Chapter 2 Tutorial Solutions Discussed In Week 3

1020 Words Apr 12th, 2015 5 Pages
ACC2131 Cost Information for Decision Making
Week 3 (Chapter 2) Tutorial Solutions
Semester 1, 2015
Note to students: Beware! These solutions are not necessarily model answers. In exams, you will not have demonstrated your understanding of the answers to these exercises if you seek only to memorise them. You are encouraged to use tutorial time to discuss issues that will test and clarify your understanding of these exercises, as well as expanding your analytical and critical-thinking skills. 2.5

Costs can be classified and reported in many different ways, depending on the purpose for which managers will use the information. Students should be careful how they interpret this phrase. It is not really different costs but the same bundle of
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(45 minutes) Schedules of cost of goods manufactured and sold; income statement
1
Maximus Manufacturing Ltd
Schedule of cost of goods manufactured for the year ended 31 December
Direct material:
Raw materials inventory, 1 January
Add:

Purchases of raw materials

Raw material available for use
Deduct: Raw materials inventory, 31
December

$106 800
877 200
984 000
70 800

Raw material used

$913 200

Direct labour

568 800

Manufacturing overhead:
Indirect material

54 000

Indirect labour

180 000

Depreciation on factory building

150 000

Depreciation on factory equipment

72 000

Electricity for factory

84 000

Council rates

108 000

3

Insurance

48 000

Total manufacturing overhead

696 000

Total manufacturing costs
Add:

2 178 000

Work in process inventory, 1 January

0

Subtotal
Less:

2 178 000
Work in process inventory, 31 December

Cost of goods manufactured

48 000
$2 130 000

2
Maximus Manufacturing Ltd
Schedule of Cost of Goods Sold for the year ended 31 December
Finished goods inventory, 1 January
Add:

Cost of goods manufactured

Cost of goods available for sale
Finished goods inventory, 31 December
Cost of goods sold

$ 42 000
2 130 000
2 172 000
48 000
$2 124 000

4

3
Maximus Manufacturing Ltd
Income Statement for the year ended 31 December
Sales revenue
Less:

Cost of goods sold

$2 526 000
2 124 000

Gross margin

402 000

Selling and administrative expenses

322 800

Profit before taxes

79 200

Income tax expense

30 000

Net profit

$ 49 200

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