Past Year Paper Accounting

2310 words - 10 pages

OFFICE USE ONLY

Monash University
Semester One Examination 2014
Faculty of Business and Economics
Department of Accounting
EXAM CODES:

ACW2020

TITLE OF PAPER:

COST INFORMATION FOR DECISION MAKING

EXAM DURATION:

3 hours

READING TIME:

10 minutes

THIS PAPER IS FOR STUDENTS STUDYING AT: (office use only - tick where applicable)
 Berwick

 Clayton

 Peninsula

 Distance Education

 Caulfield

 Gippsland

 Sunway

 Other (specify)

 Open Learning

During an exam, you must not have in your possession, a book, notes, paper, calculator, pencil case,
mobile phone or any other material/item which has not been authorised for the exam or ...view middle of the document...

How does
it influence the manager in making decisions?
(5 + 5 + 5 + 5 = 20 marks)

THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK

ACW2020 Aniza Zainol

Page 2 of 10

OFFICE USE ONLY

ACW2020 COST INFORMATION FOR DECISION MAKING

Question 2 (15 marks)
ZK Holdings Company is a manufacturer of high quality door locks, which uses a job order
cost system. On January 17, 2014, the company received two orders from customers:
Job No
101
Zara’s Auto Parts placed an order for 10,000 automotive latching doors at
the agreed price of $7,000. Zara’s Auto Parts requested the goods to be
delivered by January 21, 2014.
102

Leman Company placed an order for 3,000 side door hinges. The price for
this job is $3,000 and the requested completion date is January 25, 2014.

Both jobs will be manufactured in two departments, the Forming Department and the
Finishing Department. The following transactions are related to jobs 101 and 102:
1.

On January 1, the Purchasing Department bought 50,000 lb. of aluminium (direct
material) for $37,500, with a unit cost of $0.75/lb., and 500 gallons of metal fluid
(indirect material) for $2,500, with a unit cost of $5/gal.

2.

On January 2, the following materials were requisitioned by the Forming and
Finishing Departments.
Date
Forming Department
Job 101
Job 102

Quantity

Description

17/01
17/01

2,500 lb.
300 lb.

Aluminium
Aluminium

Total

Amount
$1,875
$225
$2,100

Finishing Department
24/01
Total

ACW2020 Aniza Zainol

10 gal

Metal fluid

$50
$50

Page 3 of 10

OFFICE USE ONLY

ACW2020 COST INFORMATION FOR DECISION MAKING

Question 2 (cont’d)
3.

Direct labor costs incurred according to labor job tickets and payroll summary were
as follows:
Forming

Finishing

Total

Direct labor – Job 101

$1,550

$350

$1,900

Direct labor – Job 102

$750

$100

$850

Indirect labor – forming department

$550

-

$550

Direct labor – Job 102

-

$200

$200

Indirect labor – finishing department

-

$75

$75

$2,850

$725

$3,575

Week of 17/01:

Week of 24/01:

Total
4.

Additional manufacturing overhead costs incurred by the Forming department:
Insurance expense
Depreciation
Payroll taxes

$1,200
150
200

Total

$1,550

5.

Overhead is applied to each job upon completion as follows:
Forming department: 100% of direct labor dollars
Finishing department: 50% of direct labor dollars

6.

Both jobs are completed and transferred to the finished goods store room.

7.

Both customers picked up goods on January 25 and paid cash.

Required:
(a)

Prepare journal entries to record the manufacturing activities of the company for
January 2014.

(b) Prepare the journal entry to dispose of the underapplied or overapplied overhead if
the underapplied or overapplied overhead is treated as an adjustment to cost of goods
sold.
(12 + 3 = 15 marks)

ACW2020 Aniza Zainol

...

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