CHAPTER 4

COST SYSTEMS & COST ACCUMULATION

Learning 1

Matakuliah : F1002-LAB COST ACCOUNTINGTahun : 2010

THEORETICAL BASISCLASSIFICATION OF COSTS

1. Costs relation to the product:

Direct Materials + Direct Labor = Prime CostDirect Labor + FOH Actual = Conversion CostDirect Material Used + Direct Labor + = Total Manufacturing FOH Actual CostMarketing Exp + Administrative Exp = Commercial ExpTotal Manufact Cost + Com Exp = Total Operating Cost

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2. Costs in relation to the volume of production:Variable costs, Fixed costs, Semivariable costs

3. Costs in relation to manufacturing departments or other segments:Direct departmental cost, indirect departmental cost

4. Costs in relation to an accounting period:Capital expenditure, Revenue expenditure

5. Cost s in relation to a decision, action, or evaluation:Differential cost, Out-of-pocket cost, Opportunity cost, Sunk cost

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CASE 1The following is the Star Company production data for the month of May 2010:1.Purchases of materials valued at Rp 300.000.000 with a ratio between the raw material with supplies of 7:3. The purchase terms are 2 /10, n/30.2.Transport costs for raw materials amounted to Rp 15.000.000 with terms FOB shipping point and for supplies amounting to Rp 6.250.000 with terms FOB destination point.3.There is a material that is damaged and is returned to suppliers amounted to Rp 3.000.000 for raw materials and Rp 1,250,000 for supplies.

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4. Payment for raw materials made during the discount period.

5. Insurance costs paid on May 3, 2010 for a period of two months amounted to Rp 12.000.000, which amounted to the office by 15% and the remainder is allocated to the factory.

6. Building rental costs amounted to Rp 11.250.000 with a ratio of cost allocation for the plant and offices amounted to 1:3.

7. On January 3, 2010 purchased machinery worth Rp 600.000.000. The machine has a useful life of five years with no residual value and depreciated using the straight-line method.

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8. On May 1, 2010 purchased office equipment worth Rp 375.000.000. The equipment has a useful life of 10 years with a residual value of Rp 5,000,000 and is depreciated using the double declining.

9. During the months of May, the Star Company has paid total salaries and wages amounting to Rp 201.875.000. The distribution of salaries and wages are as follows: salary sales is Rp 61.250.000, salary administration section is Rp 75.000.000, factory security guard salaries is Rp 18.750.000 and indirect labor wages is Rp 46.875.000.

10.Commission of sales amounting to 2% of the salary portion of the sales

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11.Prime cost is about Rp 301.080.000.12.Direct labor expenses amounted to 75% of the

budgeted FOH13.Net sales for the month of May 2010 amounted to

Rp 938.125.000. Chairman Star Company set a gross profit of 30% of net sales.

14.Consumption of raw and indirect materials is as much as 150% of the beginning inventory of each material.

15.Work in process of being transferred to finished goods during the month of May 2010 amounted to Rp 625.000.000.

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16. Ending inventory data for the month of May 2010 is as follows:Direct Materials Rp 162.500.000Indirect Material Rp 52.500.000Work In Process Rp 131.080.000Finished Goods Rp 230.600.000

Required:1. Prepare a schedule of Cost of Goods Manufactured

(COGM) and Cost of Goods Sold (COGS) of The Star Company for month of May 2010!

2. Calculate the amount of commercial expense!Bina Nusantara University 9