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.