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Assignment Managg Acc

This document appears to be an assignment question from Bhartiya Vidya Bhavan’s Usha & Laksmi Mittal Institue of Management regarding managerial accounting. The assignment asks the student to analyze utility cost data from Autodesk company over 14 months. The student is asked to: 1) Determine the utility cost equation using the high-low method. 2) Calculate the expected utility cost of producing 120,000 units. 3) Perform a regression analysis using a spreadsheet and discuss any differences from the high-low method results.

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79 views5 pages

Assignment Managg Acc

This document appears to be an assignment question from Bhartiya Vidya Bhavan’s Usha & Laksmi Mittal Institue of Management regarding managerial accounting. The assignment asks the student to analyze utility cost data from Autodesk company over 14 months. The student is asked to: 1) Determine the utility cost equation using the high-low method. 2) Calculate the expected utility cost of producing 120,000 units. 3) Perform a regression analysis using a spreadsheet and discuss any differences from the high-low method results.

Uploaded by

sandeepan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment 1

MANAGERIAL ACCOUNTING

Bhartiya Vidya Bhavan’s


Usha & Laksmi Mittal
Institue of Management
PGDM 2017-19

SUBMITED BY_
SANDEEPAN JHA
SUBMITTED TO- NIDHI SAHORE

Assignment 1
OPERATION RESERCH

Bhartiya Vidya Bhavan’s


Usha & Laksmi Mittal
Institue of Management
PGDM 2017-19

SUBMITED BY_
SANDEEPAN JHA

SUBMITTED TO- DR. Sumit Rastogi

ASSINGNMENT -1
MANAGERIAL ACCOUNTING

QUESTION NO. 1) Autodesk company produces toolboxes used by


construction professionals and homeowners. The company that it does not
have an the understanding of its utility consumption. The company’s
president, George has asked the plant manager and cost accountant to
work together to get information about utilities cost. The two of them
accumulated the following data for the past 14 months ( production volume
is presented volume is presented in units):

UTILITY REQUIRED:
MONTHS PRODUCTION(X) COST(Y)
JANUARY 113000 85600
A. Using the high/ low
FEBRUARY 114000 85800 method , what is the
MARCH 90000 73450 company’s utility cost
APRIL 110000 80000 equation ?
MAY 112000 84900
B. What would be the
JUNE 101000 84550
JULY 104000 85000 expected utility cost of
AUGUST 105000 86050 producing 120,000 units
SEPTEMBER 115000 80950 ?(The relevant range is
OCTOBER 97000 72600
85,000 to 1,25,000 units of
NOVEMBER 98000 69950
DECEMBER 98000 70150 production.)
JANUARY 112000 77150 C. Using the data shown
FEBRUARY 107000 80400 and a spreadsheet
programme a regression analysis . Discuss any difference in the results and
the potential impact on decision making.
Answer . As production unit is Independent Variable as autodesk company
can produce any number of units under its capacity . so it is represented as
‘X’ ,
And the cost is dependent on the number of unit is has produced so it is
represented as ‘Y’.
Now , the equation is in the form of ‘ TC = VC x + FC’....(1) in which
TC = total cost
VC = Variable Cost per unit of output
x = number of unit produced
FC = Fixed Cost

Now , equation 1 can be represented as y = ax + b where b = fixed cost and


a is slope .

a.
STEP1: Find the High production unit by deducing the formula:
= MAX(num1, num2....numN)
STEP 2:Find the Low production unit by deducing the formula :
= MIN(num1,num2,....numN)
STEP 3: Determine the slop ( i.e Variable cost per unit ) of these points
b(slope) = Y max- Y min / X max – X min = variable cost per
unit.....Equation(2)
VC = 0.3
STEP4 : Now put the value of VC in equation 1 and put the total cost Y
max and find the Fixed cost
80950= 0.3 * 115000 + FC
FC = 34500
so Equation is : Y = 34500 + 0.3 X
B.
now in the question RANGE is given that in which Highest quantity is
1,25,000 and the Lowest quantity to be produced is 85,000.
now for producing 85,000 and 1,25,000 Total Cost will be
Y = 34500 + 3.33 * 85000 = 283333.3333
Y = 34500 + 3.33 * 1,25,000 = 416666.6667
difffrence is Y max – Y min = 133333.3333
Then by implication of equation 2 we can find the slope or the Variable
Cost per unit is 3.3333 so for the production of 1,20,000 expected utitlity
so for the production of 1,20,000 expected cost is 399600C. Regression
Analysis:

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