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Cpu College School of Graduate Studies Mba Program: Worksheet On Managerial Accounting
Cpu College School of Graduate Studies Mba Program: Worksheet On Managerial Accounting
A. prime cost
B. Total FOH cost
C. Conversion cost
D. Production cost (mfg)
E. Direct cost
F. Indirect cost
2. A fire completely destroyed a plant and its contents on February 26 th. Fortunately certain
accounting records were kept in another building. They revealed the following for 31 st
December 2012 to February 26th2014.
Sales…………………………………………………………$500,000
Direct labor cost…………………………………………… 180,000
Prime cost……………………………………………………..294,000
Gross profit rate………………………………………………….. 20%
DM purchased…………………………………………………160,000
Cost of goods available for sale……………………………….450, 000
DM (12, 31, 2002)……………………………………………..160,000
WIP (12, 31, 2002)……………………………………………..34, 000
F.G (12, 31, 2002)……………………………………………...30, 000
FOH 40% of conversion cost………………………………….. ?
Instruction: Compute the cost of
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3. Anderso construction assembles residential houses. It uses a job costing system with two direct cost
categories (direct materials and direct labor) and one indirect cost pool (assembly support). A direct
labour hours is the allocation base for assembly support costs. In December 2003, Anderson
budgets 2004 assembly support costs to be $8,000,000 and 2004 direct labor hours to be 160,000.
At the end of 2004, Anderson is comparing the cost of several jobs that were started and completed
in 2004.
Laguna Model Mission Model
Construction period Feb – June 2004 May – Oct 2004
Direct material and direct labor are paid for on a contract basis. The costs of each are known when direct
materials are used or direct labor hours are worked. The 2004 actual assembly – support costs were
$6,888,000, and actual direct labor hours were 164,000.
Required:
4. Weston Corporation manufactures a product that is available in both a deluxe and a regular
model. The company has made the regular model for years; the deluxe model was
introduced several years ago to tap a new segment of the market. Since introduction of the
deluxe model, the company’s profits have steadily declined. Sales of the deluxe model have
been increasing rapidly.
Overhead is applied to products on the basis of direct labor-hours. At the beginning of the current
year, management estimated that $3,080,000 in overhead costs would be incurred and the company would
produce and sell 10,000 units of the deluxe model and 50,000 units of the regular model. The deluxe
model requires 2.0 hours of direct labor time per unit, and the regular model requires 1.0 hours. Materials
and labor costs per unit are given below:
Deluxe Regular
Required
a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating
overhead costs to products. Compute the unit product cost for one unit of each model. An intern
suggested that the company use activity-based costing to cost its products. A team was formed to
investigate this idea. . It came back with the recommendation that four activity cost pools be used.
These cost pools and their associated activities are listed below:
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Activity Cost Pool and Activity Measure Estimated Activity
Overhead cost
Deluxe Regular Total
$3,080,000
5. ABC Company produces and sells a single product. The selling per unit of the product is
Birr 72 and the contribution margin ratio is 28% .The Company has budgeted to have
annual fixed expenses of Birr 280,000.
Required:
a) Using the equation method determine the breakeven point in units. 13,889
b) Using the contribution margin method, determine the breakeven point in sales birr.
1millon
c) Determine and interpret the absolute and relative margin of safety assuming that the
company is currently selling 16,000 units annually.
152,000, 10%
d) The company’s management set an annual target before tax profit of Birr 56,000.
Determine the number of units and the sales Birr that must be sold to achieve the planned
target before tax profit.
1200,000
e) The company’s management set an annual target after tax profit of Birr 42,000 where the
tax rate is 40%. Determine the number of units and the sales Birr that must be sold to
achieve the planned after tax profit.
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