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    Module 1 - Additional Exercises

    Uploaded by

    cynangela
    Allan spent 4 hours providing direct accounting services to client Steve Wilson. Bernard spent 2 hours providing direct tax services. The office assistant spent 6 hours total, with 4 hours direct to Wilson's services and 2 hours for indirect support.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Module 1 - Additional Exercises

    Uploaded by

    cynangela
    24 views2 pages
    Allan spent 4 hours providing direct accounting services to client Steve Wilson. Bernard spent 2 hours providing direct tax services. The office assistant spent 6 hours total, with 4 hours direct to Wilson's services and 2 hours for indirect support.

    Original Description:

    Cost Accounting

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    Allan spent 4 hours providing direct accounting services to client Steve Wilson. Bernard spent 2 hours providing direct tax services. The office assistant spent 6 hours total, with 4 hours direct to Wilson's services and 2 hours for indirect support.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    24 views2 pages

    Module 1 - Additional Exercises

    Uploaded by

    cynangela
    Allan spent 4 hours providing direct accounting services to client Steve Wilson. Bernard spent 2 hours providing direct tax services. The office assistant spent 6 hours total, with 4 hours direct to Wilson's services and 2 hours for indirect support.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    MODULE 1 EXERCISES

    Association with cost object


    ABC & Co. provides accounting services to clients. The firm has two accountants (Allan, who
    performs basic accounting services and Bernard, who performs tax services) and one office
    assistant. The assistant is paid on an hourly basis for the actual hours worked. One client the firm
    served during April was Steve Wilson. During April 2022, the following labor time was
    incurred. Classify the labor time as direct, indirect or unrelated based on whether the cost object
    is (1) Wilson’s services, (2) tax services provided, or (3) the accounting firm.

    Cost behavior
    1. XYZ Accounting Services pays 20,000 per month for a tax preparation software license.
    In addition, variable charges incurred average 90 for every tax return the firm prepares.

    a. Determine the total cost and the cost per unit if the firm expects to prepare the
    following number of tax returns in March 2022:
    (1) 200
    (2) 500
    (3) 800

    b. Why does the cost per unit change in (1), (2) and (3) of (a)?

    c. The owner of XYZ accounting services wants to earn a margin (excluding any other
    direct costs) on tax returns of 15,000 during March. If 200 returns are prepared, what
    tax preparation fee should be charged? If that fee is charged and 800 returns are
    prepared, what is the margin in March?

    2. A company produces croquet sets. The company makes fixed monthly payments to the
    local utility based on the previous year’s electrical usage. Any difference between the
    actual and expected usage is paid in January of the year following the usage. In February
    2022, the company made 2,000 croquet sets and incurred the following costs:

    Cardboard boxes (1 per set) 10,000


    Mallets (2 per set) 120,000
    Croquet balls (6 per set) 90,000
    Wire hoops (12 per set) 36,000
    Total hourly wages for production 84,000
    workers
    Supervisor’s salary 26,000
    Building and equipment rental 28,000
    Utilities 13,000
    Total 407,000

    a. What was the per-unit cost of each component of a croquet set?


    b. What was the total cost of each croquet set?
    c. Production for March 2022 is expected to be 2,500 croquet sets. Last November,
    when 2,500 sets were made, utility cost was P14,000. There have been no rate
    changes at the local utility companies since that time. What is the estimated cost per
    set for March?

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