Problems to solve:

1. Prepare a Cost Sheet from the data given below and show what the Cost of Goods Sold is.
Labor
Purchase of Raw Material
Advertising expense
Machine depreciation
Office Rent
Factory insurance
Sales Salaries
Production superintendents salary
Supplies, factory
Depreciation office equipment
Inventory:
Raw Materials
Work in process
Finished Goods

70000
118000
40000
20000
25000
37000
50000
27000
44000
50000
Beginning of the year
6000
8000
26000

Ending of the year

10000
5000
18000

2. XYZ company has the following Total production costs for Products A, B and C:
Direct Material
Direct labor
Manufacturing Overhead

TK
30000
40000
80000

Total direct labour hours worked for all of its products are 4000 hours.
Required:
i.
ii.

Calculate actual manufacturing overhead rate based on the direct labour hours. (1)
Product A has the following information:
Direct Material
Direct labour
Direct Labour Hours worked

3600 TK
2400 TK
400 hours

Calculate total manufacturing cost for Product A.

3. ABC Manufacturing, Inc. produces three gadgets (Ace, Best, and Champ). The following
data provides production and cost data for the year, 2013.
Number of units
Machine hours
Direct materials (TK)
Direct labor (TK)
Total overhead
Total costs

Ace
25,000
2,500

Best
15,000
1,500

Champ
5,000
2,000

Total
45,000
6,000

1,000,000
375,000

450,000
225,000

275,000
75,000

1,725,000
675,000
1,350,000
3,750,000

The cost accountant of ABC Manufacturing attended a workshop on activity-based costing

and was impressed by the results. After consulting with the production personnel, he prepared
the following information on cost drivers and the estimated volume for each driver.
Activity
Setup
Machining
Assembly
Inspection

Cost driver
Number of setups
Machine hours
Direct labor hours
Number of inspections

Cost driver volume

Ace
Best
Champ
125
75
50
2,500
1,500
2,000
25,000
15,000
5,000
50
25
25

Total
250
6,000
45,000
100

The cost accountant also determined how much overhead costs were incurred in each of the
four activities as follows:
Activity
Setup
Machining
Assembly
Inspection
Total overhead costs

Overhead costs
150,000
750,000
360,000
90,000
1,350,000

Required:
Determine the cost driver rate for each activity cost pool and determine the unit cost for
each product