The Heart Co. has just completed a 4-year contract to which the following relate: Labor and Materials costs 1,800,000 Machinery Cost Initial Design Costs Disposal proceeds of machinery 50,000 600,000 100,000 According to IFRS 15, What are the total contract cost?
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- How would each of the following costs be classified if units produced is the activity base? a. Salary of factory supervisor ($120,000 per year) b. Straight-line depreciation of plant and equipment c. Property rent of $11,500 per month on plant and equipmentA production department within a company received materials of $7,000 and conversion costs of $5,000 from the prior department. It added material of $78400 and conversion costs of $47000. The equivalent units are 5,000 for material and 4,000 for conversion. What is the unit cost for materials and conversion?A manufacturer has been offered a contract to manufacture a certain product that will utilize the waste materials from his present product. The new product will use 0.3kg of waste materials per unit which is presently sold by the company for P2.00 per kg. Other materials to be used will cost P0.80 per unit. Direct labor per unit will cost P2.30. The present overhead costs of the company amount to P380,000 plus 40% of the total for direct materials and direct labor costs per year. The buyer will pay the manufacturer per unit an amount equal to the increment costs plus P1.20 profit. Determine the selling price of the manufacturer per unit.
- Kiner, Inc. began work in 20x4 on a contract for $8,400,000. Other data are as follows: 20x4 20x5Costs incurred to date $3,600,000 $5,600,000Estimated costs to complete 2,400,000 —Billings during the year 2,800,000 8,400,000Collections to year 2,000,000 7,200,000 1. If kiner uses the cost recovery method (point in time), the gross profit to be recognized in 20x5 is? 2. If Kiner uses the percentage-of-completion (over time) method, the gross profit to be recognized in 20x4 is?Jojo Sdn Bhd ordered from Koko Sdn Bhd a piece of specialised heavy equipment for its operations.Details of cost incurred are:RMPurchase price500,000Import duty12,000Engineer’s fees (for inspection and installation)10,000Shipping and transport costs6,000Site preparation costs:Direct labour costs5,000Concrete reinforcement4,000Maintenance and service contract for 1 year3,000Jojo Sdn Bhd received a trade discount of 10% on list price and 5% cash discount on early settlement.Jojo Sdn Bhd obtained a loan of RM500,000 to finance the purchase. Interest expense on the loan for the year was RM25,000.The equipment has a useful life of 5 years. Jojo Sdn Bhd estimates that dismantling cost to be RM3,500 and legal obligation to restore the site is RM6,500. Both these values are stated in present values.Required:Calculate the initial cost of the plant. Your answer should explain the reasons why some of the costs are not included in the calculation.JUBAIL BUILDERS is constructing a multi-unit residential complex. In the prior year, JUBAIL BUILDERS entered into a contract with a customer for a specific unit that is under construction. JUBAIL has determined that the contract is a single performance obligation satisfied over time. JUBAIL BUILDERS gathered the following information for the contract during the year. JUBAIL BUILDERS-Year Ended December 31, 2018: Costs to date 10,500,000 Future expected costs 7,000,000 Work certified to date 12,600,000 Expected Sales value 22,400,000 Revenue taken in earlier period 8,400,000 Costs taken in earlier periods 6,650,000 Calculate the amounts to be included in the statement of profit or loss in respect of revenue and costs for the year ended December 31, 2018 on both methods (I) Input Method (cost basis), and (II) Output Method (Sales Basis) Calculate the total expected profit for the year 2018?
- Stelle Technology has a contract to build a network for a customer for a total sales price of €10 million. Th e network will take an estimated three years to build, and total building costs are estimated to be €6 million. Stelle recognizes long-term contract revenue using the percentage-of-completion method and estimates percentage complete based on expenditure incurred as a percentage of total estimated expenditures. 1 . At the end of Year 1, the company had spent €3 million. Total costs to complete are estimated to be another €3 million. How much revenue will Stelle recognize in Year 1? 2 . At the end of Year 2, the company had spent an additional €2.4 million for an accumulated total of €5.4 million. Total costs to complete are estimated to be another €0.6 million. How much revenue will Stelle recognize in Year 2? 3 . At the end of Year 3, the contract is complete. Th e company spent an accumulated total of €6 million. How much revenue will Stelle recognize in Year 3?Springthorpe entered a three-year contract on 1 January 20X2 to build a factory. This is a contract where performance obligations are satisfied over time. The percentage of performance obligations satisfied is measured according to certificates issued by a surveyor. The contract price was $20 million. At 31 December 20X2 details of the contract were as follows. $m Costs to date 9 Estimated costs to complete 5 Amounts invoiced 4 Valuation certified complete work 4.5 Required: Explain, with journal entry, how to account for above transaction in accordance to IFRS 15: Revenue from contract with customer and prepare extracted financial statements for the year ended 31 December 20X2Isem Co.’s 2019 manufacturing costs were as follows: Direct materials and directlabor P700,000; Other variable manufacturing costs 100,000; Depreciation offactory building and manufacturing equipment 80,000; Other fixedmanufacturing overhead 18,000. What amount should be considered productcost for external reporting purposes? A. P700,000B. P800,000C. P880,000D. P898,000
- It costs P450,000 to make 150,000 units of a part in the plant. This cost includes material of P90,000 direct labor of P120,000, variable overhead of P15,000 and P225,000 in fixed overhead inclusive of P45,000 in depreciation and common overhead allocation of P150,000. The balance is for the section supervisor’s salary. The part can be purchased for P20 per unit. If the part is purchased, the space released can be rented for P65,000. If the part is purchased, the company’s profit willIt costs P450,000 to make 15,000 units of a part in this plant. This cost includes material of P90,000, direct labor of P120,000, variable overhead of 15,000, and P225,000 in fixed overhead inclusive of P45,000 in depreciation and common overhead allocation of P150,000. The balance is for the section supervisor's salary. The part can be purchased for P20 a unit. If the part is purchased, the space released can be rented for P65,000. If the part is purchased, the company will a. lose P20,000 b. lose P45,000 c. gain P20,000 d. gain P45,000On February 1, 2014, Marsh Contractors agreed to construct a building at a contract price of $5,800,000. Marsh estimated total construction costs would be $4,000,000 and the project would be finished in 2016. Information relating to the costs and billings for this contract is as follows: 2014 2015 2016 Total costs incurred to date $1,500,000 $2,640,000 $4,600,000 Estimated costs to complete 2,500,000 1,760,000 -0- Customer billings to date 2,200,000 4,000,000 5,600,000 Collections to date 2,000,000 3,500,000 5,500,000 Instructions Fill in the correct amounts on the following schedule. Part A:…
