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QUESTION 3 Joint costing
Create a spreadsheet to solve the following joint cost problem.
Joint cost allocation: additional processing beyond split-off point
ABC Company produces three joint products: A, B and C. The material is added at the beginning of the process. At the end of Process 1, the split-off point, the three intermediate products enter three separate further processes. Product A enters Process 2, Product B enters Process 3 and Product C enters Process 4. None of the products can be sold unless the subsequent processing is carried out.
The following information relates to the month of June:
(i) Direct material issued to Process 1, $26 000.
(ii) Conversion costs incurred:
Labour Overhead
Process 1 $10 000 $14 000
Process 2 3 000 2 000
Process 3 1 000 1 000
Process 4 600 400
(iii) There was no work in process at the beginning or end of the month, and no finished goods inventories at the beginning of the month.
(iv) Details of production and sales:
All delivery costs are met by customers.
Required:
(a) A statement showing the allocation of joint costs to products A, B and C using (i) a physical measures method, and (ii) the relative sales value method.
(b) Suppose that C`s price falls to $7 per tonne. It costs $5 per tonne to dump material at the tip. Should Product C be dumped at the split-off point or processed further?
Question 4 Variance analysis
A. Solve using a spreadsheet. See the requirements embedded in the spreadsheet. Include the IF function to determine Favourable and Unfavourable variances.
B. Prepare a Business Report as if for senior management:
1. Critically evaluate the purpose of variance analysis,
2. Explain why the materials price variance should be calculated on purchase,
3. Identify other areas in an organisation where variance analysis would be useful and
4. Evaluate the practical relevance of detailed overhead variance analysis
Assessment item 2
Assessment item 2
Due date: 12-May-2016
Return date: 03-Jun-2016
Submission method options
Alternative submission method
QUESTION 3 Joint costing
Create a spreadsheet to solve the following joint cost problem.
Joint cost allocation: additional processing beyond split-off point
ABC Company produces three joint products: A, B and C. The material is added at the beginning of the process. At the end of Process 1, the split-off point, the three intermediate products enter three separate further processes. Product A enters Process 2, Product B enters Process 3 and Product C enters Process 4. None of the products can be sold unless the subsequent processing is carried out.
The following information relates to the month of June:
(i) Direct material issued to Process 1, $26 000.
(ii) Conversion costs incurred:
Labour Overhead
Process 1 $10 000 $14 000
Process 2 3 000 2 000
Process 3 1 000 1 000
Process 4 600 400
(iii) There was no work in process at the beginning or end of the month, and no finished goods inventories at the beginning of the month.
(iv) Details of production and sales:
All delivery costs are met by customers.
Required:
(a) A statement showing the allocation of joint costs to products A, B and C using (i) a physical measures method, and (ii) the relative sales value method.
(b) Suppose that C`s price falls to $7 per tonne. It costs $5 per tonne to dump material at the tip. Should Product C be dumped at the split-off point or processed further?
Question 4 Variance analysis
A. Solve using a spreadsheet. See the requirements embedded in the spreadsheet. Include the IF function to determine Favourable and Unfavourable variances.
B. Prepare a Business Report as if for senior management:
1. Critically evaluate the purpose of variance analysis,
2. Explain why the materials price variance should be calculated on purchase,
3. Identify other areas in an organisation where variance analysis would be useful and
4. Evaluate the practical relevance of detailed overhead variance analysis.
For item 4. see the reading by Murray Wells.
Suggested word limit about 300- 400 words. Ensure that your answer is in business report format. Read the following online references regarding business report writing.
http://bit.ly/FoBAcademic-Writing-Skills
and
http://unilearning.uow.edu.au/report/4b.html
QUESTION 5 Cash budget
Solve:-
1. Spreadsheet the cash budget
2. How much is received from March sales?
3. How much was the sales in March? February?
4. What is meant by what if questions in the context of the budgetary process? What is the purpose of asking this type of question? How are financial models used to answer them? For Scarpa, change the spreadsheet forecasts to show a negative cash balance for April. Comment. Paste the original normal view and the changed view together with one formula view.
