Assignment Title Assignment 2

Course Name Principles Of Managerial Accounting

Instructor Dr. Rihab Grassa

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 Exercise 1:
the activity cost rates.

Recommended Cost driver cost drive COST/COST

Activity Costs
cost driver units rate DRIVER UNITS
Production setup Production runs 30,000.00 100 300 30000/100
Order processing Orders 50,000.00 200 250 50000/200
Pounds of
Materials handling 20,000.00 8,000 2.5
materials used 20000/8000
Equipment
depreciation and Machine-hours 60,000.00 10,000 6
maintenance 60000/10000
Quality management Inspections 50,000.00 40 1250 50000/40
Packing and shipping Units shipped 40,000.00 20,000 2 40000/20000
Total overhead   $250,000      

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 Cost out the three products using an activity-based costing system.

  formula Nerds Stars Fashions

Units
  1,000 500 400
produced
direct
materials   $4,000 $2,500 $2,000
costs

(direct labour
direct labor
hour*direct labour hour 1500$ =100*15$ 1500$ =100*15$ 1335$ = 89*15$
cost
rate per hour)

order
(number of order)*per
processing 2000$=8 *250$ 2000$=8 *250$ 1000$=4 *250$
order cost
cost
(number of production
production
run*cost per 600$=2 *300$ 1200$=(4 run*300$) 2400$=8 *300
setup cost
production run)
material (pound material*cost
1000$=400 *2.5$ 500$=200 *2.5$ 500$=200 *2.5$
handling cost per pound of material)
equipment
depreciation 1800$=(300
1800$=(300 machine
and (machine-hours* cost 3000$=500 machine machine
hour*^per machine
maintenance per hour) hour*^per machine hour
hour)
hour*^per
cost machine hour)

quality
(number of inspection * 2500$ = 2 *
management 2500$ = 2 * 1250$ 2500$ = 2 * 1250$
cost per inspection) 1250$
cost

2000$=1000 * 2$ 1000$=500 * 2$ 600$=300 * 2$

packing and (units shipped*cost per
shipping cost unit shipped)
total cost 16600 $ 13000 $ 12135 $
units
1,000 500 400
produced
cost/unit 17 26 30

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 Exercise 2:

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 $

Type of
2800000*20
Cash sales 20% % 3080000*20% 3220000*20 %

560000 $ 616000 $ 644000 $ 1820000 $

2800000*80
Credit sales 80% % 3080000*80% 3220000*80 %
2240000 $ 2464000 $ 2576000 $ 7280000 $

total SALES 2800000 $ 3080000 $ 3220000 $ 9100000 $

Production Budget

Jan feb mar Quater1 total

Sales units 200000 220000 230000 650000 650000
add : closing inventory 138000
20%of next month sales 44000 46000 48000 48000 (240000*20%=48000)
less: opening inventory 40000 44000 46000 40000 130000 (200000*20%=40000)
Units to be produced 204000 222000 232000 658000

Direct Materials Budget

  Jan Feb Mar Quater1  
total production in units 204000 222000 232000 658000  
Fabric required in yard per unit 1.25 1.25 1.25 1.25  
total Fabric req need for
production 255000 277500 290000 822500  
add: closing inventory (10% of
next month production) 27750 29000 30000 (300000*10%=30000)
less: opening inventory 25500 27750 29000 25500 (255000*10%=25500)
direct materials purchases 257250 278750 291000 827000  
6$ 6$ 6$ 6$
cost per yard  
total cost of direct materials 1543500 1672500 1746000 4962000$  

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$ $ $