FATIH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

DEPARTMENT OF MANAGEMENT

2005-2006 FALL

MAN 305 COST ACCOUNTING

MIDTERM EXAM II

Duration: 75 minutes                                                                                                                                                                                                                                                                     December 13, 2005

Instructor: Ali COSKUN

QUESTIONS

QUESTION 1:

The Glavine Corporation manufactures and sells packaging machines. It recently used an activity-based approach to refine the job-costing system at its Colorado plant. The resulting job-costing system has one direct-cost category (direct materials) and four indirect manufacturing cost pools. These four indirect manufacturing cost pools and their allocation bases were chosen by a team of product designers, manufacturing personnel and marketing personnel:

Indirect manufacturing                                                                 Budgeted cost-

         cost pools                              Cost-allocation bases            allocation rate     

1. Material handling                       Component parts                                     $6 per part

2. Machining                                   Machine-hours                        $24 per hour

3. Assembly                                    Assembly-hours                     $60 per hour

4. Inspection                                   Inspection hours                 $125 per hour

Cola Supreme recently purchased 80 can packaging machines from the Glavine Corporation. Each machine has direct materials costs of $3,000, requires 50 component parts, 10 machine-hours, 15 assembly-hours, and 4 inspection-hours.

Compute the manufacturing cost of each machine and the total manufacturing cost of the Cola Supreme job using the Activity Based Costing (ABC) system.

 

QUESTION 2:

Alfred, owner of Hi-Tech Fiberglass Fabricators Inc. is interested in using the reciprocal allocation method. The following data from operations were collected for analysis.

Budgeted manufacturing overhead costs

Plant Maintenance   PM (Support Dept.)          $350,000

Data Processing       DP (Support Dept.)           $  75,000

Machining                 M (Operating Dept.)         $225,000

Capping                     C (Operating Dept.)         $125,000

Service furnished:

By Plant Maintenance (budgeted labor-hours)                 By Data Processing (budgeted computer time)

 Data Processing                2,125                                         Plant Maintenance                600

 Machining                         3,400                                         Machining                          3,500

 Capping                          11,475                                          Capping                                900

 

What are the costs of the Data Processing and the Plant Maintenance allocated to Machining and Capping using the reciprocal method?

 

QUESTION 3:

Zenon Chemical, Inc. processes pine rosin into three products; TP, PS and SR. During May, the joint costs of processing were $120,000. Production and sales value information for the month were as follows:

   Sales Value

Product            Units Produced           at Split off Point

   TP                        6,000 liters                   $90,000

   PS                        6,000 liters                     60,000

   SR                        3,000 liters                     50,000

    New sales value

Product           Separable costs       after further processing

   TP-1                    $ 35,000        $115,000

   PS-1        20,000            75,000

   SR-1                        15,000            60,000

Required:

Determine the amount of joint cost allocated to each product (TP-1, PS-1, SR-1) if the estimated net realizable value (NRV) method or the constant gross-margin percentage NRV method is used.