Assignment Question(s): (Marks
10)
Q1. Explain how job costing is used in service sectors and manufacturing sectors? Provide
examples by citing one job costing example of the service sector and one example of the
manufacturing sector of a Saudi company to support your answers. (CH 5, 2
Marks)
Answer:
Job costing systems used in service sectors are very similar to those used in the manufacturing
companies. However, there is a difference in that the service organizations use fewer materials when
compared to the manufacturing organizations. The account names are also different and whereas the
manufacturing sector keeps track of costs by product, the service industry keeps track of costs by the
customer.
When job costing in a manufacturing sector, tracking is done on the jobs that use different types of
direct expenses such as direct labour and direct materials while still allocating overhead costs to the
job. In service industry, job costing refers to the computation of the total operational cost of each unit
of the intangible product. It is applicable where the company exercises consistence in the production
of the same service.
An example of a manufacturing company thank uses job casting is A.G Enterprises. An example of
Job costing in service industry is in Saudi Arabian Hospitals.
Q2. Axel Ltd. uses a process costing system for its sole processing department. There were
24,000 units in beginning WIP inventory for March and 216,000 units were started in March.
The beginning WIP units were 75% complete and the 19,500 units in ending WIP were 60%
complete. All materials are added at the start of processing.
(CH 6, 3 Marks)
Required:
a) Compute the no. of units started & completed.
b) Compute the EUP for DM and CC using FIFO and WA methods.
c) Calculate total manufacturing cost/EUP under both methods, if the following details are
available:
, FIFO WA
Direct Material Cost SAR 700,000 SAR 910,000
Conversion Cost SAR 920,000 SAR 1,210,000
Answer:
a) no. of units started & completed
Particulars Physical unit Direct materials Conversion costs
Beginning work in 24000 - 25% of 24, 000=
process inventory 6,000
Number of units 196,500 196,500 196,500
started and completed
Ending work in 19,500 19,500 60% of 19,500=
process 11,700
Equivalent unit 216,000 214,200
production
b)
i) Computation of cost/EUP:
Direct materials Conversion costs
Total cost SAR 700, 000 SAR 920, 000
Equivalent Unit product 216, 000 214, 200
Cost/EUP (Total costs/EUP) SAR 3.24 SAR 4.30
ii) Weighted average method
Particulars Physical units Direct materials Conversion costs
Number of units 220,500 220,500 220,500
completed and
transferred
Ending work in 19,500 19,500 60% of 19,500=
10)
Q1. Explain how job costing is used in service sectors and manufacturing sectors? Provide
examples by citing one job costing example of the service sector and one example of the
manufacturing sector of a Saudi company to support your answers. (CH 5, 2
Marks)
Answer:
Job costing systems used in service sectors are very similar to those used in the manufacturing
companies. However, there is a difference in that the service organizations use fewer materials when
compared to the manufacturing organizations. The account names are also different and whereas the
manufacturing sector keeps track of costs by product, the service industry keeps track of costs by the
customer.
When job costing in a manufacturing sector, tracking is done on the jobs that use different types of
direct expenses such as direct labour and direct materials while still allocating overhead costs to the
job. In service industry, job costing refers to the computation of the total operational cost of each unit
of the intangible product. It is applicable where the company exercises consistence in the production
of the same service.
An example of a manufacturing company thank uses job casting is A.G Enterprises. An example of
Job costing in service industry is in Saudi Arabian Hospitals.
Q2. Axel Ltd. uses a process costing system for its sole processing department. There were
24,000 units in beginning WIP inventory for March and 216,000 units were started in March.
The beginning WIP units were 75% complete and the 19,500 units in ending WIP were 60%
complete. All materials are added at the start of processing.
(CH 6, 3 Marks)
Required:
a) Compute the no. of units started & completed.
b) Compute the EUP for DM and CC using FIFO and WA methods.
c) Calculate total manufacturing cost/EUP under both methods, if the following details are
available:
, FIFO WA
Direct Material Cost SAR 700,000 SAR 910,000
Conversion Cost SAR 920,000 SAR 1,210,000
Answer:
a) no. of units started & completed
Particulars Physical unit Direct materials Conversion costs
Beginning work in 24000 - 25% of 24, 000=
process inventory 6,000
Number of units 196,500 196,500 196,500
started and completed
Ending work in 19,500 19,500 60% of 19,500=
process 11,700
Equivalent unit 216,000 214,200
production
b)
i) Computation of cost/EUP:
Direct materials Conversion costs
Total cost SAR 700, 000 SAR 920, 000
Equivalent Unit product 216, 000 214, 200
Cost/EUP (Total costs/EUP) SAR 3.24 SAR 4.30
ii) Weighted average method
Particulars Physical units Direct materials Conversion costs
Number of units 220,500 220,500 220,500
completed and
transferred
Ending work in 19,500 19,500 60% of 19,500=
