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## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

QUESTION 1-

Jumbo Giant Limited manufactures three products, namely, Milk, Yoghurt and Ice-cream. The initial joint cost of production is \$600,000 for the year. This cost results in an output of 2,000,000 litres.

Details relating to the 3 joint products are given below:

 Milk Yoghurt Ice-cream Quantity at split-off point 1,000,000 litres 400,000 litres 600,000 litres Selling price at split-off point \$ 1.00 per litre \$ 2.00 per litre \$ 3.00 per litre Separable cost \$ 0.50 per litre \$ 1.25 per litre \$ 1.50 per litre Sales price of ultimate product \$ 5.50 per litre \$ 4.00 per litre \$ 9.00 per litre

REQUIRED:

1. Allocate the joint cost between Milk, Yoghurt and Ice Cream using:

a) The Physical Units Method.

b) The Relative Sales Value Method. Round percentage to 2 decimal places.

c) Net Realisable Value Method. Round percentage to 2 decimal places.

2. Jumbo Giant Limited has a request from a prospective customer to further process all its Ice Cream production into Gourmet Ice Cream which will then be bought by the customer for \$12.00 per litre. This will increase the separable costs of ice cream per litre to \$2.60.

Would you advise the company to accept the offer? Why or why not?

QUESTION 2-

Mighty Mouse Limited estimates the following information for October 2016:

Sales (Units): 22,000

Inventory - 1st October 2016: 9,000

Inventory - 31st October 2016: 7,500

The company's inventory policy requires ending inventory to be equal to 25% of the prior month's sales.

The company predicts sales to increase by 5% in November. December is a slow month and sales are estimated at 70% of November sales.

The cost price per unit is \$5.00 and this expected to increase by 10% in December.

REQUIRED: Prepare a purchases budget in units and dollars for the quarter ending 30th December 2016.

QUESTION 3-

Fussy Hair Ltd has decided to prepare a cash budget for the quarter ending 30st September 2016. Services are provided on 30 day credit terms. As at 1 July 2016, the Cash at bank ledger account had a debit balance of \$500,000.

The following estimates have been made for the next three months:

 July August September Sales 200,000 300,000 400,000 Cash purchases 150,000 140,000 160,000 Cash wages 15,000 20,000 28,000 Depreciation on plant 80,000 80,000 80,000 Electricity expenses 10,000 11,000 11,500 Insurance expenses 36,200 36,200 37,000 Loan repayment 0 20,000 20,000

All sales are on credit.

It is expected that debtors will pay their accounts as follows:

• 50 per cent in the month following the sale.
• 20 per cent in the second month following the sale.
• 30 per cent in the third month following the sale.

Actual sales for the previous three months were as follows:

• \$300,000 in April 2016
• \$290,500 in May 2016
• \$320,000 in June 2016

Electricity expenses and insurance expenses are paid the following month after they are incurred. June expenses were as follows:

• Electricity expenses \$8,000
• Insurance expenses \$35,000

REQUIRED:

Part A: Prepare a schedule of cash receipts from debtors for the period ending 30th September 2016.

Part B: Prepare a Cash budget for the Quarter ending 30th September 2016.

QUESTION 4-

Terrific Tables Pty Ltd incurred the following costs to produce job number TB300, which consisted of 500 office desks.

Direct material:

1 June Requisition no. 520: 900 metres of timber @ 8.00 per metre

18 June Requisition no. 101: 600 metres of steel @ \$0.20 per metre

Direct labour:

18 June Timesheet no. 72 500 hours@\$14 per hour

Applied on the basis of direct labour hours @\$12 per hour

Job TB300 was completed on 18 June.

REQUIRED: Prepare a job cost sheet and record the information given above and also a cost summary for job TB300.

Managerial Accounting, Accounting

• Category:- Managerial Accounting
• Reference No.:- M91767130

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