MANAGERIAL ACCOUNTING ASSGINMENT

Question 1 (10 marks

1a , 2d , 3b , 4c , 5b , 6c , 7b , 8c , 9d , 10a

Question 2 (17 marks

A

1 Work in process 32 ,000

Stores 32 ,000

Work in process (Direct labor 46 ,000

Factory payroll 46 ,000 3 . Work in process (Factory overhead applied 36 ,800

Factory overhead control 46 ,000 x 80 36 ,800 4 . Factory overhead control 39 ,000

Vouchers payable 39 ,000

5 . Finished goods (Job 56 58 80 .000

Work in process (materials 26 ,000

Work in process

(labor 30 ,000

Work in process (factory overhead -80 x 30 ,000 24 ,000

B 10 ,000 x 80 8 ,000

Job 56

materials 12 ,000 labor 20 ,000 factory overhead 16 ,000 48 ,000 48 ,000 / 2 ,000 units 24 per unit job 58

materials 14 ,000 labor 10 ,00 factory overhead 8 ,000vvv 32 ,000 32 ,000 / 400 units 80 per unit

Work in process end 32 ,000 46 ,000 36 ,800 - 80 ,000 34 ,800

4 . Actual factory overhead 39 ,000

Applied factory overhead 36 ,800

underapplied factory overhead 2 ,200

Question 3 (15 marks

A . Equivalent production

B . Production costs for work in process inventory end and goods transferred out C

The cost per belt of 4 .85 is higher than the unit cost per belt of 4 .46 . This is arrived at by adding materials unit cost of 2 .21 and unit conversion cost of 2 .25 . The reason for the difference of 0 .39 will be the cost allocated to administrative and operating expenses These are non -manufacturing expenses (Karim , 2005 1

Question 4 (25 marks

A Standard costing based on hours

The cost per hour for farm animals is

The cost per hour for pets is

B . Activity based costing

The following the cost computation of farm animals using activity based costing

The following is the cost computation for pet animals using activity based costing

and D

The value added activities include the drug treatment , surgery , travel consultation and accounting / office expenses because they are variable expenses . Variable expenses change depending upon the activity . The board and grooming activity is not a value added activity because it is a fixed expense . Fixed expenses do not change even if activity increases or decreases . The above computation shows that activity -based costing improve product and service cost data . ABC also improves decisions about pricing , service mixes and product strategies due to the more accurate cost information available as compared to the traditional cost accounting methods . ABC allows for more accurate evaluation of performance y programs and responsibility center (Lewis , 1993 ,

. 36

Question 5 (3 marks

Antique Company

Degree of operating leverage contribution margin / net income DOL 350 ,000 150 ,000 2 .33

Contemporary Company Degree of operating leverage contribution margin / net income

DOL 560 ,000 150 ,000 3 .73 (Williams , 1985 ,1

Question 6 (10 marks

1 true , 2 false , 3 false , 4 false 5 true , 6 true , 7 true , 8 true , 9 true , 10 false

References

Karim , K . E...