FINAL

EXAMINATION FRONTSHEET
Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Management Accounting (489)

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Class No. Assessor Name THAOPUP

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 FINAL EXAMINATION

Lecturer Ms. Pham Uyen Phuong Thao, M.Sc

Email: thaopup@fe.edu.vn or phoebe.pham198@gmail.com

There are 2 parts in this examination. Part I is theoretical section and Part II is application
section. You have to do both parts to finish the exam!

Part I – Theories

A. Choose the best answer (only one) for the following questions
B. Answering the following questions
C. True or False?

Part II – Application

You can choose ONLY TWO questions among the four following questions. If anyone
breaks the rule (does more than 2 questions), it means that you will receive the grade
for only one question.

A. Cost Allocation
Golden Company manufactures pottery in two producing departments: Shaping and Firing.
Three support departments support the production departments: Power, General Factory
and Human Resources. Budgeted data on the five departments follow:
Units: $
Supporting Departments Producing Departments
General
Power HR Shaping Firing
Factory
Direct overhead costs 90.000 167.000 84.000 72.000 230.000
Kilowatt hours - 13.000 25.000 20.000 80.000
Square feet 2.000 - 6.000 24.000 8.000
Direct labour hours - - - 10.000 4.000

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 Power is allocated on the basis of kilowatt-hours, General Factory is allocated on the basis
of square footage, and Human Resources is allocated on the basis of direct labour hours.
The company does not break overhead into fixed and variable components.
Required
1. Allocate the overhead costs to the producing departments using the direct method
(Round allocation ratios to two decimal places).
2. Using direct labour hours, compute departmental overhead rates.
3. Allocate the overhead costs to the producing departments using the sequential
method (Round allocation ratios to two decimal places).
4. Using direct labour hours, compute departmental overhead rates.
5. Allocate the overhead costs to the producing departments using the reciprocal
method (Round allocation ratios to two decimal places).
6. Using direct labour hours, compute departmental overhead rates.
B. Budgeting
Optima Company is a high-technology organization that produces a mass-storage system.
The design of Optima’s system is unique and represents a breakthrough in the industry.
The units Optima produces combine positive features of both floppy and hard disks. The
company is completing its fifth year of operations and is preparing to build its master
budget for the coming year (2019). The budget will detail each quarter’s activity and the
activity for the year in total. The master budget will be based on the following information:
i. Fourth-quarter sales for 2018 are 55.000 units.
ii. Unit sales by quarter (for 2019) are projected as follows:
1st quarter 2nd quarter 3rd quarter 4th quarter
65.000 70.000 75.000 90.000

iii. The selling price is $400 per unit.

iv. Ending inventory of finished good for each quarter is following the rule that it equals
to 25% of the sales level of that quarter.
v. Each mass-storage unit uses five hours of direct labour and three units of direct
materials. Laborers are paid $10/hour, and one unit of direct materials costs $80.
vi. There are 65,700 units of direct materials in beginning inventory as of January 1,
2019, costed $285/unit. At the end of each quarter, Optima plans to have 30% of the
direct materials needed for next quarter’s unit sales. Optima will end the year with
the same level of direct materials found in this year’s beginning inventory.
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 vii. Fixed overhead totals $1 million each quarter. Of this total, $350,000 represents
depreciation. The fixed overhead rate is computed by dividing the year’s total fixed
overhead by the year’s expected units produced.
viii. Variable overhead is budgeted at $6 per direct labour hour. All variable overhead
expenses are paid for in the quarter incurred.
ix. Fixed selling and administrative expenses total $250,000 per quarter, including
$50,000 depreciation.
x. Variable selling and administrative expenses are budgeted at $10 per unit sold.

Required

Prepare a master budget for Optima Company for each quarter of 2019. The following
component budgets must be included:

1. Sales budget
2. Production budget
3. Direct materials purchases budget
4. Direct labour budget
5. Overhead budget
6. Selling and administrative expenses budget
7. Ending finished goods inventory budget
8. Cost of goods sold budget