Management Accounting Assignment
Question 1
(a) How do fixed costs in a business create a problem for Job costing?
(b) Provide examples of wages that might be deemed to be (1) a direct cost and (2) an indirect costs
Question 2
Estimated or budgeted cost and operating data for three companies for 2013 are given below:
Company X Company Y Company Z
Units to be produced 10,000 8,000 12,000
Machine - hours 50,000 10,000 6,000
Direct labour - hours 12,000 16,000 36,000
Direct labour cost $48,000 $64,000 $150,000
Factory overhead cost 150,000 40,000 60,000
Predetermined overhead rates are calculated on the following bases in the three companies
Overhead rate based on
Company XMachine - hours
Company Y Direct labour - hours
Company Z Direct labour cost
Required:
(a) Calculate the predetermined overhead rate to be used in each company during 2013.
(b) Assume that three jobs are worked on during 2013 in company X. Machine - hours recorded by jobs are: job23, 21,000 hours; job 29, 16,000 hours; job 31,11,000 hours. How much overhead will the company apply to work in the process? If actual overhead costs total $149,000 for 2012, will overhead be over - or under - applied? By how much?
(c) Of what value is the schedule of cost of goods manufactured and how does it tie into the profit and loss statement. Discuss.
Question 3
Tony's Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follow.
Men's Boys
Selling price $28.80 Selling price $24.00
Variable cost $20.40 Variable cost $16.80
Fixed costs are $38,400.
Required:
(a) What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of means shirts?
(b) What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts?
(c) What is meant by a products contribution margin ratio and how is this ratio useful in the planning of business operation?
Question 4:
Byron Sports is a manufacture of sportswear. It produces all of its products in one department using a process costing system?
The information for the current month as follows
Beginning work in process (30% completed as to conversion cost) 12,000 units
Unit started 90,000 units
Units completed and transferred out ?
Ending work in process (70% complete as to conversion) 8,000 units
Costs:
Beginning work- in - process direct materials $28,800
Beginning work - in - process conversion $5,040
Direct materials added during month $216,000
Conversion costs incurred during the month $139,200
Direct materials are added at the beginning of the process. Conversion cost are incurred uniformly throughout the production process. Costing is handled on a FIFO basis.
Required:
(a) Prepare a production cost worksheet using 5 steps approach.
(b) Under what conditions would a process costing system be more appropriate than a job order costing system? Explain.