Cost Estimation Assignemnt Help

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Cost Estimation Assignemnt Help
Key factors to keep in mind when writing your submission are:

  1. The due date for the hard copy of the individual assignment is at the beginning of your seminar in Week 8, week commencing 14 August 2017. The electronic copy is to be lodged on by 12:00 midnight on Monday, 07 August 2017
  2. You must submit Microsoft Word (electronic) copy of your assignment.
  3. The file name for the electronic copy must follow the following pattern: your student ID number followed by Assignment. For example, if your student ID number is 17432968, the file name should be 17432968_200313Assignment.
  4. Students are to keep a copy of all assignments submitted for marking.
  5. Ensure you use accurate spelling and grammar. It is often best to state things simply and clearly rather than using complicated language in the wrong context. Prior to submission make sure you use tools like spelling and grammar checkers in WORD. You may also want to make use of online tools (e.g. the Writer’s Diet http://writersdiet.com/WT.php?home to improve the quality of your written work).
  6. All sources of information must be appropriately acknowledged. Ensure that all in-text references are accurate and comply with the Harvard referencing style. A guide is available on the UWS Library website with examples to assist you. Ensure you use only credible sources appropriate to your level of studies. Wikipedia, for example, is not a credible source. A Reference list of all works cited in your submission must be provided.
  7. THIS IS AN INDIVIDUAL ASSIGNMENT CONTAINING EIGHT (8) QUESTIONS. IT IS NOT A GROUP ASSIGNMENT. Please refer to the Misconduct Policy. For the full definition of academic misconduct and the consequences of such behaviour, you are advised to read the Student Misconduct Rule at http://www.westernsydney.edu.au/about_uws/leadership/governance/student_misconduct_rule. Each student must present their own work. Failure to do so could lead to accusations of academic misconduct.
  8. As a guide to what is expected from you for the assignment, a previous semester’s assignment with solution, marking guide and feedback is available on vUWS. This will assist in the preparation and presentation of your assignment as you can be more aware of and better able to avoid some of the pitfalls.
  9. Use the Assignment Cover Sheet and include your Name and Student ID on the cover sheet. Ensure that the declaration is signed and dated on the Assignment Cover Sheet.
  10. In addition to loss of marks for incorrect answers, marks may be deducted for untidy presentation including inappropriate formatting, poor numerical punctuation, not adhering to other requirements of the assignment. Begin each question on a new page. All journals, tables and statements must have appropriate headings and be presented in a proper format. All answers must be supported by relevant calculations.
  11. Solutions to the questions contained in this assignment may require research beyond the recommended textbook.
  12. Assessment percentage 20% (out of 100% total for the unit). Assignment will be marked out of 100 and converted to 20%. Marks for each question are shown alongside the question number.

Question 1: Cost estimation: High-low method and Least Squares (10 Marks) 

  • Express the relationship between total cost (TC), variable cost per unit (VC), Volume (x), and fixed   cost (FC) in equation form. (1 Mark)
  • Explain how a scattergraph is used to separate a mixed cost into its fixed and variable components.

(2 Mark)

Month Number of Patients Admitted Admitting Department Costs
May………………………………. 1,800 $14,700
June………………………………. 1,900 $15,200
July……………………………….. 1,700 $13,700
August……………………………. 1,600 $14,000
September………………………… 1,500 $14,300
October…………………………… 1,300 $13,100
November………………………… 1,100 $12,800
December………………………… 1,500 $14,600
  • The administrator of Aztec Hills Hospital would like a cost formula linking the administrative costs involved in admitting patients to the number of patients admitted during a month. The Admitting  Department’s cost and the number of patients admitted during the immediately preceding eight months  are given in the following table:

Required: 

  1. Use the high-low method to estimate the fixed and variable components of admitting costs. (2 Marks)
  1. Express the fixed and variable components of admitting costs as a cost formula in the form Y = a + bX (1 Mark)
  • Given a choice between a high-low method, a scattergraph or regression analysis, which method would you prefer to separating a mixed cost into its fixed and variable components? Why? (2 Marks)
  • Explain the concept of the relevant range. Howe does a company’s relevant range differ from the steps found in a step cost?               (2 Marks)

Question 2: Job order costing (15 Marks)

Malcom Company designs and builds retaining walls for individual customers. On 1 August, there were two jobs in process: job 93 with a beginning balance of $8750 and job 94 with a beginning balance of $7300. Malcom applies overhead at the rate of $8 per direct labour hour. Direct labour wages average $18 per hour. Data on August cost for all jobs are as follows:

Job 93  Job 94  Job 95  Job 96

Direct Materials          $ 950            $4500         $3300       $1300

Direct Labour               2160             5400           2610           900

During August Job 95 and 96 were started. Job 93 was completed on 17 August and the client was billed at cost plus 25%. All other jobs remained in process.

Required:

  • Calculate the number of direct labour hours that were worked on each job in August (2 Marks)
  • Calculate the overhead applied to each job during the month of August (2 Marks)
  • Prepare job order cost sheets for each job as of the end of August (6 Marks)
  • Calculate the balance in work in process on 31 August (4 Marks)
  • What is the price of job 93? (1 Marks)

Question 3: Process costing (15 Marks)  

Mirvac Company Processes and packages cream cheese. The following data have been complied for the month of April. Conversion activity occurs uniformly throughout the process.

Work in process, April 1-10,000 units

            Direct Material: 100% complete, cost of ……………………………………$ 22,000
            Conversion: 20% complete, cost of ………………………………………….   4500
             Balance in work in process, April 1 …………………………………………. 26,500
Units started during April 1 …………………………………………………………. 100,000
Units completed during April and transferred out to finished goods inventory………

Work in process, April 30:

Direct materials 100% complete

Conversion 33⅓% complete

Costs incurred during April:

  80,000
Direct material ………………………………………………………………………. $198,000
Conversion costs:

Direct labour…………………………………………………………………. $              Applied manufacturing overhead………………………………………………

Total conversion costs…………………………………………………………

 52,800

105,600

$158,400

Required: 

Prepare schedules to accomplish each of the following process-costing steps for the month of April. Use the weighted-average method of process costing. (10 Marks)

  1. Analysis of physical flow of units.
  2. Calculation of equivalent units.
  3. Computation of unit costs.
  4. Analysis of total costs.
  5. Build a spreadsheet: Construct and Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: The April 1 work-in-process costs were $66,000 for direct material and $18000 for conversion. (5 Marks)

Question: 4 Support department cost allocation (10 Marks)

ABC School of Music and Art provides classes for school-age children. The students are enrolled in two departments: Music Education and Art Education. The school also has two service departments: Administration and Human Resources (A & HR) and Maintenance (M). The budgeted costs in the two service departments are as follows:

Administration and Human Resources …………………………………………    $342,000

Maintenance…………………………………………………………………….       171,000

The usage of the service department’s output for the year is as follows:

Product of Service
Usage of Service Administration & Human Resources Maintenance
Administration & Human Resources 5%
Maintenance 10%
Music Education 40% 40%
Art Education 50% 55%

Required:

Allocate the two services department’s cost to the Music Education and Art Education departments using the following allocation methods.

  1. Direct Method (4 Marks)
  2. Step-down method (Since each service department serves on other service department, allocate the cost of A & HR first) (4 Marks)
  3. How does managerial accountant determine the department sequence in the step-down method? How are ties handled? (2 Marks) 

Question 5: Plant-wide rate, departmental overhead rates and ABC (15 marks) 

Cost Estimation Assignemnt HelpContinental Inc. Manufactures two products Classic and Premium. Premium are more complex of the two products, requiring more direct labour time and more machine time per unit than Premium.

Manufacturing overhead is currently assigned to the products on the basis of direct labour hours. The company has gathered some activity information and is interested in the differences between its present costing method and activity based costing. All overhead costs should be allocated to the products. The overhead cost pools and activity drivers are as follows.

Activity Pool Overhead Costs Total Driver Usage
Setup $256,000 3200 setups
Materials purchasing 110,000 2,750 purchase orders
Machining/ fabricating 136,000 27,200 machine hours
            Total overhead costs $502,000

 

Other product information is as follows:

 

  Classic Premium
Number of units produced 40,000 10,000
Direct materials cost $15.00 per unit $30.00 per unit
Direct labour cost $5.25 per unit $14.00 per unit
Direct labour hours 30,000 20,000
Setups 400 2,800
Purchase orders 2070 680
Machine hours 8,000 19,200

 Required:

  1. Using the traditional method of allocating overhead based on direct labour hours, compute the unit product cost of Classic and Premium:
    1. Determine the overhead rate per direct labour hour. (1 Mark)
    2. Allocate overhead to each product based on the direct labour hours used by each. (2 Marks) iii)Calculate the overhead cost per unit. (1 Mark) iv)Determine the unit product cost (2 Marks)
  1. Using the activity-based costing approach compute the unit product cost of Classic and Premium:
    1. Determine the three activity rates. (3 Marks)
    2. Allocate overhead to each product based on the activity drivers used by each. Total the three activity allocations to arrive at the total overhead allocated to each product. (2 Marks)
  • Calculate the overhead cost per unit. (2 Marks) iv)Determine the unit product cost (1 Mark)
  1. Why do your answer in a (iv) and b (iv) differ? Be specific. (1 Mark)          

Question 6: Preparation of budget (15 marks) 

Tulsa Corporation manufactures and sells a seasonal product that has peak sales in the third quarter.

The following information concerns operation for Year 2- the coming year and the first two quarters of Year 3:

  1. The company’s single product sells for $9 per unit. Budgeted sells for the next six quarters are as follows (all sales are on credit):
Year 2 Quarter Year 3 Quarter
1 2                     3 4 1                     2

Budgeted sales      40,000   60,000   100,000                 50,000   70,000   80,000 in units

 

  1. Sales are collected in the following pattern: 75% in the quarter sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the company’s balance sheet showed $65,000 in accounts receivable, all of which will be collected in the first quarter of the year. Bad debts are negligible and can be ignored.
  1. The company desires an ending finished goods inventory at the end of each quarter equal to 30% of the budgeted unit sales for the next quarter. On December 31, Year 1, the company had 12,000 units on hand.
  1. Five pounds of raw materials are required to complete one unit of product. The company requires ending raw materials inventory at the end of each quarter equal to 10% of following quarter’s production needs. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand.
  1. The raw material cost $0.80 per pound. Raw materials purchases are paid for in the following pattern: 60% paid in the quarter the purchases are mad, and the remaining 40% paid in the following quarter. On January 1, Year 2, the company’s balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be paid for in the first quarter of the year. 

Required:

Prepare the following budgets and schedules for the year, showing both quarterly and total figures:

  1. A sales budget and a schedule of expected cash collections. (4 Marks)
  2. A production budget (3 Marks)
  3. A direct materials budget and a schedule of expected cash payments for purchases of materials.

(8 Marks)      

Question 7: Analysis of overhead costs (10 Marks) 

Moon Light Company, which manufactures electrical switches, uses a standard costing system. The standard production overhead cost per switch are based on direct labour hours and are as follows:

Variable overhead (5 direct labour hours @$8.00 per hour…………………. $       40

Fixed overhead (5 direct labour hours@ $12.00 per hour) ……………………       60

Total overhead…………………………………………………………        $100

The following information is available for the month of October.

Variable overhead costs were $2,340,000.

Fixed overhead costs were $3,750,000.

56,000 switches were produced, although 60,000 switches were scheduled to be produced.

275,000 direct labour hours were worked at a total cost of $2,550,000.

Required:

Compute the variable overhead spending and efficiency variances and the fixed- overhead budget and volume variances for October. Indicate whether a variance is favourable or unfavourable where appropriate.        

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Question 8: Cost volume profit analysis (10 Marks)

Alden Company prepared the following budgeted income statement for the coming year.

Sales revenue $ 515,000
Total variable cost 402,950
Contribution Margin $112,050
Total Fixed costs 64,800
Operating income $47,250

 

Required:

  • what is Alden’s variable cost ratio? What is its contribution margin ratio? (2 Marks)
  • Suppose Alden’s actual revenues are $35,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement. (2 Marks)
  • How much sales revenue must Alden earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. (3 Marks)
  • What is Alden’s expected margin of safety? (1 Mark)
  • What is Alden’s margin of safety if sales revenue is $380,000? (2 Marks)