Instructions:
1
Problem-1 (Marks 5) Stanley Company, a manufacturing firm, has supplied the following information
from its accounting records for the year 2006(in dollars):
Advertising 2,400
Prime cost
Period Cost
Conversion cost
2
Problem-2 (Marks 8) Aussie yarn Co. is a producer of woolen yarn made from wool imported from
Australia .Raw wool is processed, spun, and finished before being shipped out to knitting and weaving
companies. Material is added in the beginning of processing and conversion costs are added evenly
throughout processing.
Aussie began the month of August with 10,000 units in process that were 100 percent complete as to
materials and 80 percent complete as to labor and overheads. They introduced 70000 units in
production during the month. At the end of the month 20,000 remained in ending inventory, where
material is 100% complete and 50 percent complete as to conversion cost. The cost data are as follows:
Beginning work
Current costs
in progress
Direct
Material 18000 142000
3
Problem-3 (Marks 5) Mats Farms produces strawberries and raspberries. Annual fixed costs are
$15,600. The variable cost is $0.75 per box of strawberries and $0.95 per box of raspberries.
Strawberries sell for $1.10 per box and raspberries for $1.45 per box. Two boxes of strawberries are
produced and sold for every box of raspberries.
Problem-4 (Marks 8) Bouncer Company sells its product at Rs.15 per unit. In a period, if it produces and
sells 8000 units, it incurs a loss of Rs.5 per unit .If the volume is raised to 20,000 units, it earns a profit of
Rs. 4 per unit.
4
Problem-5 (Marks 9) Lowder Inc. builds custom conveyor systems for warehouses and distribution
canters.
c) Overhead is charged to production at the rate of $10 per direct labor hour.
e) Job # 704, which was started during July, remained in process at the end of the month
f) Job #700 which had been completed in June was sold on account for cost plus 30%.
g)
Direct material requisition during July $
h)
5
1) You are required to calculate:
2) The actual overhead incurred in July is $19,100. The over applied/under applied overhead is adjusted
by the firm in the same month. Calculate the following treating the amount of under applied/over
applied overhead and apportioning it to the appropriate inventory accounts and Cost of Goods Sold on
the basis of value.
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