# Assignment 1 send 29 09 2014

863 Words Feb 7th, 2015 4 Pages
Assignment-1 Cost Concept-29-09-2014
Question 1: Cost drivers and functions: The list of representative cost drivers in the right column below are randomized with respect to the list of functions in the left column. That is, they do not match.
Function

Representative Cost Driver

1.
2.
3.
4.

A. Number of invoices sent
B. Number of purchase orders
C. Number of Research scientists
D. Hours of computer processing unit (CPU)
E. Number of new hires
F. Number of transaction processed

Accounting
Personnel
Data processing
Research and Development

6. Billing

1. Match each function with its representative cost driver.
2. Give a second example of a cost driver for each function.

Question 2: Total costs and unit costs: Ms. Thomas
Case 1
Case 2
Accounts receivable, 12/31
Rs. 6,000
Rs.2, 100
Cost of goods sold
A
20,000
Accounts Payable, 1/1
3,000
1,700
Accounts payable, 12/31
1,800
1,700
Finished goods inventory, 12/31
Gross Margin

B
11,300

5,300
C
1

Work in progress, 1/1
Work in progress 12/31
Finished goods inventory, 1/1
Direct material used
Direct manufacturing labor
Indirect manufacturing costs
Purchase of Direct material
Revenues
Accounts Receivable, 1/1

0
0
4,000
8,000
3,000
7,000
9,000
32,000
2,000

800
3,000
4,000
12,000
5,000
D
7,000
31,800
1,400

Question 4: Fire loss, computing inventory costs. A distraught employee, Mr. Unsatisfied put a torch to manufacturing plant on a blustery February 26. The resulting blaze destroyed the plant and its content.
Fortunately, certain accounting records were kept in another building. They reveal the following for the period from January 1 to February 28, current year.
Direct material purchased
Work in process, 1st January
Direct materials, 1st January
Finished goods, 1st January
Indirect manufacturing costs
Revenues
Direct manufacturing labor
Prime costs
Gross margin percentage based on revenue
Cost of goods available for sale

Rs 1, 60,000
3, 40,000
1, 60,000
3, 00,000
40% of conversion costs
50, 00,000
18, 00,000
29, 40,000
20%
45, 00,000

The loss is fully covered by insurance. The insurance company wants to know the historical cost of the inventories as a basis for negotiating a settlement, although the settlement is