EXAMPLES-3
1.   The firm is using job costing system. Beginning work-in process inventory is 28,000 TL (Job 10).
 
      Make the cost accounting and transfer to the work-in process records of the following transactions.
 
             a. The firm bought materials costing 100,000 TL + 18 % VAT.
 
       b.    Materials costing 50,000 TL are released to the cutting department. 30,000 TL of these materials are used for job-11, 20,000 TL of these materials are used for Job-12.
 
         c.   Direct labor cost incurred in the cutting department is 30,000 TL. 12,000 TL of this cost is incurred for Job-11, 18,000 TL of this cost is incurred for Job-12.
 
      d.      Materials costing 37,000 TL are released to the machining department. 15,000 TL of these materials are used for job-10, 14,000 TL of these materials are used for Job-11, and 8,000 TL of these materials are used for job-12.
 
       e.   Direct labor cost incurred in the machining department is 20,000 TL. 8,000 TL of this cost is incurred for Job-10, 7,000 TL of this cost is incurred for Job-11, and 5,000 TL of this cost is incurred for Job-12.
 
      f.      Materials costing 80,000 TL are released to the assembly department. 35,000 TL of these materials are used for job-10, 27,000 TL of these materials are used for Job-11, and 18,000 TL of these materials are used for job-12.
 
        g.   Direct labor cost incurred in the assembly department is 60,000 TL. 28,000 TL of this cost is incurred for Job-10, 18,000 TL of this cost is incurred for Job-11, and 14,000 TL of this cost is incurred for Job-12.
 
        h.   Total manufacturing overhead allocated to Job-10 is 32,000 TL, total manufacturing overhead allocated to Job-11 is 28,000 TL, total manufacturing overhead allocated to Job-12 is 15,000 TL.
 
      Make the accounting records of the following transactions.
 
        i.    Job-10 and Job-11 are completed and transferred to the finished goods inventory. (Total cost of Job 10 is 146,000 TL, total cost of Job 11 is 136,000 TL)
 
        j.    Job-10 is sold for 190,000 TL + 18 % VAT.
 
2.      The firm is producing homogenous products on a continuous basis. The products pass through three processes, which are Process-1, Process-2, and Process-3. 
 
Beginning work-in process inventory: Process-2: 45,000 TL, Process-3: 60,000 TL. These are the products that are completed in the preceding process, but have not been processed in the subsequent process.
 
      Beginning finished goods inventory: 222,000 TL. (30,000 units at a cost of 7.40 TL per unit)
 
 
      a.   Costs incurred in the processes during the period are as follows:
 
 
 
Process-1
Process-2
Process-3
Direct materials
90,000
60,000
50,000
Direct labor
50,000
 35,000            
40,000
Manufacturing overhead
85,000
110,000
70,000
                                                                                                                    Make the cost accounting and transfer to work-in process record.
 
      b.   A total of 90,000 units are processed and 70,000 units are completed and transferred to the finished goods (20,000 units have not been completed). Make the accounting record.
 
      c.   75,000 units are sold at 12 TL + 18 % VAT. Make the accounting record. (The firm is using weighted average method). 
 
3.   ABA is a household durables producer. In the first quarter it produced 6,000 units and sold 5,000 units at a price of 600 TL per unit. In the second quarter it produced 10,000 units and sold 11,000 units at a price of 600 TL per unit. Cost information is presented below:
 
      Direct material cost per unit                              : 150 TL
      Direct labor cost per unit                                    : 120 TL
      Variable manufacturing overhead per unit            : 90 TL
      Variable selling and marketing expense per unit sold      : 30 TL
      Total fixed manufacturing overhead for the period      : 90,000 TL
      Total fixed selling, marketing, and delivery expenses for the
      period                                                  : 50,000 TL
      Total general administrative expenses (all fixed)
      for the period                                            : 80,000 TL
 
      Prepare a full-absorption costing and variable costing income statement for two quarters. In which quarter ABA’s management is more successful and why?
 
 
4.  
      a.      Management is considering a new product named X. X has a projected sales price of 60 TL per unit and variable cost of (manufacturing + selling, marketing and delivery) 40 TL per unit. Fixed costs for the period are projected to be 120,000 TL. What is the break-even point?
      b.      Management desires to earn 60,000 TL profit. What is the sales volume required to earn this profit?
      c.   The marketing manager has proposed a selling price of 50 TL per unit. What is the sales volume required to earn the desired profit?
      d.   Target costing is employed to reengineer the product, thereby reducing the variable cost to 25 TL per unit (selling price is 50 TL). What is the sales volume required to earn the desired profit?
      e.   5 TL of the variable cost is variable selling, marketing and delivery expenses. If fixed selling, marketing and delivery expenses increase an additional 15,000 TL, what should be the new variable selling, marketing and delivery expenses per unit to earn the desired profit? (Selling price is 50 TL., the firm is selling the amount found in d)
 
5.   A firm is producing and selling three products, which are X, Y, and Z.
 
 
X
Y
Z
Percentage of sales
20 %
50 %
30 %
Selling price (TL)
25
50
55
Unit variable cost (TL)
17.25
12.5
27.5
 
      Total fixed costs for the period is 425,000 TL.
      a.   How many units from each product must be sold to break-even?
      b.   How many units from each product must be sold to earn 50,000 TL profit?
 
6.   A company is producing and selling 18,000 units of a product. The information is presented below:
 
      Sales revenue (18,000 units at 5 TL each)         : 90,000 TL
      Variable manufacturing costs (D/M, D/L, variable MOH)   : 3 TL per unit
      Variable selling, marketing and delivery expenses      : 0.3 TL per unit
      Fixed manufacturing overhead for the period              : 23,000 TL
      Other fixed costs for the period                          : 6,000 TL
 
      Another company offered to buy 1,000 units at a selling price of 3.8 TL per unit.
 
      a. The variable selling, marketing and delivery expenses for the special order are 0.15 TL per unit. There is no change in variable manufacturing costs and fixed costs. Should the firm accept the special order?
      b.      Because of overtime and material costs variable manufacturing costs for the special order will be 3.75 TL per unit. The variable selling, marketing and delivery expenses for the special order are 0.15 TL per unit. There is no change in fixed costs. Should the firm accept the special order?
 
7.   A company is producing and using 10,000 units of a certain part in the production of its main product. The following information is available about the costs to make the part.
 
      Direct materials                     : 22 TL per unit
      Direct labor                      : 16 TL per unit
      Variable manufacturing overhead : 6 TL per unit
      Fixed manufacturing overhead      : 120,000 TL for the period
 
Cost to buy the parts from another company is 46 TL per unit.
 
If the company buys the parts fixed manufacturing overhead will reduce by 40,000 TL. Should the company make or buy the parts?
 
8.   A company is producing three products, which are A, B, and C. Information is as follows:
 
 
A
B
C
Sales revenue
32,600
42,800
51,200
Variable costs
(22,000)
(38,000)
(40,100)
Contribution margin
10,600
4,800
11,100
Fixed costs allocated to each product
(4,700)
(5,600)
(7,100)
Operating income
5,900
(800)
4,000
 
The company is considering dropping product B. If this product is dropped fixed costs will decrease by 5,000 TL. Should the company drop this product? 
 
     
9.   A firm is producing three products, which are X, Y, and Z.
 
Information is as follows:
 
 
X
Y
Z
Selling price
15 TL
32 TL
95 TL
Expected demand for the period
20,000 units
10,000 units
30,000 units
Direct material
0.5 kg per unit
0.3 kg per unit
0.6 kg per unit
Direct labor
0.7 hours per unit
2 hours per unit
7 hours per unit
Direct material cost
10 TL per kg.
Direct labor cost
8 TL per hour
Variable manufacturing overhead
2 TL per direct labor hour
Variable selling, marketing and delivery expenses
10 % of the selling price
Fixed manufacturing overhead
18,000 TL for the period
Fixed selling, marketing and delivery expenses
4,000 TL for the period
General administrative expenses (all fixed)
15,000 TL for the period
 
Total direct labor hours available is 30,000 hours for the period. There are 31,500 kg. of direct materials available for the period.
 
Formulate a linear programming model to determine the product mix.