates monetary info for inventory valuation and revenue dimension while a administration accounting procedure accumulates, classifies and stories info that may support managers of their decision-making, making plans and keep watch over actions. This booklet is anxious with either price and administration accounting, with equivalent emphasis being put on either structures. meant basically for college students who're pursuing a twelve months price and administration accounting path, the e-book is perfect for these forthcoming this topic for the 1st time. it's appropriate for beginning expert (CACA, CIMA and 365 days university origin classes, organization of Accounting Technicians, BTEC better and nationwide degree, "A" point accounting and a primary point costing path for undergraduate measure scholars.

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20 Cost control problem requiring the preparation of a performance report using equivalent production calculations. 5 (a) Cleansing agent process account Ingredient Wages Overheads A B c kg 2,000 3,000 6,000 £ 1,600 Completed production 1,500 WIP c/fwd (1,170 + 516) 2,400 3,764 1,882 11,000 £11,146 kg 8,600 2,400 £ 9,460 1,686 11,000 £11,146 Calculation of cost per unit: Materials Labour Overheads Total cost £ 5,500 3,764 1,882 Completed units Equiv. WIP (1) Equiv. WIP (2) Total equiv. 10 9,460 £11,146 Note that 11,000 kg were put into the process and 8,600 kg were completed.

5 - - - - - - - - - - - - - - - - - - - - - - - - - 53 (b) See Chapter 6 for definitions and an explanation of the accounting treatment of abnormal gains and equivalent units. See Chapter 7 for a definition of by-products. Note that income from by-products should be credited to the process account from which the by-product emerges. 8 (a) See the introduction to Chapter 6 for the answer to this question. (b) The question does not specify at what point in the production process the losses are detected.

U Preparation of the wages control accounts plus an evaluation of the impact of a proposed piecework system. 17 Preparation of contract accounts. 1 (a) Stores ledger control account £ Opening balance b/fwd Creditors: Materials purchased £ 24,175 Materials issued: Work in progress control 26,350 76,150 Production overhead control 3,280 Closing stock c/fwd 70,695 --£100,325 £100,325 Work in progress control account Opening balance b/fwd Stores ledger: Materials issued Wages control: Direct wages Production overhead control: Overhead absorbed (15,236 X 150%) Profit and loss account: Stock gain (see Note 1) £ 19,210 Finished goods control: £ 62,130 26,350 15,236 22,854 2,840 Closing stock c/fwd £86,490 24,360 £86,490 Finished goods control account Opening balance b/fwd Work in progress: Cost of goods sold £ 34,164 Profit and loss account: Cost of sales 59,830 62,130 Closing stock c/fwd (difference) 36,464 £96,294 36------------------------------ £ £96,294 ACCOUNTING ENTRIES FOR A JOB COSTING SYSTEM Production overhead control account Prepayments b/fwd Stores ledger: Materials issued for repairs Wages control: Idle time of direct workers Wages control: Indirect workers' wages (£3,342 + £890) Cash/creditors: Other overheads incurred £ 2,100 W ark in progress: £ Overheads absorbed (15,236 X 150%) 22,854 Capital under construction 5,230 account: Overheads absorbed (2,670 X 150%) 4,005 4,232 Profit and loss account Under-absorbed overhead 12,200 (balance) 183 3,280 £27,042 £27,042 Profit and loss account Cost of goods sold Gross profit c/fwd £ 59,830 Sales 15,570 £75,400 Selling and distribution overheads Production overhead control: Under-absorbed overhead Net profit c/fwd £ 75,400 £75,400 5,240 Gross profit b/fwd Stock gain: W ark in progress 15,570 2,840 183 12,987 £18,410 £18,410 Notes: (1) The stock gain represents a balancing figure.

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