PRACTICE QUESTIONS

COST ACCOUNTING

BY SIR KHURRU PERVIZ

1. On January 1, the finished goods inventory of Manuel company was $300000.During the
year Manuel’s cost of goods manufactured was $ 1900000, sales were $ 200000 with a
20% gross profit.

Required: The cost assigned to the December 31 finished goods inventory.

2. The December 31, trial balance of the Balkwell Company showed

Sales $4000500 Sales return and allowances $25200
Purchases (net) 2400000 Transportation income 32000
Direct labor 3204000 Factory overhead 1885600
Sales salaries 200000 Delivery expense 65000

INVENTORIES
December 31 19B December 31 19A
Finished Goods $467400 $620000
Work in Process 136800 129800
Materials 196000 176000

Required
A) Total manufacturing cost
B) Cost of goods manufactured
C) Cost of goods sold

3. The accounting department of the Ruthven company provided the following data for
May; Sales $72000, marketing expenses 5%,administrative expenses 1%,other expenses
5% of all sales , purchases $ 36000,factory overhead 2/3 of direct labor, direct labor
$15000.

Beginning inventories

Finished goods $7000

Work in process 8000
Materials 8000

Ending Inventories
Finished goods 10200
Work in process 15200
Materials 8500

Required
a) Cost of goods statement AND Income statement
4. Crowley Inc. submits the following data for September
Direct labor cost, $30000
Cost of goods sold, $111000
Factory overhead is applied at the rate of 150% of direct labor cost
Inventory accounts showed these beginning and ending balances
September 1 September 30
Finished goods $15000 $17500
Work in Process 9600 13000
Materials 7000 7400

OTHER DATA
Marketing expenses $14100
General and administrative expenses 22900
Sales of the month 182000
REQUIRED:
An income statement with schedule showing cost of goods manufactured and sold

5. The Sentosa company submits following information on December 31, 19……

Sales of the year $314000

Inventories at the beginning of the year
Finished goods 5900
Work in process 4600
Materials 3800
Purchases of materials for the year 140000
Direct labor 67350
Factory overhead 50% of the labor cost
Inventories at the end of year
Finished goods 9270
Work in process 6200
Materials 4300
Other expenses of the year
Marketing expenses 23115
Administrative expenses 17650

REQUIRED
A) An income statement for the year ended December 31, 19………
B) The percentage of income to sales, before income tax.
6) The following data are provided by the controller of the Merlion corporation

Cash $240000
Accounts Receivable 348000

Inventories January 1 December 31

Finishing goods $44200 $66000
Work in process 29800 38800
Materials 88000 64000

Materials purchased 366000

Sales discount 8000
Factory overhead (excluding 468400
Depreciation)
Marketing and administrative expenses 344200
(excluding depreciation)
Depreciation (90% manufacturing, 10% marketing and 116000
Administrative expenses)
Sales 1844000
Direct labor 523600
Freight materials purchased 6600
Rental income 64000
Interest on bonds payable 16000
REQUIRED
Cost of goods sold statement

7) The following data relate to the Brockway Corporation

INVENTORIES
Ending Beginning
Finished goods $ 95000 $ 110000
Work in process 80000 70000
Direct materials 95000 90000

Cost incurred during the period

Cost of goods available for sale $684000
Total manufacturing cost 584000
Factory overhead 167000
Direct materials used 193000
REQUIRED : Cost of goods sold statement
 8. The records of Reinbeck inc show the following inf show the following as of
march 31 19B
Materials used $440000
Direct labor 290000
Indirect labor 46000
Light and power 4260
Depreciation 4700
Repairs to machinery 5800
Miscellaneous factory overhead 29000
Work in process inventory, April 1,19A 41200
Finished goods inventory, April 1, 19A 34300
Work in process inventory, March 31, 19 B 42500
Finished goods inventory, 31500
During the year 18000 units were completed
REQUIRED
1) A cost of goods sold statement for the year ended March 31, 19B
2) The unit cost of goods manufactured
3) The amount of over or under applied factory overhead if the company applies
factory overhead on the basis of 30% of direct labor cost.

Q.9 Following information relates to the Snowball Manufacturing Company:

Direct materials……………………………………………. $25,000
Indirect materials………………………………………….. 5,000
Direct labor………………………………………………… 30,000
Indirect labor……………………………………………….. 4,500
Factory overhead (excluding indirect materials and indirect labor) 15,000
Plant cost 500,000
Required: Compute the prime costs, conversion costs, and product costs?
Q.10. Allure Company produces women’s clothing. During 2004, the company incurred the following
costs:
Factory rent 265,000
Direct labor 325,000
Utilities-Factory 88,000
Purchases of direct materials 465,000
Indirect materials 70,000
Indirect labors 35,000

INVENTORY January 1 December 31

Direct materials 90,000 50,000
Work in process 40,000 85,000
Finished goods 115,000 95,000
 Required : Prepare a statement of cost of goods manufactured; and Calculate cost of goods sold?

Q.11. The following data pertain to Spartan Products Company:

Sales Revenue 1,000,000
Direct materials inventory, Jan 1, 2004 20,000
Direct labor-Wages 350,000
Depreciation expense-Plant and equipment 80,000
Indirect labor-Wages 5,000
Heat, Light, and power – Plant 12,000
Supervisor's salary-Plant 40,000
Finished goods inventory, Jan 1, 2004 35,000
Work in Process inventory, Dec, 31, 2004 25,000
Supplies-Administrative office 6,000
Property taxes-Plant 13,000
Finished goods inventory, Dec 31, 2004 40,000
Direct materials inventory, Dec 31, 2004 30,000
Sales representative's salaries 190,000
Work in Process inventory, Jan, 1, 2004 35,000
Direct materials purchases 100,000
Supplies-Plant 4,000
Depreciation-Administrative office 30,000
Required: Prepare a statement of cost of goods manufactured and an income statement for
Spartan Products Company for the year ended December 31, 2004?

Q.12.
Raw material (1-1-03) Rs 12,500 Raw material (31-12-03) Rs 32,000
Work-in-Process (1-1-03) 6,300 Work-in-Process (31-12-03) 16,500
Finished Goods (1-1-03) 12,500 Finished Goods (31-12-03) 25,000
Sales 678,600 Direct labor 125,000
Sales return 15,000 Other factory overhead 17,600
Purchases of raw material 245,000 Repair and maintenance 10,000
Administrative expense 70,000 Insurance-factory 12,000
Marketing expense 55,000 Depreciation-factory 22,000
Indirect material 8,000
Indirect labor 4,500
Required:
1. Statement of cost of goods manufactured;
2. Statement of cost of goods sold; and
3. Income Statement?
Q.13. The following data pertain to Duvernoy Company for the year ended December 31, 2004:
Depreciation expense - Administrative office 33,000
Depreciation expense - Plant and equipment 88,000
Direct labor – wages 487,000
Direct materials inventory, Dec. 31. 2004 25,000
Direct materials inventory, Jan. 1, 2004 18,000
Direct materials purchases 155,000
Finished goods inventory, Dec 31, 2004 38,000
Finished goods inventory, Jan 1, 2004 15,000
Heat, light, & power - Plant 44,000
Indirect labor 25,000
Property taxes - Plant 34,000
Sales representatives salaries 145,000
Sales revenue 1,500,000
Factory Supervisor's salary 66,000
Supplies - Administrative office 16,000
Supplies – Plant 29,000
Work-in-Process inventory, Dec 31, 2004 9,000
Work-in-Process inventory, Jan 1, 2004 23,000
Required: Prepare a statement of cost of goods manufactured and an income statement for
Household furnishings for the year ended December 31, 2004?

Q.14. The Delta Company manufactures small stuffed gorillas. The total revenue is $59,000.

The Company incurred the following costs:

Materials…………………………………… $ 5,200 (10% is indirect materials)

Labor ……………………………………… 7,000 (12% is indirect labor)

Factory overhead…………………………..25,000 (including indirect materials and indirect

labor)

General and administrative expenses………14,700

Office salaries………………………………. 4,800

Equipment purchased at end of period

(ignore depreciation)……………………….. 5,300

Total…………………………………………. $62,000

There were no units still in process at the end of the year, and 92% of the goods produced
during the year were sold. Required: Prepare Income Statement showing net income or loss?
Q.15. The following information was taken from the accounting records of Blazek Manufacturing
Company. Unfortunately, some of the data were destroyed by a computer malfunction.

Case A Case B
Sales 100,000 ?
Finished goods inventory, Jan 1, 2004 15,000 8,000
Finished goods inventory, Dec 31, 2004 16,000 ?
Cost of goods sold ? 43,000
Gross margin 25,000 3,000
Selling and administrative expenses ? 1,000
Operating income 10,000 2,000
Work in process, Jan 1, 2004 ? 14,000
Direct material used 18,000 8,000
Direct labor 15,000 9,000
Factory overhead 20,000 ?
Total manufacturing costs ? 35,000
Work in process Dec 31, 2004 7,000 ?
Cost of goods manufactured ? 45,000

Required: Calculate the unknowns indicated by questions mark by applying the relevant formulae?

Q .16. Messersmith submits the following data on October 31, 2005, material put into process
$42,300; direct labor is paid at the rate of $7.8 and $8.4 in department A and B respectively.
Department A worked 6125 hours and Department B reported 9875 hours. Factory overhead is
applied on the basis of direct labor hours at the rate of $5 per hour in Department A and $4.2
per hour in Department B.

Oct.1 Oct.31

Finished goods $11,300 $9400

Work in process 17,300 19,425

Materials 15,000 19,200

Required: Determine

1. Total manufacturing cost;

2. Cost of goods manufactured; and Cost of goods sold?