Question

Assignment Question(s):                                                   (Marks5)

Q1.In managerial accounting, costs can be classified by behavior, traceability decision-making, external reporting , prime costs vs conversion costs and Function Wise Classification. Discuss all the above cost classifications and explain the importance of each classification. (2.0 marks)

Answer:

Q2. Compare Job Order Costing versus Process costing (one marks)

Answer:

Q3. ABC Company had the following inventories on May 1, 2019(amounts in SR) (two marks)

Raw Material         30,000

Finished Goods     40,000

WIP – Material      20,000

WIP – Labor          20,000

WIP – Manufacturing overhead 15,000

During the month, the cost of material purchased was 130,000 direct labor cost incurred was 140,000 and factory overhead applicable to production was 70,000, on May 31, inventories were:

Raw Material         40,000

Finished Goods     50,000

WIP – Material      15,000

WIP – Labor          25,000

WIP Manufacturing overhead    10,000

Required:

Prepare Journal entries on May 31, to show the flow of cost through the proper summary T accounts. Assume that sales values were 500,000 on credit

Answer:

Answer 1

As per the managerial accounting cost as classified by below terms The under behavior a) cost classification by behavior is categorized as fixed costs variable costs and mixed costs and protone. External report. There are two type of cost is product cost ") period cost. Product Lost relates to inventory or items manufactured and recognized in financial Statements once they are sold . eg cexample): direct material, wages etc. Perlod coot deals with particular time. Traceability Direct and Indirect coot comes under to a ceability. The examples of direct cost are cost relating to material, labour etc. and example of Indirect cost are fixed and variable overheads. Decision making & This is important for the purpose of decisions related to costs which are more relevant eg: sunt costsete

Prime cost v/s conversion Prime cost is used in manufacturing of finished goods in pd 3. 920 8. example: direct cost of raw material conversion cost is used for cost incurred on convertinga raw material to finished goods. example factory rent, labour expences etc,