Tutorial 1 – Management Accounting

1.23
2.

a) Planning since we are yet in June and the action will take place since July. There is a wish to
increase the price (around a 30% increase). It might involve budgeting and think about costs and
revenues
b) Controlling = actually implementing the change in the fee by announcing people
c) Planning = decision to update the content
d) Controlling (performance evaluation) = comparing the results they expected with the actual.
results
e) Planning since they are again in the stage of planning, making budgets and thinking about the
revenue and the possible costs they could have If they lower everything

1. The planning part includes making decisions for the company. It involved budgets and planning
the next moves.
The controlling part actually involves taking action. It means changing prices, advertising the campaign
and then gaining all the results. With the results that we have, we can evaluate our performance and
take action if what we did was not good. Based on the feedback from the first controlling action we can
now go again through planning what to change (for example, rising the prices didn’t bring us the
desired results so now we will just plan to decrease them again)

2.13 - Total costs and unit costs

1.
 If they choose Schedule 1, there will be a fixed cost of 8000 that does not depend on the number
of attendees
 If they choose Schedule 2, there will be a:
-> Variable cost of $20*number of participants which depends on how many attendees they have and
lastly
-> The fixed cost of 2000

 If they choose Schedule 3 they will only have variable costs equalling 50*the number of
attendees.

1. (a) 50 attendees
Schedule 1 = 8000 = > Unit cost = 160
Schedule 2 = 2000+ 50*20 = 3000 => Unit cost = 60
Schedule 3 = 50*50 = 2500 => Unit cost = 50
(b) 200 attendeees
Schedule 1 = 8000 => Unit cost = 40
Schedule 2 = 2000 + 20*200 = 2000+4000 = 6000 => unit cost = 30
Schedule 3 = 50*200 = 10000 => unit cost = 50

(c) 500 attendeees

Schedule 1 = 8000 => Unit cost = 16
Schedule 2 = 2000+20*500 = 12000 => Unit cost = 24
Schedule 3 = 50*500= 25000 => Unit cost = 50

1.
No. of passengers Costs (fixed + variable) Unit cost
200 60000 300
250 60000 240
300 60000 200

2. First, 4000 passengers in 15 flights does not reach the 300 limit => costs are 60.000

15 scheduled flights * 60.000 = $ 900.000

The cost/passenger is 900.000/4000 = $225 per passenger

Mention: They need to fill every plane with as close to 300 as possible to get the lowest cost

THEY ALWAYS HAVE TO PAY THE 15000 NO MATTER HOW MANY PASSENGERS THEY
GET ON THE FLIGHT. THEY WILL HAVE DIFFERENT PROFITS BUT THE 15000 IS A FIXED
COST SO IT DOES NOT DEPEND. THE UNIT COSTS DO NOT AFFECT THE TOTAL COSTS

2.18
2.18

I left from the premise that:

- Plant supervisory salary is direct labour cost
- Miscellaneous overhead + marketing +indirect man. Labour = indirect costs
- Depreciation and revenues are in the IS
- Plant utilities and supplies used are direct costs
- And also took into consideration the beg and ending values foe each stock type

2.22
Production = 100 000 units
One unit = two kg of direct materials
Revenues = 873 600
Finished goods ending = 41 940

1. Direct Materials quantity used = 100.000*2 = 200.000 and that costed $280.000.
That means that the cost for 1 kg is = 280.000/200.000 = $1.4/kg
So for the closing balance of direct materials, we have 2000*1.4 = $2800
2. So we know that total costs is $41.940
3. Selling price per unit = 873600/100000 = $8,763
4. Operating profit:
 SCHEDULE OF COSTS OF GOODS MANUFACTURED

Opening WIP 10
Direct Materials used 15 + 325 – 20 = 320
Direct Labour costs 100
Indirect manufacturing costs 35 + 60 + 240 + 80 + 5 + 10 + 30 = 460
Manufactured costs incurred 320+100+220= 640
Closing WIP dec 31st 5
Cost of goods manufactured 10-5+640 = 645
Opening Finished goods Jan 1 70
Cost of goods manufactured 645
Cost of finished goods 70 + 645-55 =660
Closing finished goods dec 31st 55
Revenues 950
COGS 660
GROSS MARGIN 290
Operating costs 240
Net profit 50
A) Direct materials used cost = $280.000
We used in production 200.000kg
We calculate the cost per kg = 1.4 (280000/200000)
2000*1.4 = 2800

B) 41940 / unit cost which also involves a lot of other costs

To calculate unit costs = dir mat used dir man labour plant energy indirect manuf labour costs other
manuf indirect costs = 3086000
Fixed costs = 80000
 466000 / 100000 =4.66 = 9000
SO WE HAVE SOLD 10000-9000 = 91.000

IDEEA E CA NOI LA FINISHED GOODS MAI AVEM SI ALTE COSTS. LA DIRECT

MATERIEALS NU ERAU DAR AICI TREBUIE ADAUGATE TOATE CA SA VEZI PRETUL
PE UNITATE. DUPA PRETUL PE UNITATE IL VEI FOLOSI IMPARTING THE VALUE AT
THE END. Marketing and administrative are not included in the manufacturing

C) Revenue / Units sold = price per unit

Units sold il stim pentru ca ai produs 10000 si ai ramas cu finished goods => you have just
91.000

d) Marketing and administrative costs se baga si ele separate ala operating costs

2.23.

1. Unit cost = 4.66

Selling = 9.6
Sold units = 122000
Finished goods remained is 12000
Units produced = 122000+12000-9000 = 134000-9000 = 125.000
We already have 9000 so we wanna sell 122000 this year and keep 12000 in our stock

2. 9000*9.6 + 121
So you calculate the budget for the number of units you have produced.
The total costs 125000*4.66
In order to calculate the new unit cost because this time you are producing 1250000