Closing stocks 1,000Salesman Commission 18,00010,000Distribution Expenses 13,000Stock Differences:Raw Materials: Closing 1,000Finished Goods: Closing2,000Net Profit as Per the Financial Books: 20,000Dividends Received3,000Salesman Commissions 18,000Interest on Bank Deposits1,000Selling Expenses:15,000Loss on sale of land1,000Distribution Expenses13,000Interest on Mortgage2,000Fines 1,000Net Profit c/d 70,000______175,000175,000T axation 24,000Net Profit b/d70,000Transfers to General Reserve 9,000Retained Earnings b/f36,000Ordinary COST ACCOUNTING
Cost Accumulation 102 share dividend18,000Preference Dividends11,000Goodwill written off 37,000_______106,000106,000 Retained Profit b/f 37,000 xDrCrStores Ledger Control a/cx W.I.P. control a/cxFinished Goods Control a/cxIn the Costing BooksWages Paid in Cash Dr Wages a/cDr Wages Control a/c Cr Cash a/cCr General Ledger Adjustment a/cWages Incurred as direct labour Not recorded in Financial BooksDr. W.I.P a/cCr. Wages Control Dr. Production Overheads Control a/cIn the Costing BooksPurchases on Credit: Dr Purchases a/cDr Stores Ledger Control a/c Cr Creditors a/cCr General Ledger Adjustment a/cReturn of Materials to Suppliers Dr CreditorsDr. General Ledger Adjustment a/c Cr. Purchases a/c Cr. Stores Ledger Control a/cPurchases of Materials in Cash Dr. Purchases a/cDr. Stores Ledger Control a/c Cr. Cash a/cCr. General Ledger Adjustment a/cCanteenBoiler houseProduction department %%110202301032030Service department 43020Canteen-20Boiler house10- __Total100100ShsProduction department1200,0002500,00 03300,0004400,000Service departmentCanteen50,000Boi ler house100,000Total1,550,000S hsShsPartner44 81,000 8,000Manager44 8 600 4,800Seniors2130 51 S TRATHMORE U NIVERSITY STUDY PACK
103 Lesson Three 40020,400Assistants4870118 20023,6007710818556,80021 SMTWTFSTotalChargeable hours: Client A885ShsCompensation of professional staff40,000,000Other costs24,000,000Total budgeted costs64,000,000CuttingStitchi ngHours actually workedDirect labour hours68,00030,000Machine hours-17,000Factory overhead cost incurred1,600,000760,000Cut tingStitchingDirect materialsShs.500Shs.750Direc t labour hours3010Machine hours- 20CuttingStitchingDirect labour costShs.1,200,000Shs.750,00 0Factory overheadShs.1,500,000Shs.1, 620,000Direct labour hours60,00030,000Machine hours-40,000 Department ADepartment BShsShsMaterials issued5,000Shs.15,000Direct labour cost4,800Shs.4,000Direct labour hours400500Machine hours1,500100Department ADepartment BShsShsDirect material cost800,000600,000Direct labour cost600,000500,000Factory overheads600,000400,000Dir ect labour hours40,00050,000Machine hours120,0007,500ABi)Units2 0,00010,000ii)Labour hours20,00020,000iii)Labour costShs.17,500Shs.22,500iv) Machine COST ACCOUNTING
Cost Accumulation 104 hours45,00015,000v)Material costShs.15,000Shs.25,000 S1S2S3P1P2TOTALCost Prior to Allocation 92,000 184,800 138,600400,000500,000Alloc ate S1(1:2:4:3)92,4009,24018,48 036,96027,720194,040157,08 0436,960527,720Allocate S2(2:5:3) (194,040)43,120107,80043,1 20- 200,200544,760570,840Alloc ate S3(1:6) (200,200)28,600171,600S1S2 S3P1P2TOTALCost Prior to Allocation 92,000 184,800 138,600400,000500,000Alloc ate S1(4:3)(92,400)--52,800 39,600Allocate S2 (5:2)- (184,800)-132,000 52,800Allocate S3(1:6)- - (138,600) 19,800118,800- - - 604,600711.2001,315,800Uni t of Service ProvidedCosts Prior to Service DepartmentS1S2S3Shs.S1 0 2,000 4,500 92,400S2 1,000 0 0 184,800S3 2,000 4,000 0 138,600P1 4,00010,000 1,500 400,000P2 3,000 4,000 9,000 500,000Totals10,00020,00015 ,0001,315,800 Possible cost driverOrderingNumber of ordersMaterials handlingNumber of production runsProduction schedulingNumber of S TRATHMORE U NIVERSITY STUDY PACK
105 Lesson Three production runsDispatchingNumber of dispatchesTotal Overhead absorbed(1375)(250 x 5.50)___ ______Under absorption of overhead125NIL125 950 Note That the total profit over the two periods is the same for each method of
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