Assignment Title Assignment 2

Course Name Principles Of Managerial Accounting

Instructor Dr. Rihab Grassa
 Exercise 1: (10 Marks).
Answer2:

Costs($ Cost driver

Activity Recommended cost driver activity cost rate
) units
Production setup Production runs 30,000 100 300$(Per Production Run)
Order processing Orders 50,000 200 250$(Per Order)
2.5$(Per Pound Of
Materials handling Pounds of materials used 20,000 8,000 Material

Equipment depreciation
Machine-hours 60,000 10,000 6$ (Per Machine Hour)
and maintenance

Quality management Inspections 50,000 40 1250 $ Per (Inspection)

Packing and shipping Units shipped 40,000 20,000 2$( Per Shipment)

Note: the formula of activity cost rate =(costs /cost driver units)

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 Answer3:
  nerds stars fashions
Units Produced 1,000 500 400
Direct Materials Costs $4,000 $2,500 $2,000
Direct Labor Cost= (Direct
Labor Hour*Direct Labour 1500$ =(100hr*15$) 1500$ =(100hr*15$) 1335$ = (89hr*15$)
Hour Rate Per Hour)
Order Processing
Cost=(Number Of 2000$=(8 Order*250$) 2000$=(8 Order*250$) 1000$=(4 Order*250$)
Order)*Per Order Cost
Production Setup
Cost=(Number Of
600$=(2 Runs*300$) 1200$=(4 Run*300$) 2400$=(8 Run*300)
Production Run*Cost Per
Production Run)
Material Handling
Cost=(Pound 1000$=(400 500$=(200
500$=(200 Pound*2.5$)
Material*Cost Per Pound Pound*2.5$) Pound*2.5$)
Of Material)
Equipment Depreciation 1800$=
And Maintenance 3000$=(500 Machine
1800$=(300 Machine (300 Machine
Cost=(Machine-Hours* Hour*^Per Machine
Hour*^Per Machine Hour) Hour*^Per Machine
Cost Per Hour) Hour)
Hour)
Quality Management Cost= 2500$ =
2500$ = (2 Inspection * 2500$ = (2 Inspection *
(Number Of Inspection * (2 Inspection * 1250$
1250$ Per Inspection) 1250$ Per Inspection)
Cost Per Inspection) Per Inspection)
Packing And Shipping 2000$=(1000 Units 600$=
1000$=(500 Units Shipped
Cost=(Units Shipped*Cost Shipped * 2$ Per Unit (300 Units Shipped *
* 2$ Per Unit Shipped)
Per Unit Shipped) Shipped) 2$ Per Unit Shipped)
Total Cost 16600 $ 13000 $ 12135 $
Units produce 1,000 500 400
Total Cost / Units
produce 16.6 ≈17 26 30.3375≈30

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 Exercise 2: (5Marks)

Answer1:

Sales Budget
  Jan Feb Mar Quater1
Sales (in units) 200000 220000 230000 650000
selling price per unit 14 14 14 14

total SALES 2800000 3080000 3220000 9100000

  Jan Feb Mar Quater1

Cash Sales 2800000*20% 3080000*20% 3220000*20 %

  560000 616000 644000 1820000

 
credit Sales 2800000*80% 3080000*80% 3220000*80 %

  2240000 2464000 2576000 7280000

 

total SALES 2800000 3080000 3220000 9100000

Production Budget
Jan feb mar Quater1
expected unit sales 200000 220000 230000 650000
add : desired ending fg unit(20%
of next month sales) 44000 46000 48000 48000 (240000*20%=48000)

Total Reqd Units 244000 266000 278000 698000

less: beginning fg unit 40000 44000 46000 40000 (200000*20%=40000)

reqd prod units 204000 222000 232000 658000

December closing inventory
January opening inventory  

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 Direct Materials Budget
  Jan Feb Mar Quater1  
total production in units 204000 222000 232000 658000  
direct materials per unit 1.25 1.25 1.25 1.25  
total pounds need for production 255000 277500 290000 822500  
add: desired ending direct
material 27750 29000 30000 30000 (300000*10%=30000)
total reqd . Units 282750 306500 320000 852500  
less: beginning direct materials 25500 27750 29000 25500 (255000*10%=25500)
direct materials purchases 257250 278750 291000 827000  
cost per yard 6 6 6 6  
total cost of direct materials 1543500 1672500 1746000 4962000