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L15.2030 - Cost Accounting (2025/2026)
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Company X has an established normal spoilage rate of 5% that is consistent with the industry's average. However, company X recently changed to a 10% normal spoilage rate. Explain briefly the main consequences of Company X's choice in the two following scenarios:
a) actual spoilage rate is 4%
b) actual spoilage rate is 8%
[Fact Pattern #2] Company X produced three joint products at a joint cost of €137495. Two of these products were processed further. Production and sales were:
Product
|
Units (weight)
|
Selling price per kg.
|
Additional Processing Costs per kg.
|
A
|
2 000 kgs.
|
€245
|
€200
|
B
|
3 000 kgs.
|
€30
|
€0
|
C
|
4 000 kgs.
|
€175
|
€100
|
If joint costs are allocated based on relative weight of the outputs and all products are main products, how much of the joint costs would be allocated to product A? (Round to units)
Company X processes a single type of aluminium. During the current period the following information was given:
|
Units
|
Material Costs
|
Conversion Costs
|
Beginning Inventory
|
4 800
|
€6 100
|
€5 600
|
Started During the Current Period
|
21 400
|
48234
|
66 400
|
Ending Inventory
|
4 500
|
|
|
All materials are added at the beginning of the production process. The beginning inventory was 25% complete as to conversion, while the ending inventory was 40% completed for conversion purposes. Company X uses the first-in, first-out system of process costing. What were the costs assigned to the units transferred out this period? (
[Fact Pattern #1] Company X has two support departments, Maintenance and Personnel. Maintenance Department (MD) costs of €360196 are allocated on the basis of budgeted maintenance-hours. Personnel Department (PD) costs of €170 000 are allocated based on the number of employees. The costs of operating departments A and B are €200 000 and €300 000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
|
Maintenance Department
|
Personnel Department
|
A
|
B
|
Budgeted costs
|
€360196
|
€170 000
|
€200000
|
€300000
|
Budgeted maintenance-hours
|
NA
|
890
|
1 220
|
630
|
Number of employees
|
75
|
NA
|
220
|
660
|
Using the direct method, what amount of Maintenance Department costs
will be allocated to Department B?
A company produces 10 000 units of which 840 are spoiled units because the process, even though carefully and efficiently executed is unable to produce good units 100% of the time. Another 100 of the 10 000 units produced are spoiled because machines broke down and there also were operator errors. What is the normal spoilage rate in percentage of the good units passing inspection? (round to two decimal places)
Company X uses process costing. Direct materials are added at the start of the process and conversion costs are added evenly during the process. The company presented the following information:
|
Physical units
|
Degree of completion
|
BWIP
|
5,000
|
17%
|
Started
|
15,000
|
|
Completed
|
16,000
|
|
EWIP
|
4,000
|
40%
|
Based on the information above, which of the following is TRUE?
Company X uses the FIFO method of process costing (no spoilage). Direct materials are added at the start of the process and conversion costs are added evenly during the process. The company presented the following information:
|
Physical units
|
Degree of completion
|
|
BWIP
|
5,000
|
20%
|
|
Started in the period
|
15,000
|
|
|
Completed
|
16,000
|
|
|
EWIP
|
4,000
|
38%
|
|
|
|
|
|
|
Total costs
|
DM
|
CC
|
Cost added last period
|
$8,000
|
$5,000
|
$3,000
|
If the cost/EUP for this period is equal to the last period cost/EUP,
what would be the total cost added in the current period for conversion costs?
Company X uses a process costing system and computes cost using the weighted average. Inspection point is at 56% of the production process. Company X presented the following information:
Assignment of costs
| |
Costs before adding normal spoilage
|
$882,250
|
Normal spoilage on good completed units
|
$56,425
|
Total cost of good units and transferred out
|
$938,675
|
Abnormal spoilage
|
$33,855
|
EWIP before normal spoilage
|
$344,500
|
Normal spoilage on EWIP
|
$22,570
|
EWIP
|
$367,070
|
Total costs accounted for
|
$1,339,600
|
Which of the following is TRUE
Company X uses a process cost system and computes cost using the weighted average. Direct materials are added at the 60% of the process and conversion costs are added evenly during the process. The company presented the following information:
|
Physical units
|
Degree of completion
|
|
BWIP
|
5,000
|
20%
|
|
Started in the period
|
15,000
|
|
|
Completed
|
13,000
|
|
|
EWIP
|
4,000
|
65%
|
|
|
Transferred in
|
DM
|
CC
|
Cost / EUP
|
$10
|
$12
|
$8
|
The Inspection point is at 50% of the production process. Normal
spoilage is 9,8%. The inventoriable amount in EWIP units is
Company X uses the weighted average method of process costing (no spoilage). Direct materials are added at 60% of the process and conversion costs are added evenly during the process. The company presented the following information:
|
Physical units
|
Degree of completion
|
BWIP
|
1,000
|
80%
|
Started
|
4,000
|
|
|
|
|
|
DM
|
CC
|
Cost added last period
|
$ 5,000
|
$ 3,000
|
Costs added in the current period
|
$ 25,000
|
$ 30,000
|
Cost / EUP (WA)
|
$14
|
$13,588235294118
|
|
|
|
The degree of completion of EWIP is 10%.