QUESTION 1 (14 marks)

Jazza Ltd produces clocks at its Shenzhen factory. Each clock is put together in the Assembly Department and then tested in the Testing Department.

In the Assembly Department, the process-costing system at Jazza Ltd has a single direct cost category (direct materials) and a single indirect cost category (conversion costs).

Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process.

When the Assembly Department finishes work on each clock, it is immediately transferred to Testing. Jazza Ltd uses the weighted-average method of process costing.

Data for the Assembly Department for August 2017 are:

Physical Units Direct Materials Conversion costs
Work in process, 1 August 6,000 $2,950,000 $925,500
Started during August 20,000
Completed during August 22,500
Total costs added during October $12,200,000 $6,375,000


Opening work in process is 60% complete with regards to conversion costs and closing work in process is 70% complete with regards to conversion costs.


Produce a production cost report in order to calculate the cost of clocks transferred out and the value of closing work in process in the assembly department.


QUESTION 2 (15 marks)

Moo Dairy Limited is located in Tasmania and produces organic Milk, Yoghurt and Ice-cream from its state of the art production facility.

The initial joint cost of production is $1,200,000 for the year. This cost results in an output of 2,000,000 litres.

Details relating to the 3 joint products are given below:

Milk Yoghurt Ice-cream
Quantity at split-off point 1,000,000 litres 400,000 litres 600,000 litres
Selling price at split-off point $ 1.00 per litre $ 2.00 per litre $ 3.00 per litre
Separable cost $ 0.50 per litre $ 1.25 per litre $ 1.50 per litre
Sales price of ultimate product $ 5.50 per litre $ 4.00 per litre $ 9.00 per litre



  1. Allocate the joint cost between Milk, Yoghurt and Ice Cream using:
  2. The Physical Units Method. (3 Marks)
  3. The Relative Sales Value Method. Round percentage to 2 decimal places. (3 Marks)
  4. Net Realisable Value Method. Round percentage to 2 decimal places. (3 Marks)
  5. Moo Dairy Limited has a request from a prospective customer to further process all its Ice Cream production into Gourmet Ice Cream which will then be bought by the customer for $12.00 per litre. This will increase the separable costs of ice cream per litre to $2.60.

Would you advise the company to accept the offer? Why or why not? (6 Marks)


QUESTION 3 (21 marks)

Vestas Ltd manufactures watches and has decided to prepare a cash budget for the quarter ending 30 September 2017.

As at 1 July 2017, the Cash at bank ledger account had a debit balance of $50,000. The following estimates have been made for the next three months:

July August September
Sales 200,000 300,000 400,000
Cash purchases 150,000 140,000 160,000
Cash wages 15,000 20,000 28,000
Depreciation on plant 80,000 80,000 80,000
Electricity expenses 10,000 11,000 11,500
Insurance expenses 36,200 36,200 37,000
Loan repayment 0 20,000 20,000


All sales are on credit.

It is expected that debtors will pay their accounts as follows:

  • 50 per cent in the month following the sale.
  • 20 per cent in the second month following the sale.
  • 30 per cent in the third month following the sale.

Actual sales for the previous three months were as follows:

  • $300,000 in April 2017
  • $290,500 in May 2017
  • $320,000 in June 2017

Electricity expenses and insurance expenses are paid the following month after they are incurred. June expenses were as follows:

  • Electricity expenses $8,000
  • Insurance expenses $35,000


Part A: Prepare a schedule of cash receipts from debtors for the period ending 30th September 2017.                  (7 marks)

Part B: Prepare a Cash budget for the Quarter ending 30th September 2017.                       (14 marks)


QUESTION 4 (9 marks)

Limited edition dresses Pty Ltd incurred the following costs for job number SH400, which consisted of 500 cocktail dresses for sale to a fashion store.

Direct material:

1 December Requisition no. 520: 900 metres of Cotton @ 8.50 per metre 16 December Requisition no. 101: 600 metres of Nylon @ $4.40 per metre

Direct labour:

16 December Timesheet no. 72: 500 hours@$24 per hour

Manufacturing overhead:

Applied on the basis of direct labour hours @$12 per hour

Additional information:

Job SH400 was completed on 16 December.


Prepare a job cost sheet including dates & requisition / timesheet numbers and record the information given above and also a cost summary for job SH400.

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