Q1. Toyland company Producers a small plastic toy. All direct materials are added at the beginning of the production process. Data for the direct materials used in the manufacture of plastic toys for the month of July is listed below.
Production data:
Beginning work in process 25,000 units Units started during the period 50,000 units Completed and transferred out 67,500 units Manufacturing costs:
Beginning work in process (direct materials) \$35,000 Direct material used \$75,000

a. Under the FIFO method, how many units were started and completed with respect to direct materials during the month?
b. Under the FIFO method, what is the cost of the direct materials in ending work in process at the end of the month?
c. Under the FIFO method, what is the amount of direct materials cost transferred out this period?
d. Calculate the direct materials cost per equivalent unit under the weighted average method. (2Marks) CH6

Q2. What process is used to assign costs in an ABC system? Provide numerical example.
(2Marks) CH7

Q3. Suppose Ahmad company produces and sells 800 units for SR20. Variable manufacturing cost per unit is SR10. Total fixed manufacturing costs (up to the maximum capacity of 1000 units) are SR3,000. Variable operating cost is SR1 per unit and fixed operating costs total \$1000.
A customer placed a special order for 150 units for \$15 each. The customer is willing to shoulder the delivery costs. So the business will not incur additional variable operating costs. Does the quantitative and qualitative analysis suggest that the company should accept the special order?

Sample Solution