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Management accounting

Management Accounting

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Management Accounting

Question 1

a)         The manufacturing overhead cost per unit for the company’s two products under traditional costing system is calculated as:

Manufacturing Overhead Cost = Total Estimated Manufacturing Overhead Cost/Total        Labor Hours

                                                     = 1464480/24000

= RM 61.02 per hour

Thus, Manufacturing Overhead Cost

for product E100                          = Overhead Cost per unit X Direct Labor hours

= 61.02 X 0.40

= RM 24.41 per unit

Manufacturing Overhead Cost for

for product L200                          = 61.02 X 1.2

= RM 73.22 per unit

Total Manufacturing Overhead Cost

Per unit                                         = 24.41 + 73.22

= RM 97.63 per unit

b)         Calculating Manufacturing Overhead Cost per unit under Activity Based Costing involves:

i) Predetermined Overhead Rate = Estimated Overhead Cost/Estimated labor hours

= 1464480/24000

= RM 61.02 per hour

ii) Unit Product Cost

 

E100

L200

Direct Materials Per Unit

10.20

50.50

Direct Labor Per Unit

8.40

25.20

Direct Labor-Hours Per Unit (61.02X0.4)=24.41 (61.02X1.20)=73.22
Total Unit Product Cost

43.01

148.92

iii) Activity Based Cost

Total Cost

Total Activity

Activity Rate

Activity Based Cost (E100)

Activity Based Cost (L200)

 552000

24000

23

276000

276000

132400

1104

119.93

103619.52

28783

780000

1560

500

300000

480000

Total Activity Based Cost

679619.52

784783

iv)  Manufacturing Overhead Cost per unit =Total ABC/Produced Units

E100 = 679619.52/30000 = RM 22.65 per unit

L200 = 784783/10000      = RM 78.48 per unit

Total Manufacturing Overhead Cost per unit = 22.65 + 78.48 = RM 101.13 per unit

Question 2

I) a)      Number of Units Sold in 2012, if national income = 125000, selling price per unit = RM 100, variable costs per unit = RM 70, fixed costs = RM 475000

Let Number of units sold = x

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(100x – 70x) – 475000 = 125000

30x – 475000 = 125000

30x = 125000 + 475000

X = 600000/30

= 20000 Units

b)         Number of Units sold if national income is increased by RM 60000

Let Number of units sold = y

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(100y – 70y) – 475000 = (125000 + 60000)

30y – 475000 = 185000

30y = 660000 + 475000

y = 600000/30

= 22000 Units

c)         Selling Price per unit if number of units sold in 2013 is same as 2012 and net income is increased by RM 60000

Number of units sold = 20000, national income = 185000

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(20000y – [70X20000]) – 475000 = 185000

20000y = 185000 + 475000 + 1400000

Y = 2060000/20000

= RM 103

II)        Units used in making component = 6000 units

 

Per Unit

Total

  Make Buy Make Buy
Purchase Price   13   78000
Direct materials 5   35000  
Direct Labor/hrs 2   15000  
Variable OH 1   10000  
Fixed OH 3   20000  
Total 13   80000  

 

Question 3

a)

Direct labor budget

Month July August September October
Units to be produced 5000 7000 7500 8000
Direct Labor Time Per Unit in Hrs 1.3 1.3 1.3 1.3
Total Hrs Needed 6500 9100 9750 10400
Avg Wage per Hr        
Total Direct Labor Cost        

 

 

 

 

b)

 

Per Unit

Total

  Make Buy Make Buy
Purchase Price   13   78000
Direct materials 5   35000  
Direct Labor/hrs 2   15000  
Variable OH 1   10000  
Fixed OH 3   20000  
Total 13   80000  

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