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Accounting For Managers - Assignment 5 - Chapter 5

This document contains an accounting assignment with 3 questions: 1. Fill in missing data for companies' accounting information. 2. Help a furniture business owner prepare a corrected income statement by properly allocating costs and including ending inventory amounts. 3. Prepare income statements for a manufacturing company under absorption costing and variable costing, given additional information.

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Abeba Gselassie
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111 views

Accounting For Managers - Assignment 5 - Chapter 5

This document contains an accounting assignment with 3 questions: 1. Fill in missing data for companies' accounting information. 2. Help a furniture business owner prepare a corrected income statement by properly allocating costs and including ending inventory amounts. 3. Prepare income statements for a manufacturing company under absorption costing and variable costing, given additional information.

Uploaded by

Abeba Gselassie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ET Online College

Assignment
Course: Accounting for Managers

Assignment 5

Chapter 5
1. Supply the missing data for each company listed below all the amounts are given in Br.
Company W X Y Z
Sales 300,000 D 390,000 660,000
DM Beginning 27,000 30,000 21,000 J
DM purchased 42,000 45,000 48,000 63,000
DM ending A 24,000 27,000 24,000
Direct labor 75,000 E 51,000 95,500
MOH cost 60,000 54,000 76,500 95,500
WIP beginning 57,000 18,000 G 36,000
WIP ending 48,000 24,000 45,000 30,000
FG beginning 60,000 F 51,000 48,000
FG ending 69,000 33,000 H 54,000
Cost of goods B 126,000 210,000 K
manufactured
Cost of goods sold C 132,000 I 300,000
Gross margin 129,000 144,000 162,000 L

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2. Assume that Lemma was graduated from Jimma Technical and vocational college four years ago. He was working in Agaro Furniture
Company for the last 3 years under different positions. 12 months ago he started his own furniture factory called LAMMA office and House
hold furniture. After he started operation, he learnt that maintaining an accounting record is essential. He thought he know how to
establish an accounting system, maintain an accounting record and prepare financial statements by virtue of his college knowledge. He
prepared the following income statement at the end of the current year Sene 30, 2001
LEMMA Office and House hold furniture
Income statement
For the year ended Sene 30, 2001
Sales Br.135,000
Cost of goods sold
Beginning inventory
 Direct material 9,000
 Work in process 3.000
 Finished goods 12,000
Direct material purchased 30,000
Direct labor 45,000
Rent 14,000
Light, heat, and power 5,000
Telephone 1,500
Depreciation 4,000
Indirect labor 6,000
Marketing and administrative 9,000
Insurance 8,000
Miscellaneous MOH cost 2,000
Miscellaneous marketing and 1,800
adm.
Total 143,100
Net loss ( Br.8,100)

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The ending inventory of direct material, work in process and finished goods is birr 3,000, 4,500 and 15,000 respectively. The following costs
should be allocated

Manufacturing Non-Manufacturing
Rent 60% 40%
Light, heat and power 70% 30%
Telephone 70% 30%
Insurance 60% 40%
Depreciation 80% 20%

He worried why the loss comes; he doubted his capacity of accountancy, and asked you to help him prepare the income statement as new.
Can you help him by preparing the income statement as new?

3. The following is income statement of ABC manufacturing company prepared under throughput costing system for the year ended 2009

Throughput costing income statement


Sales revenue Br. 180,000
Direct material cost 36,000
Throughput contribution Br.144,000
Other costs and expense
Direct labor cost 30,000
MOH cost 60,000
Operating expense 30,000 120,000
Operating income Br. 24,000
Additional information
 The company manufactured 3,000 units of which 2,400 units were sold
 There was no beginning finished goods inventory
 There were no WIP at the beginning as well as at the end
 40% of MOH cost and 40% of operating expense is variable in nature
 The company uses actual costing system

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Requirement: Prepare income statement under each of the following costing systems
1. Absorption costing
2. Variable costing

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