ASSIGNMENT ON ACC 322- ADVANCED COST ACCOUNTING 2 FOR PART TIME

 

ASSIGNMENT 1

A company sells a single product at a price of N14 per unit. Variable manufacturing costs of the product are N6.40 per unit. Fixed manufacturing overheads which are absorbed into the cost of production at a unit rate (based on normal activity of 20,000 units per period) are N92,000 per period. Any over or under absorbed fixed manufacturing overhead balances are transferred to the profit or loss account at the end of each period in order to establish the manufacturing profit.

Sales and production (in units) for the two periods are as follows:

                                                          Period 1                          Period 2

Sales                                                 15,000                            22,000

Production                                         18,000                            21,000

The manufacturing profit in period 1 was reported as N35, 800.

Required:

(a) Prepare a trading statement to identify the manufacturing profit for the period 2 using existing absorption costing method.

(b) Determine the manufacturing profit that would be reported in period 2 if marginal costing was used.                                                 

(c) Explain with supporting calculations the reasons for the change in manufacturing profit between period 1 and 2 where absorption costing is used in each period.

 

ASSIGNMENT 2

Wise-Up Communications Limited which manufactures the “Campus” Radio Receiver commenced trading on June 29th, 2020. The company`s budget for each four week period is as follows:

                                                              N                  N

Sales (20,000 receivers)                                        400,000

Manufacturing costs of goods sold:

Variable Cost                                    240,000

Fixed Overhead                                   60,000     (300,000)

Gross Profit                                                          100,000

Selling and distribution cost (fixed)                       (20,000)

Net Profit                                                               80,000

The following date relates to the first two trading periods:

                                                          Period 1      Period 2

Production                                         24,000                  18,000

Sales                                                 18,000                  21,000

Required:

Prepare operating statement for each of the two periods on each of the following bases:

(a)  Where fixed manufacturing overhead is absorbed into product cost at the budgeted rate and selling and distribution costs are treated as period costs.

(b) Where all fixed costs are treated as period costs. You may assume that the selling price, fixed costs and unit variable costs for the two periods are in line with budget.