Islamic university Gaza

Faculty of commerce
Accounting department
Final exam
Cost accounting 2
( 2 hours )

Name :
Id : . Class : ...

Question 1 :
Mohammad is the owner of Gaza bottling , a bulk soft drink producer . a single production process
yield two bulk soft drink : rainbow dew( the main product) and resi dew ( the byproduct) . both
product are fully processed by a splitoff point . and there are no separable cost .
For September 2006, the cost of the soft drink operation is $ 240.000 production and sales data are
as follows :
Production(in Sales(in gallons) Selling price per gallon
gallons)
Main product: rainbow dew 20.000 16.000 $40
Byproduct: resi- dew 4.000 2.800 4

A- What is the gross margin for bottling factory under production method ?
b- what are inventory costs reported in the balance sheet on September 30.2006 for two products ?

: Question 2
Sinclair oil & gas , jointly process purchase hydrocarbons to generate three nonsaleable
intermediate products A,B, and C . these intermediate products are further processed separately to
: produce AA1, BB1, and CC1 . an overview of process and result for august 2007 are shown
 AA1
PROCESSING GALLONS 300
A $ 350 @ 36 PER
GALLON

Processing PROCESSING BB1

B $ 210 gallons @ 100
30 $ per gallon

C PROCESSING CC1
$ 420 gallons 1600
@2.6 $ per
gallon

joint cost $3.600 .

a - allocate the august 2007 joint cost among the three products using NRV method .
b assuming the inventory is half of production for each product show the operating income for
product AA1 .

Question 3 :
Horizon unlimited manufactures a full line of well known sunglasses frames and lenses. Horizon
using a standard costing system . manager will be asked explain the following performance report
for 2007:
 Actual result Static budget amount
Unit sold 9.700 10.000
Revenue $795.400 $800.000
Variable manufacturing cost 469.286 432.000
Fixed manufacturing cost 144.530 150.000
Gross margin 181.584 218.000
Manager collected the following information:

1. three items comprised the standard variable manufacturing cost in 2007 :

- direct materials: frames. Static budget cost of $ 66.000 the standard input for 2007 is 6.00
ounces per unit.
- direct materials: lenses. Static budget cost of $186.00 . the standard input for 2007 is 12.00
ounces per unit.
- direct manufacturing labor: static budget cost of $ 180.000. the standard input for 2007 is 2.4
hours per unit.

2. the actual variable manufacturing cost in 2007 were :

- direct materials: frames. actual cost of $ 74.496 . actual ounces used were 6.4 ounces per unit.
- direct materials: lenses. actual cost of $ 200.984 . actual ounces used were 14 ounces per unit.
- direct manufacturing labor: actual cost of $ 193.806. the actual labor rate was 29.6 per hour

required : prepare report include price and efficiency variances for :

(1) direct material frames , (2) direct manufacturing labor.

Question 4:
Ahmad has the following information:-
Budgeted variable manufacturing overhead rate $400 per hour
Budgeted fixed manufacturing overhead rate $480 per hour
Budgeted cutting time per part 3 hours
Budgeted production and sales for May 2007 10.000 parts
Budgeted fixed manufacturing over head costs for May2007 $3.600.000

actual results for May 2007 are:-

parts produced and sold 9.600 units
cutting- hours used 16.800 hours
Variable manufacturing over head cost $2.956.800
fixed manufacturing overhead costs $3.664.400
Required:-
1-Compute the spending variance and the efficiency variance for variable manufacturing overhead
2-Compute the spending variance and the production-volume for fixed manufacturing overhead

Question 5 :
M. Alashi manufactures paints in two department : preparing and mix the following information for
October 2007 is available :
preparing department :
units
beginning work in process (60% completion level) : 20.000
units start during the period : 120.000
good completed unit : 125.000
ending work in process (60% completion level) : 5.000

costs :
Beginning work in process cost :
direct material : $ 20.000
conversion cost : $ 20.000

Period cost :
direct material : $ 243.000
conversion cost : $ 240.000
NOTES :
1.direct material adding at the beginning
2. conversion cost adding evenly during the process.
3. inspection point at 55%
4. accept 10 % of good units pass the inspection point as normal spoilage .

required :
1.using process costing system ( WA method ) compute cost of good completed units , and cost of
ending work in process .

QUESTION 6:

1. WHAT IS A STANDARD COST , AND WHAT ARE ITS PURPOSE ?

2. WHY SHOULD COMPANY CALCULATE PRICE AND EFFIECIENCY VARIANCES ?

3. HOW DO JOINT PRODUCT DIFFER FROM BYPRODUCT ?