Direct material and direct labor variances

User Generated

Niratre

Business Finance

Description

Diploma base work



Unformatted Attachment Preview

Assessment 1 Q1 You are employed to investigate whether any accrual entries are needed in the business of Safe Security Services (SSS). On completion of your investigation on 30 June, you have discovered that the following items need attention: 1. Employee salaries owed but not recorded, 2. Prepaid insurance expired, 3. Interest revenue accrued but not recorded, $9200. $900. $10 000. 4. Unearned security services revenue now earned, $4600. 5. Depreciation not recorded, $16 000. Required A. Prepare the adjusting entries for items 1 to 5 at 30 June, the end of the accounting period. B. Suppose the adjusting entries in requirement A were not made. Calculate the total overstatement or understatement of profit as a result of the omission of these adjustments. Q2 Selected accounts of Rikki’s Real Estate are shown below at 30 June of the current year before any adjusting entries have been made. Debit Credit Prepaid Insurance $ 1200 Supplies 550 Office Equipment 6 000 Unearned Rental Fees $ 4200 Salaries Expense 29 800 Rental Fees Revenue 13 200 Additional information (a) Prepaid insurance represents premiums for 1 year paid on 1 June. (b) Supplies of $200 were on hand at 30 June. (c) Office equipment, which had been purchased on 1 April, is expected to last 5 years. (d) Rikki collected 4 months’ rent in advance on 1 June from a number of tenants. (e) Accrued salaries not recorded as at 30 June are $3500. 1 Required Record in the general journal the necessary adjusting entries on 30 June. Q3 Subiaco Rental Services ends its financial year on 30 June. Required A. Using the following information, make the necessary adjusting entries. 1. Rent of office premises of $609 for the 3-month period ending 31 July is due to be paid in July. 2. The telephone expense of $147 is unpaid and unrecorded at 30 June. 3. The Supplies account had a $287 debit balance on 1 July of the preceding year. Supplies costing $1372 were purchased during the year, and $252 of supplies are on hand as at 30 June. 4. Subiaco Rental Services borrowed $13300 from ABC Bank on 15 February. The principal, plus 8% interest, is payable on 15 August. Accrued interest on 30 June has not been recorded. 5. Annual depreciation on equipment is estimated to be $6580. The balance in Accumulated Depreciation at the beginning of the financial year was $9870. 6. The office assistant earns $280 a day. He will be paid in July for the 5-day period ending 3 July. 7. On 1 June, Subiaco Rental Services received 2 months rent in advance, totalling $896. This was recorded by a credit to Unearned Rental Revenue. 8. Subiaco Rental Services purchased a 6-month insurance policy for $567 on 1 November. A 24-month policy was purchased on 30 April for $1272. Both purchases were recorded by debiting Prepaid Insurance. B. As you know, all adjusting entries affect one balance sheet account and one income statement account. Based on your adjusting entries prepared in requirement A: 1. calculate the increase or decrease in profit 2. calculate the increase or decrease in total assets, total liabilities and total equity. 2 Assessment Mapping Checklist Learner Name/ID: ___________________________________ Performance & Knowledge Evidence C/NYC Performance Evidence • produce a detailed asset register and depreciation schedule • accurately record entries for balance day adjustments • prepare financial reports • trace and reconcile errors systematically or seek expert advice if required • apply double-entry principles • complete all tasks according to organisational policies and industry standards Comments Knowledge Evidence • explain double-entry principles • identify general journal and general ledger entries • list the key provisions of relevant legislation, regulations, standards and codes of practice that may preparation of financial reports • describe systems • outline typical errors that can be made in processing financial transactions • describe forms of ‘proof of lodgement’ organisational bookkeeping accounting • describe types of ‘special transactions’ Identify and describe the key features of: • industry codes of practice • legislative and regulatory requirements relevant to the work 3 • organisational policy and procedures • explain the security procedures for handling cheques, vouchers and cash • describe the key features of a range of reports. Comments: Signed by Learner: Date: Signed by Assessor: Date: 4 Assessment 3 Case Study – Prepare Comprehensive Income Statement and Statement of Changes in Equity Fergie Ltd incurs the following expenses and income for the year ended 30 June 2015. The income tax expense of $150 000 is calculated after considering a tax deduction of $21 450, which related to the damage caused by the space junk. Tax rate is 33 per cent. During the year there has also been an increase in the revaluation surplus of $80 000 as a result of a revaluation of land of $80 000. The balance of the revaluation surplus at 1 July 2014 was $nil. A new accounting standard has also been introduced, which has a transitional provision allowing initial write-offs to be recognised as a decrease against retained earnings. The decrease against retained earnings amounts to $50 000. Retained earnings at the beginning of the financial year were $1 950 000, and dividends of $200 000 were paid during the financial year. Issued share capital at 1 July 2014 and 30 June 2015 was $510 000. REQUIRED Prepare an income statement (in a single statement with expenses shown by function) and a statement of changes in equity in conformity with AASB 101. Provide only those notes that can be reasonably determined from the above information Assessment Mapping Checklist Learner Name/ID: ___________________________________ Performance & Knowledge Evidence C/NYC Comments Performance Evidence • produce a detailed asset register and depreciation schedule • accurately record entries for balance day adjustments • prepare financial reports • trace and reconcile errors systematically or seek expert advice if required • apply double-entry principles • complete all tasks according to organisational policies and industry standards Knowledge Evidence • explain double-entry principles • identify general journal and general ledger entries • list the key provisions of relevant legislation, regulations, standards and codes of practice that may preparation of financial reports • describe systems • outline relevant organisational policies, procedures and accounting standards. • outline typical errors that can be made in processing financial transactions • describe forms of ‘proof of lodgement’ organisational bookkeeping accounting • describe types of ‘special transactions’ Identify and describe the key features of: • industry codes of practice • legislative and regulatory requirements relevant to the work • organisational policy and procedures • explain the security procedures for handling cheques, vouchers and cash • describe the key features of a range of reports. Comments: Signed by Learner: Date: Signed by Assessor: Date: Assessment 1 - Written Examination At 30 June 2014, E-Surfboards Limited had the following temporary differences: Page 659 The following information is available for the following year, the year ending 30 June 2015. E-Surfboards Limited depreciates computers over five years in its accounting records but over three years for tax purposes. The straight-line method is used. During the year ESurfboards wrote off bad debts amounting to $15 000. Warranty costs of $70 000 were paid during the year. No amounts were paid for long-service leave during the year. The following information is extracted from the statement of financial position at 30 June 2015: There was no acquisition of plant and equipment during the year. The tax rate as at 30 June 2014 and 30 June 2015 was 30 per cent. REQUIRED (a) Calculate the amount of each of E-Surfboards' temporary differences, if any, at 30 June 2014, and state whether it is deductible or taxable. (b) What is the balance of the deferred tax liability and deferred tax asset, if any, as at 30 June 2014? (c) Calculate E-Surfboards' taxable income for the year ended 30 June 2015. (d) Prepare journal entries to record current tax and deferred tax for the year ended 30 June 2015 Assessment Mapping Checklist Learner Name/ID: ___________________________________ Performance & Knowledge Evidence C/NYC Comments Performance Evidence • access and accurately compile data and prepare reports for corporate entities that comply with: o relevant accounting standards o statutory and other relevant requirements of reporting bodies. Knowledge Evidence • identify and explain current business taxation requirements • identify and explain current financial legislation and statutory requirements relating to taxable transactions and reporting requirements • explain the key features of integrated computerised accounting systems • describe a range of methods and formats for presenting financial data • outline options, methods and practices for recording and reporting deductions, benefits and depreciation • identify and explain the key principles of double-entry bookkeeping and accrual accounting Comments: Signed by Learner: Date: Signed by Assessor: Date: Assessment 2 Assignment Direct material and direct labour variances; job costing; journal entries: manufacturer Business Wear Fashions manufactures one type of women's jacket, produced in jobs to fill each customer order. These jackets are supplied to various department stores, and Business Wear sews the label of each store onto the jackets. During November, Business Wear worked on three orders. The job cost records disclose the following data: Job no. No. jackets Total material used (metres) Total hours worked AB 2000 8 200 5 960 CD 3400 13 000 10 260 MN 2400 10 100 5 780 The following additional information is available: • Business Wear purchased 90 000 metres of material during November at a cost of $990 000. • Direct labour during November amounted to $660 000. According to payroll records, production employees were paid $30 per hour. • Page 483 There was no work in process on 1 November. During November, jobs AB and CD were completed. All material was issued for job MN, which was 80 per cent complete as to direct labour. • The standard costs for a jacket are as follows: Direct material 4 metres @ $10.00 $ 40.00 Direct labour 3 hours @ $29.00 87.00 Manufacturing overhead 3 hours @ $18.00 Standard cost per jacket 54.00 $181.00 Required: 1 Construct a spreadsheet that includes: (a) A schedule calculating the standard cost of jobs AB, CD and MN for November. (b) The following variances for November and indicate whether each variance is favourable or unfavourable: 2 (i) Direct material price variance. (ii) Direct material quantity variance for each job and in total. (iii) Direct labour efficiency variance for each job and in total. (iv) Direct labour rate variance for each job and in total. Prepare journal entries to record each of the following events: (a) Purchase of material. (b) Incurrence of direct labour cost and direct labour variances for November. (c) Addition of direct material to work in process inventory, and direct material variances for November. 3 Use the spreadsheet from requirement 1 to demonstrate the effects of the standard quantity of material decreasing to 3 metres per jacket and the standard direct labour rate increasing to $32.00 per hour. 4 Discuss possible causes for each of the variances that you calculated under requirement 1(b). Consider each variance separately. Also, consider possible interactions between variances. Assessment Mapping Checklist Learner Name/ID: ___________________________________ Performance & Knowledge Evidence C/NYC Comments Performance Evidence • gather and record operating and cost data in accordance with organisational policy and procedures • analyse data and assign costs to products, services and organisational units to comply with organisational procedures • obtain data and prepare a range of cost reports and budgets to meet management information requirements • analyse variances between budgeted and actual data, and review integrity of costing systems. Knowledge Evidence • identify and describe cost behaviour characteristics for the different cost elements of a product or service • describe the principles of doubleentry bookkeeping and accrual based accounting • identify and discuss the key features of organisational policy and procedures as they apply to costing systems • outline the key management information requirements • identify and explain the key principles and practices of budget preparation • discuss the relationship between variance analysis and costing system integrity • explain the key processes and procedures for recording and securely storing data. • identify and explain the key principles of double-entry bookkeeping and accrual accounting • identify and explain business legal requirements relating to delegated authorities, reporting periods and taxation payment timings. Comments: Signed by Learner: Date: Signed by Assessor: Date:
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Please let me know if there is anything needs to be changed or added. I will be also appreciated that you can let me know if there is any problem or you have not received the work Good luck in your study and if you need any further help in your assignments, please let me know Can you please confirm if you have received the work? Once again, thanks for allowing me to help you R MESSAGE TO STUDYPOOL NO OUTLINE IS NEEDED AS IT IS A EXCEL COMPLETED 100% PLAG CHECK .. REPORT ATTACHED GRAMMAR CHECKED - USING GRAMMARLY CITATION AND REFERENCES ACCORDING TO INSTRUCTION

You are employed to investigate whether any accrual entries are needed in the business of Safe Security Services (SS
of your investigation on 30 June, you have discovered that the following items need attention:

1. Employee salaries owed but not recorded,
2. Prepaid insurance expired,
3. Interest revenue accrued but not recorded,
4. Unearned security services revenue now earned,
5. Depreciation not recorded,

9200
900
10000
4600
16000

Required
A. Prepare the adjusting entries for items 1 to 5 at 30 June, the end of the accounting period.
B. Suppose the adjusting entries in requirement A were not made. Calculate the total overstatement or understatemen
profit as a result of the omission of these adjustments.

SOLUTION:
Journal Entries
Particulars
Salary Expense
Salaries Payable

Debit
9200

Credit
9200

Insurance Expense
Prepaid Insurance

900

Interest Receivable
Interest Revenue

10000

Unearned Security Services Revenu
Security services revenue

4600

Depreciation Expens
Accumulated Depreciation

16000

900

10000

4600

16000

B.
Salary Expense
Insurance Expense
Depreciation Expens
Total overstated

9200
900
16000
26100

Interest Revenue

10000

Security services revenue
Total understated

4600
14600

The net overstatement of profit is therefore 26100 - 14600 = 11500

e Security Services (SSS). On completion

ement or understatement of

Selected accounts of Rikki’s Real Estate are shown below at 30 June of the current year before any adjusting entries h
Debit
1200
550
6000

Prepaid Insurance
Supplies
Office Equipment
Unearned Rental Fees
Salaries Expense
Rental Fees Revenue

Credit

4200
29800

Additional information
(a) Prepaid insurance represents premiums for 1 year paid on 1 June.
(b) Supplies of $200 were on hand at 30 June.
(c) Office equipment, which had been purchased on 1 April, is expected to last 5 years.
(d) Rikki collected 4 months’ rent in advance on 1 June from a number of tenants.
(e) Accrued salaries not recorded as at 30 June are $3500.
Supplies
Office equipment
Rikki collection
Accrued salaries

200
5
4
35000

Years
Month

Required:
Record in the general journal the necessary adjusting entries on 30 June.
SOLUTION:

a

Journal Entries
Particulars
Insurance Expense (1200 / 12)
Prepaid Insurance

Debit
600

b

Supplies Expense (550-200)
Supplies

350

c

Depreciation Expense – Office Equipment (6000/5)*(3/12)
Accumulated Depreciation – Office Equipment

300

d

Unearned Rental Fees (4200 /4 month)
Rental Fees Revenue

1050

e

Salaries Expense

3500

Salaries Payable

ore any adjusting entries have been made.

13200

Credit
600

350

300

1050

3500

Subiaco Rental Services ends its financial year on 30 June.
Required
A. Using the following information, make the necessary adjusting entries.

1. Rent of office premises of $609 for the 3-month period ending 31 July is due to be paid in July.
2. The telephone expense of $147 is unpaid and unrecorded at 30 June.
3. The Supplies account had a $287 debit balance on 1 July of the preceding year. Supplies costing $1372 were purch
year, and $252 of supplies are on hand as at 30 June.
4. Subiaco Rental Services borrowed $13300 from ABC Bank on 15 February. The principal, plus 8% interest, is pay
August. Accrued interest on 30 June has not been recorded.

5. Annual depreciation on equipment is estimated to be $6580. The balance in Accumulated Depreciation at the begin

6. The office assistant earns $280 a day. He will be paid in July for the 5-day period ending 3 July.
7. On 1 June, Subiaco Rental Services received 2 months’ rent in advance, to...


Anonymous
Just the thing I needed, saved me a lot of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags