MOJAKOE

MOdul JAwaban KOEliah

Management Accounting
UTS Semester Genap 2014/2015

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PROBLEM V- Cash Budget-20% (Hint-Easy to Medium)-Time Allotment 30 minutes

The accountant for Atlanta Pizza prepared the following cash budget for the third quarter of 2015.
When the owner was reviewing it, he was eating a deep dish pizza loaded with extra cheese. Some
of the topping inadvertently spilled on to the page and smeared the figures.

in US Dollar

payment of accounts payable July August September Total

cash receipt from sales ? 3,900 5,700 ?
borrowing (repayment) 8,200 10,100 ? ?
cash excess (deficiency) 500 ? (500) ?
beginning cash balance ? (4,100) ? ?
payment of overhead costs 4,500 ? ? ?
minimum cash balance 4,000 4,600 ? 1,300
total cash available 2,500 2,500 2,500 2,500
receive (pay) interest ? ? 19,500 ?
payment of wages expenses 0 0 ? (50)
total cash disbursement 5,000 ? 6,100 ?
ending cash balance 10,300 ? 16,200 ?
? ? ? ?

The computation of Cash Excess (deficiency) after including the minimum cash balance

Construct the figure above using the correct cash budget format and complete the missing numbers
on cash budget (show your calculation), assuming that the accountant has projected a minimum
cash balance at the start of each mont of $2,500. All borrowings, repayments, and investments are
made in even $500 amounts.

(Suggested sequence in doing the exam – No 1,3,5,2, and 4)

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SOLUTION

PROBLEM 1

CVP Analysis

Last year sales 25000 units Total Cost $525000

Last year $25 Fixed Cost $150000
selling price

Total cost = Fixed Cost + Variable Cost

$525000 = $150000 + Variable Cost

Variable Cost = $ 375000

Variable Cost per unit = $375000/25000 units

= $15

Option to improve product:

- Replace the $2.5 part with a $4.5 one, thus increasing variable cost for $2 per unit, making
the variable cost per unit $17
- Purchased a new machine at $24000. 6 years life, no salvage value, straight line depreciation
method. The depreciation expense from the new machine will add to the fixed cost.
- New machine’s depreciation rate is $4000/year

1. BEP point for last year

o Revenue-VC-FC=0
o 25Q – 15Q – 150.000 = 0
o 10Q = 150.000
o Q = 15.000
2. Last year’s operating income is $140.000
o 25Q – 15Q – 150.000 = 140.000
o 10Q = 290.000
o Q = 29.000
3. BEP if sales price held constant, made suggested changes (change parts, purchase machine)
o 25Q – 17Q – 154.000 = 0
o 8Q = 154.000
o Q = 19.250
4. Sales price held constant, made suggested changes, operating income same as last year
o Last year’s operating income:
o 25 (25.000) – 15 (25.000) – 150.000 = $100.000
o This year’s:
o 25Q – 17Q – 154.000 = 100.000

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o 8Q = 254.000
o Q = 31.750
5. Sales price per unit if Game Boy wishes to maintain the same contribution-margin ratio
o Last year’s CM ratio:
o CM/selling price = (25 – 15)/ 25 = 40%
o This year:
o (Selling price – VC) / Selling Price = 40%
o (Selling price – 17) / Selling Price = 4/10
o 10SellingPrice – 170 = 4SellingPrice
o 6SellingPrice = 170
o Selling Price = 170/6 = 28,33

PROBLEM 2

Operating Budget

1. Sales budget for each type of product and total for JULY 2013
JULY
Sales from type 1 750.000.000
Sales from type 2 1.400.000.000
TOTAL 2.150.000.000

2. Production Budget
o FG Inventory: The company’s policy is 80% of the next month’s estimated sales
should be available as ending balance of the previous month’s FG inventory
o June 30, 2013. Type 1 beginning inventory is 4.000 units. Type 2 beginning inventory
is 6.400 units.

PRODUCTION BUDGET

JULY TOTAL
Type 1 Type 2
Forecasted unit sales 5000 8000 13000
Planned ending inventory units 4800 8000 12800
Total Production Required 9800 16000 25800

Beginning FG Inventory 4000 6400 10400

Units to be manufactured 5800 9600 15400

3. Direct Material Purchased Budget

o At each month’s end, PTSB wants to have sufficient materials on hand to produce
next month’s estimated sales.*

JULY
Type 1 Type 2

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Budgeted
Production
in Units 5800 9600
Materials PN101 PN211 PN242 PN101 PN211 PN242
Materials
needed 34800 46400 11600 76800 38400 9600
+ Budgeted
ending DM* 36000 24000 12000 80000 40000 10000

PN101 PN211 PN242

TOTAL
budgeted
DM 227600 148800 43200
- Beginning
Dm -94000 -52000 -18000
Budgeted
DM Puchase 133600 96800 25200
Cost per IDR IDR IDR
unit DM 2,400.00 3,600.00 1,200.00
IDR IDR IDR
320,640,000.00 348,480,000.00 30,240,000.00

4. DL Budget

Type 1 Type 2 TOTAL

Budgeted Production in Units 5800 9600
Forming Hours per unit 0.8 1
Hourly labor
rate IDR 8,000.00 IDR 8,000.00
IDR 37,120,000.00 IDR 76,800,000.00 IDR 113,920,000.00
Assembling Hours per unit 2 3
Hourly labor
rate IDR 5,500.00 IDR 5,500.00
IDR 63,800,000.00 IDR 158,400,000.00 IDR 222,200,000.00
Finishing Hours per unit 0.25 0.5
Hourly labor
rate IDR 6,000.00 IDR 6,000.00
IDR 8,700,000.00 IDR 28,800,000.00 IDR 37,500,000.00
IDR 373,620,000.00

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PROBLEM 3

Sales/Revenue Variance

a. Sales Price Variance

A B C D
Actual price Budgeted Price (A)-(B) Unit Sold (C) x (D)
2300 3600 1300 13500 17550000 (U)

b. Sales Volume Variance

A B C D
Actual Unit Sold Budgeted Unit Sold (A)-(B) Budgeted Price (C)x(D)
13500 10000 3500 3600 12600000 (F)

c. Interpretation
a. Sales Price Variance: Unfavorable sales price variance indicates that sales were
made at a lower average price than the standard. Possible causes include:
 Increasing competition in the market
 Decrease in demand for the product
 Government enforces a policy to lower the price (e.g. ceiling price)
b. Sales Volume Variance: Favorable sales volume variance indicates a higher standard
profit or contribution than the budgeted profit or contribution. Possible causes
include:
 Favorable sales quantity variance (higher number of unit sold than
budgeted)
 Favorable sales mix variance (higher proportion of more profitable products
with higher contribution margin sold than budgeted)

d. Sales Mix variance by type and in total

o Budgeted Sales Mix:
BUDGETED PREMIUM STANDARD
Budgeted Sales 10000 20000
Budgeted Sales Mix 1/3 2/3

Expected mix on actual sales (actual sales x mix) Actual Sales

Premium 22500 x 1/3 7500 13500 Exceed 6000
Standard 22500 x 2/3 15000 9000 Under 6000

Budgeted
CM/unit
Premium 500 x Exceed 6000 3000000 (F)
Standard 400 x Underperform 6000 2400000 (U)
600000 (F)

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e. Sales Quantity Variance

o Budgeted Sales Mix:

BUDGETED PREMIUM STANDARD
Budgeted Sales 10000 20000
Budgeted Sales Mix 1/3 2/3

Expected mix on actual sales (actual sales x mix) Budgeted Sales

Premium 22500 x 1/3 7500 10000 Under 2500
Standard 22500 x 2/3 15000 20000 Under 2500

Budgeted
CM/unit
Premium 500 x Underperform 2500 1250000 (U)
Standard 400 x Underperform 2500 2000000 (U)
3250000 (U)

f. Sales Volume Variance

o 2.650.000 (U)
o Proof check:
PREMIUM STANDARD
Actual Sales 13500 9000
Budgeted Sales 10000 20000
Difference 3500 (11000)
Standard CM 500 400
Diff x Std. CM 1750000 (4400000)
TOTAL 2650000 (U)

g. Interpretation
o Sales Mix Variance: Favorable Sales Mix Variance indicates that a higher proportion
of a more profitable product were sold than what was budgeted. Possibly causes
include:
 Concentration of sales and marketing efforts toward selling the more
profitable product
 Increase in the demand for the higher margin product (where demand is a
limiting factor)
 Increase in the supply of the more profitable products due to example
addition to the product capacity (where supply is a limiting factor)
 Decrease in demand or supply of the less profitable products
o Sales Quantity Variance: Unfavorable sales quantity variance indicates sold less
number of goods on an aggregate basis compared to the total number of units
b.udgeted to be sold during the period. Possible causes include
 Decline in demand side factor where demand is a limiting factor such as by a
reduction to an overall demand in the industry (maybe a cheaper and better
substitute of some kind appeared)

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 Decrease in quantity and quality of supply side factor where excess demand
exist in the market for example due to unavailability of a critical
manufacturing component or raw material, or a decline in productivity of
the workforce (check in labor efficiency variance)

PROBLEM 4

Standard Costs

1. Determine the fixed overhead spending variance

o Fixed overhead spending variance = Actual Fixed overhead – Budgeted Fixed
Overhead
o Hint: Use high low method!
o Budgeted:
( ) ( )
 V.FOH/unit = ( ) ( )

 V.FOH/unit =
V.FOH/unit (Budgeted) = $4/hr
F.FOH => Total FOH – VFOH
= 120.000 – 4 (20.000)
f= 120.000 – 80.000
..= $40.000+
o Fixed Overhead Spending Variance = 41.335 – 40.000
= 1.335 (U)
2. Determine the variable overhead spending variance
o Variable OH Spending variance = Actual Hours Worked x (Actual Overhead Rate –
Standard Overhead rate)
o Actual Hours Worked => F.FOH + V.FOH rate (actual hours worked) = Total actual OH
o Standard OH rate (Fixed + Variable) is $6.25
o $6.25 =
o X = 17.778 (Budgeted Labor Hour)
o Variable OH Efficiency Variance = (Actual LH – Budgeted LH) x V.FOH rate
o -3200 = ( Actual LH – 17.778) x 4
o -800 = Actual LH – 17.778
o Actual LH = 16.978
o Variable OH Spending Variance = 70.000- (16.978x4) = 2.088 (U)
3. Determine the standard direct labor per unit of product
o = = 4.445
4. Prepare the necessary journal related to factory overhead

Variable Overhead Control 70000

Various Accounts 70000
(to record actual variable cost
incurred)

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Fixed Overhead Control 41335
Various Accounts 41335
(to record actual fixed overhead)

Work-in-Process Inventory 112862

Variable Overhead Allocated 71112
Fixed Overhead Allocated 41750
(to record overhead allocated)

Variable Overhead Allocated 71112

Variable Overhead Spending
Variance 2088
Variable Overhead Control 70000
Variable Overhead Efficiency
Variance 3200
(to record variable overhead
variance)

Fixed Overhead Allocated 38250

Fixed Overhead Spending variance 1335
Fixed Overhead Volume Variance 1750
Fixed Overhead Control 41335
PROBLEM 5

Cash Budget

The format in the problem is quite the mess, so here is a breakdown

JULY AUGUST SEPTEMBER TOTAL

Beginning Cash Balance 4500 2900 2900 10300

Cash Received from Sales 8200 10100 16600 34900
TOTAL Cash Available 12700 13000 19500 45200

Disbursement
Payment for Wages Payable 5000 6100* 6100 17200
Payment for Accounts Payable 1300 3900 5700 10900
Payment for Overhead 4000 4600 4400 13000
TOTAL Cash Disbursement 10300 14600 16200 41100
Minimum Cash Balance 2500 2500 2500 2500
Cash Excess (Deficiency) -100 -4100 800 -3400

Financing
Borrowing (repayment) 500 4500 -500 4500
Receive (pay) interest 0 0 -50 -50
Ending Cash Balance 2900 2900 2750 8550

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*Payment for Wages Payable for August is written as “-“ in the problem, which might lead to a less-
than-correct interpretation that “Payment for Wages Payable” for August is 0. But for the problem
to actually have a solution this part must have a value.

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 March 23

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 UNIVERSITAS OF INDONESIA
FACULTY OF ECONOMICS – DEPARTMENT of ACCOUNTING

MID EXAM
EVEN SEMESTER 2012/2013
SUBJECT : MANAGEMENT ACCOUNTING (ACCT 12103)
LECTURER : TEAM LECTURER
TYPE : CLOSED BOOK
DATE : APRIL 12, 2013
DURATION : 180 MINUTES

No. 1 Cost-Volume-Profit Analysis (15 points)

The following is the data of AMZ Corporation for April 2013:

Price per unit $ 95.00

Variable costs per unit:
Direct materials $ 10.00
Direct labor $ 15.00
Variable OH $ 7.00
Variable selling and marketing $ 3.00
Fixed costs:
Fixed manufacturing costs $ 450,000.00
Fixed general and administration
costs $ 175,000.00
Fixed marketing costs $ 275,000.00

Required:
1. Calculate break even in units and revenue for April 2013. (2 points)
2. If AMZ is targeting to achieve operating income $1,500,000, how many units it must sell
to achieve it? (3 points)
3. Suppose that the company income tax is 25%. If AMZ is aimed to achieve net income
$1,350,000 how much revenue (in $) it must earned to achieve it? (5 points)
4. To increase sales, AMZ is planning to make an aggressive marketing campaign. To do
so, the fixed marketing cost must be increased by 30%. AMZ is aimed to achieve targeted
operating income $2,000,000. How much new price to increase assuming AMZ wants to
achieve the same quantity sold as in requirement (2). (5 points)

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NO. 2. Cash Budget (20 points)

Sunrise’s is an independently owned mayor appliance and electronics discount chain with seven
stores located in a Midwest metropolitan area. Rapid expansion has created the need for careful
planning of cash requirement to ensure that the chain is able to replenish stock adequately and
meet payment schedules to creditors. Tommy, founder of the chain, has established a banking
relationship that provides a $200,000 line of credit to Sunrise’s. The bank requires that a
minimum balance of $8,200 be kept in the chain’s checking account at the end of each month.
When the balance goes below $8,200, the bank automatically extends the line of credit in
multiples of $1,000 so that the checking account balance is at least $8,200 at month-end.

Sunrise’s attempts to borrow as little as possible and repays the loans quickly in multiples of
$1,000 plus 2 percent monthly interest on the entire loan balance. Interest payments and any
principal payments are paid at the end of the month following the loan. The chain currently has
no outstanding loans.

The following cash receipts and disbursements data apply to the fourth quarter of the current
calendar year.

Estimated beginning cash balance $ 8,800

Estimated Cash Sales:
October 14,000
November 29,000
Sales on Account:
July (actual) 130,000
August (actual) 104,000
September (actual) 128,000
October (estimated) 135,000
November (estimated) 142,000

Projected cash collection of sales on account is estimated to be 70% in the month following the
sale, 20% in the second month following the sale, and 6% in the third month following the sale.
The 4% beyond the third month following the sale is determined to be uncollectible. In addition,
the chain is scheduled to receive $13,000 cash on a note receivable in October.
All inventory purchases are made on account as the chain has excellent credit with all vendors
because of a strong payment history. The following information regarding inventory purchases is
available.

Inventory Purchases

September (actual) $ 120,000

October (estimated) 100,000
November (estimated) 128,000

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Cash disbursement for inventory are made in the month following purchase using an average
cash discount of 3 percent for timely payment. Monthly cash disbursements for operating
expenses during October, November, and December are estimated to be $38,000, $41,000, and
$46,000, respectively. (adopted from Mowen & Hansen 2011)

Required:
1. Prepare the Sunrise’s cash budget for the months of October and November (15 points)
2. Suppose you are preparing a budgeted balance sheet as of October 31, please show the
balance for the following account (5 points):
a. Cash
b. Account Receivable
c. Accounts Payable

No 3 . Inventory Costing (10%)

PT. Primatron manufactures and sell LED TV 32 inch. Below are data regarding company’s
production on January and February 2013:

January February
Unit Beginning Inventory 0 30
Unit Produced 100 80
Unit Sold 70 80

Variable Manufacturing Cost 900.000 900.000

per unit (Rp)
Variable Marketing Cost per 600.000 600.000
unit sold (Rp)
Fixed Manufacturing Cost (Rp) 80.000.000 80.000.000
Fixed Marketing Cost (Rp) 40.000.000 40.000.000

Selling price of LED TV of 32 inch per unit is Rp 5.000.000. Fixed manufacturing cost
computed with the assumption that production capacity is 100 units per month. Production
volume variance will be closed to cost of goods sold account.

Required:
1. Compute operating income for January and February if PT. Primatron uses absorption
costing? (4 points)
2. Compute operating income for January and February if PT. Primatron uses Variable
costing? (4 points)
3. Can you explain the operating income difference? Show your computation. (2 points)

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No. 4. Varians Analysis (25 points)

1. Following information are provided for Macy Inc. :

Standard cost per unit:

Direct material ………………………….. 2,5 pounds @ Rp. 33.000 / pound
Direct labor …………………………….. 0,25 hour @ Rp. 280.000 / hour
Variable overhead is applied on the bases of direct labor hours at Rp. 238.000 /
direct-labor hour

Production budget:
Direct material ………………………….. Rp. 3.300.000.000
Direct labor …………………………….. Rp. 2.800.000.000
Manufacturing overhead ……………… Rp. 3.980.000.000

Actual cost:
Direct material purchased and used ……. Rp. 3.774.000.000 (102,000 pounds)
Direct labor ……………………………. Rp. 2.800.000.000 (10,700 hours)
Manufacturing overhead ……………… Rp. 4.080.000.000 (60% is variable)

The company’s actual production and sales was 42.000 units, which is 20% of market share.
Average selling price was Rp. 340.000.
The company expected to get 25% market share. The expected market for this product is
160,000 units. Its selling price is budgeted at Rp. 350.000.

Required:
(a) Prepare a complete variance report consisting of (20 points):
i. Direct-material price & quantity variances
ii. Direct-labor rate & efficiency variances
iii. Variable-overhead spending & efficiency variances
iv. Fixed-overhead spending & production volume variances
v. Sales price variance
vi. Sales volume variance
vii. Sales quantity variance
viii. Market share and market size variance
ix. The flexible budget variance
(b) Give your analysis and opinion regarding the performance of the management of Macy
Inc. (5 points)

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No. 5. Operational Budget (20 Points)

Kitchen Appliance Company produces and sells two kitchen appliances : Mixers and
Doughmakers. In Juli 2012, Kitchen’s budget department gathered the following data to meet
budget requirements for 2013.

2013 Projected Sales

Product Units Price (in 000 Rp)
Mixers 120.000 Rp. 150
Doughmakers 80.000 500

2013 Inventories (Units)

Product Expected 1/1/13 Desired (31/12/13)
Mixers 30.000 40.000
Doughmakers 8.000 10.000

To produce one unit of each product, the following major internal components are used (in
addition to the plastic housing for products, which is subcontracted in a subsequent operation):

Component Mixers Doughmakers

Motor 1 1
Beater 2 4
Fuse 3 3

Projected data for 2013 with respect to components are as follows:

Component anticipated purchase expected inventory Desired inventory

price (in 000 Rp) (1/1/13) (31/12/13)
Motor Rp 50 4.000 7.200
Beater 5 42.000 48.000
Fuse 10 12.000 15.000

Projected direct labor requirements for 2013 and rates are as follows:

Product Hours per Unit Rates per Hour (in 000 Rp)
Mixers 2 Rp 35
Doughmakers 3 45

Manufacturing overhead is applied at a rate of Rp 25.000 per direct labor hour.

Based on the above projections and budget requirements for 2013 for Mixers and Doughmakers,
prepare the following budget for 2013:
a. Revenue Budget (3 points)
b. Production budget (3 points)

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 c. Direct material purchased budget ( in quantities and in dollars) (6 points)
d. Direct manufacturing labor budget (3 points)
e. Budgeted finished goods inventory at December, 31, 2013. (5 points)

No. 6. Customer Profitability Analysis (10 Points)

Bob's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here,
two or more of the movie videos are sold as a single package. Managers at Bob's are keenly
interested in individual product-profitability figures. Information pertaining to its three bundled
products and the stand-alone selling prices of its individual products is as follows:

Type of Stand-Alone Packaged

Cost Package
Video Selling Price, Price
Comedy $15 $2.00 Comedy & Action $20
Action $10 $1.50

Required:
Allocate the $25 packaged price of Comedy and Action, using:
a. The stand-alone revenue-allocation method, with selling prices as the weights. (2 points)
b. The incremental revenue-allocation method. Assuming Comedy is the primary product,
followed by Action. (3 points)
c. The Shapley value method. Assuming equal unit sales between Comedy and Action. (3
points)
d. Which method will you recommend? Explain. (2 points)

-------- GOOD LUCK ----------

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Answer
No. 1 Cost-Volume-Profit Analysis
Data of AMZ Corporation for April 2013 :
Price per unit : $ 95
Variable costs per unit : $ 35 ( $ 10 + $ 15 + $ 7 + $ 3)
Fixed costs : $ 900,000 ( $ 450,000 + $ 175,000 + $ 275,000 )

1. Break even in units and revenue for April 2013 ?

Break even point (BEP) is that quantity of output sold at which total revenues equal total
costs-that is, the quantity of output sold that results in $ 0 of operating income.

Formula : Revenue - Variable Cost - Fixed cost = Operating Income

(Selling price x Quantity of units sold) - (Variable cost per unit x Quantity of units sold)
- Fixed costs = Operating income

Answer :
Break even in units :
Revenue - Variable Cost - Fixed cost = Operating Income
95Q - 35Q - $900,000 = 0
60Q = $900,000
Q = 15.000 units

Break even revenue :

Revenue = Selling price x Quantity of units sold
Revenue = $95 x 15.000 units
Revenue = $1,425,000

2. Revenue - Variable Cost - Fixed cost = Operating Income

95Q - 35Q - $900,000 = $ 1,500,000
60Q = $ 2,400,000
Q = 40.000 units

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3. Net income = $ 1,350,000 (After tax 25 %)
$ 1,350,000
Income taxes =( 75
X 25)

= $ 450,000

Operating income = Net income + income tax

= $ 1,350,000 + $ 450,000 = $1,800,000

Revenue - Variable Cost - Fixed cost = Operating Income

95Q - 35Q - $900,000 = $ 1,800,000
60Q = 2,700,000
Q = 45.000 units

Revenue = Selling price x Quantity of units sold

Revenue = $95 x 45.000 units
Revenue = $ 4,275,000

4. New Data of AMZ Corporation for April 2013:

Price per unit : $ 95
Variable costs per unit : $ 35
Fixed costs (Fixed marketing cost must be increased by 30%) : $ 982,500*
*( $ 450,000 + $ 175,000 + $ 275,000 x 130%)

Q = 10.000 units (assuming AMZ wants to achieve the same quantity sold as in
requirement (2)).
Revenue - Variable Cost - Fixed cost = Operating Income
40.000P – 40.000 x $ 35 - $ 982,500 = $ 2,000,000
40.000P – $ 1.400.000 - $ 982,500 = $ 2,000,000
40.000P = $ 4,382,500
P = $ 109.56

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NO. 2. Cash Budget

1. Sunrise’s cash budget for the months of October and November

Sunrise Co.

Cash Budget

For the Month Ending October 31 and Nov 30, 20x1

October November

Beginning Cash Balance $ 8.800,00 $ 8.600,00

Cash collection

From October/ November Cash Sales $ 14.000,00 $ 29.000,00

From September/ October Sales $ 89.600,00 $ 94.500,00

From Agustus/ September Sales $ 20.800,00 $ 25.600,00

From July/ Agustus Sales $ 7.800,00 $ 6.240,00

Collection of Note Receivable $ 13.000,00

Total Cash Receipt $ 154.000,00 $ 163.940,00

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 Cash Disbursement

For Supplier $ 116.400,00 $ 97.000,00

Operating Expenses: $ 38.000,00 $ 41.000,00

Total Cash Disbursement $ 154.400,00 $ 138.000,00

Minimum Cash balance $ 8.200,00 $ 8.200,00

Total Cash Needed $ 162.600,00 $ 146.200,00

Cash Deficiency $ (8.600,00) $ 17.740,00

Borrowing/ Payment $ 9.000,00 $ 9.360,00

Ending Cash Balance $ 8.600,00 $ 16.580,00

2. Balance for the cash, account receivable, and account payable

On Balance Sheet 31 October

Cash $ 8.600,00
Account Receivable $ 169.120,00*
Accounts Payable $ 97.000,00

*Account Receivable = ((6% x $104.000) + (20% x $128.000) + (6% x $ 128.000) +

(70% x $ 135.000) + (20% x $ 135.000) + (6%x $135.000))

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 No 3 . Inventory Costing

1. Absorption Costing

January February
Revenues : Rp 5.000.000,- x 70 unit ; 80 unit 350.000.000 400.000.000
Variable cost of goods sold :
Beginning inventory : Rp 1.700.000,- x 0 unit ; 30 unit 0 51.000.000
Variable manufacturing costs : Rp 900.000,- x 100 unit ; 80 unit 90.000.000 72.000.000
Alocated fixed manufacturing costs : Rp 800.000,- x100 unit ; 80 unit 80.000.000 64.000.000
Cost of goods available for sale 170.000.000 187.000.000
Deduct ending inventory : Rp 1.700.000,- x 30 unit ; 30 unit (51.000.000) (51.000.000)
Adjustment for production volume* 0 16.000.000
Cost of goods sold 119.000.000 152.000.000
Gross margin 231.000.000 248.000.000
Variable marketing costs : Rp 600.000,- x 70 unit ; 80 unit 42.000.000 48.000.000
Fixed marketing cost 40.000.000 40.000.000
Operating income 149.000.000 160.000.000

* Adjustment for production volume :

January : 80.000.000 - (800.000 x 100 unit) = 0

February : 80.000.000 - (800.000 x 80 unit) = 16.000.0000

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 2. Variable Costing

January February
Revenues : Rp 5.000.000,- x 70 unit ; 80 unit 350.000.000 400.000.000
Variable cost of goods sold :
Beginning inventory : Rp 900.000,- x 0 unit ; 30 unit 0 27.000.000
Variable manufacturing costs : Rp 900.000,- x 100 unit ; 80 unit 90.000.000 72.000.000
Cost of goods available for sale 90.000.000 99.000.000

Deduct ending inventory : Rp 900.000,- x 30 unit ; 30 unit (27.000.000) (27.000.000)

Variable cost of goods sold 63.000.000 72.000.000
Variable marketing costs : Rp 600.000,- x 70 unit ; 80 unit 42.000.000 48.000.000
Contribution margin 245.000.000 280.000.000
Fixed manufacturing cost 80.000.000 80.000.000
Fixed marketing cost 40.000.000 40.000.000
Operating income 125.000.000 160.000.000

3. January February
1. Absorption costing operating income Rp149.000.000 Rp160.000.000
2. Variable-costing operating income Rp125.000.000 Rp160.000.000
3. Difference : (1) -(2) Rp24.000.000 Rp0

The difference between operating income under arbsorption costing and variable costing can
be computed by this formula which focuses on fixed manufacturing costs in beginning
inventory and ending inventory.

Fixed manufacturing costs Fixed manufacturing costs

Absorption costing Variable costing in ending inventory in beginning inventory
operating income - operation income = under absorption costing - under absorption costing
Jan Rp149.000.000 - Rp125.000.000 = Rp 800.000 x 30 units - Rp 800.000 x 0 units
Rp24.000.000 = Rp24.000.000

Feb Rp160.000.000 - Rp160.000.000 = Rp 800.000 x 30 units - Rp 800.000 x 30 units

Rp0 = Rp0

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 We could alternatively look at fixed manufacturing costs in units produced and units sold.
Fixed manufacturing costs Fixed manufacturing costs
Absorption costing Variable costing inventoried in units produced in COGS
operating income - operation income = under absorption costing - under absorption costing
January Rp149.000.000 - Rp125.000.000 = Rp 800.000 x 100 units - Rp 800.000 x 70 units
Rp24.000.000 = Rp24.000.000

February Rp160.000.000 - Rp160.000.000 = Rp 800.000 x 80 units - Rp 800.000 x 80 units

Rp0 = Rp0

No. 4. Varians Analysis

a. A complete variance report consisting of :

i. Direct-material price & quantity variances

(Actual input quantity x Actual Actual input quantity x Budgeted (Budgeted input quantity for actual
Price ) Price) output x Budgeted Price)

102.000 pounds x Rp 37.000,- 102.000 pounds x Rp 33.000,- 42.000 units x 2,5 pounds x Rp
/pound /pound 33.000,-/pound

= Rp 3.774.000.000,- = Rp 3.366.000.000,- = Rp 3.465.000.000,-

Direct Material Price Direct Material Efficiency

Variance Variance

Rp 408.000.000,- (U) Rp 99.000.0000,- (F)

Flexible Budget
Variance

Rp 309.000.000,- (U)

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ii. Direct-labor rate & efficiency variances

(Actual input quantity x Actual (Actual input quantity x Budgeted (Budgeted input quantity for actual
Price ) Price) output x Budgeted Price)

10.700 hours x Rp 10.700 hours x Rp 280.000,-/hour 42.000 units x 0.25 hour x Rp

261.682,243/hour 280.000,-/hour
= Rp 2.996.000.000,-
= Rp 2.800.000.000,- = Rp 2.940.000.000,-

Direct Labor Price Direct Labor Efficiency

Variance Variance

Rp 196.000.000,- (F) Rp 56.000.0000,- (U)

Flexible Budget
Variance

Rp 140.000.000,- (F)

iii. Variable-overhead spending & efficiency variances

(Actual input quantity x Actual (Actual input quantity x Budgeted (Budgeted input quantity for actual
Price ) Price) output x Budgeted Price)

60% x Rp 4.080.000.000,- 10.700 hours x Rp 238.000,- 42.000 units x 0.25 hour x Rp

238.000,-
= Rp 2.448.000.000,- = Rp 2.546.600.000,-
= Rp 2.499.000.000,-

Price/Rate Variance Efficiency/ Quantity Variance

Rp98.600.000,- (F) Rp 47.600.0000,- (U)

Flexible Budget
Variance

Rp 51.000.000,- (F) and comment at mojakoe post

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 iv. Fixed-overhead spending & production volume variances

Actual Cost Budgeted Cost Flexible Budget Allocated Fix

Incurred Incurred Overhead
Q = 25 % x 160.000
(100-60)% x Rp Q = 42.000 units units = 40.000 units 0.25 x 42.000 units x
4.080.000.000,-
Rp 1.600.000.000,- 160.000
Rp 1.600.000.000,-*
= Rp 1.632.000.000,-
Rp 1.680.000.000,-

FOH Spending Never a variance Production-volume variance

variance
Rp 80.000.000,- (F)
Rp 32.000.000,-
(U)

Flexible Budget
Variance

Rp 32.000.000,- (U)

*VOH Production budget = 25% x 160.000 units x 0.25 hour x Rp 238.000,- = Rp 2.380.000.000,- ;

maka FOH = Rp 1.600.000.000,- ( Rp 3.980.000.000 - Rp 2. 380.000.000)

v. Sales price variance

Sales price variance = (Actual Price – Budgeted Price) x Actual Quantity
Sales price variance = (Rp 340.000 – Rp 350.000) x 42.000 units
Sales price variance = Rp 420.000.000 (U)

vi. Sales volume variance

Sales volume variance = (Actual quantity – Budgeted quantity) x Budgeted
contribution margin
Sales volume variance = (42.000 – 40.000) x Rp 138.000* = Rp 276.000.000,- (F)

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 *Budgeted contribution margin = Rp 350.000 – (2.5 x Rp 33.000) – (0.25 x
280.000) – (0.25 x Rp 238.000) = Rp 138.000,-

vii. Sales quantity variance

Sales quantity variance = sales volume variance as the company only
produced and sold one type of product

viii. Market share and market size variance

Actual Market Size x Actual Actual Market Size x Budgeted Budgeted Market Size x Budgeted
Market Share x Budgeted CM Market Share x Budgeted CM Market Share x Budgeted CM
/unit /unit /unit

= 210.000 x 20% x Rp 138.000,- = 210.000 x 25% x Rp 138.000,- = 160.000 x 25 % x Rp 138.000,-

= 5.796.000.000 = 7.245.000.000 = 5.520.000.000

Market share variance Market size variance

1.449.000.000 (U) 1.725.000.000 (F)

Sales volume
variance

276.000.000 (F)

*Actual Market Size = 42.000/20% = 210.000

ix. The flexible budget variance

The flexible budget variance consist of Selling price variance, DM variance,
DML Variance, MOH Variance.
Flexible budget variance = (Rp 309.000.000,- ) + Rp 140.000.000,- + Rp
51.000.000,- + (Rp 32.000.000,- ) + ( Rp 420.000.000,-) = 570.000.000 (U)

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 b. Analysis and opinion regarding the performance of Macy Inc
Macy Inc planned to produce 40.000 units, but actually produced 42.000 units. The
favorable production-volume variance represents efficient use of setup capacity. But,
the problem is Macy inc have earned lower operating income by selling 42.000 units
at a lower price than 40.000 units at a higher price. So, Macy’s manager should
interpret the production volume variance cautiously because it does not consider
effects on selling prices and operating income.

No. 5. Operational Budget

a. Revenue Budget
Kitchen Appliance Company
Revenue Budget
For the Year Ending December 31, 2013

Units Selling Price Total Revenues

Mixers 120.000 Rp150.000,00 Rp18.000.000.000,00
Doughmakers 80.000 Rp500.000,00 Rp40.000.000.000,00
Total Rp58.000.000.000,00

b. Production budget

Kitchen Appliance Company

Production Budget (in units)
For the Year Ending December 31, 2013
Product
Mixers Doughmakers
Budgeted unit sales 120.000 80.000
Add targeting ending finished goods inventory 40.000 10.000
Total required units 160.000 90.000
Deduct beginning inventory (30.000) (8.000)
Units of finished goods to be produced 130.000 82.000

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c. Direct material purchased budget ( in quantities and in dollars)

Kitchen Appliance Company

Direct Material Usage Budget in Quantity and Dollars
For the Year Ending December 31, 2013

Material
Motor Beater Fuse Total
Physical Units Budget
Direct materials required for Mixers 130.000 260.000 390.000
(130.000 units x 1 motor, 2 beaters, and 3 fuses)
Direct materials required for Doughmakers 82.000 328.000 246.000
(82.000 units x 1 motor, 4 beaters, and 3 fuses)
Total quantity of direct materials to be used 212.000 588.000 636.000

Cost Budget
Available from beginning direct materials inventory
(under a FIFO cost-flow assumption)
Motor : 4.000 units x Rp 50.000,- Rp200.000.000,00
Beater : 42.000 units x Rp 5.000,- Rp210.000.000,00
Fuse : 12.000 units x Rp 10.000,- Rp120.000.000,00
To be purchased for this period
Motor : (212.000-4.000 units) x Rp 50.000,- Rp10.400.000.000,00
Beater : (588.000 - 42.000) x Rp 5.000,- Rp2.730.000.000,00
Fuse : (636.000 - 12.000) x Rp 10.000,- Rp6.240.000.000,00
Direct materials to be used this period Rp10.600.000.000,00 Rp2.940.000.000,00 Rp6.360.000.000,00 Rp19.900.000.000,00

Kitchen Appliance Company

Direct Material Purchase Budget
For the Year Ending December 31, 2013

Material
Motor Beater Fuse Total
Physical budget
To be used in production 212.000 588.000 636.000
Add target ending direct material
inventory 7.200 48.000 15.000
Total requirements 219.200 636.000 651.000
Deduct beginnning inventory 4.000 42.000 12.000
Purchase to be made 215.200 594.000 639.000

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 Cost budget
Motor : 215.200 units x Rp 50.000,- 10.760.000.000
Beater : 594.000 x Rp 5.000,- 2.970.000.000
Fuse : 639.000 x Rp 10.000,- 6.390.000.000
Purchases 10.760.000.000 2.970.000.000 6.390.000.000 20.120.000.000

d. Direct manufacturing labor budget

Kitchen Appliance Company

Direct Manufacturing Labor Budget
For the Year Ending December 31, 2013

Output Units Total Hourly Wage

Produced DLH/unit hours Rate Total
Mixers 130.000 2 260.000 Rp35.000,00 Rp9.100.000.000,00
Doughmakers 82.000 3 246.000 Rp45.000,00 Rp11.070.000.000,00
Total 506.000 Rp20.170.000.000,00

e. Budgeted finished goods inventory at December, 31, 2013.

Kitchen Appliance Company

Budgeted Finished Goods Inventory
For the Year Ended December 31, 2013
Quantity Cost/Unit Total
Mixers 40.000 Rp210.000,00 Rp8.400.000.000,00
Doughmakers 10.000 Rp310.000,00 Rp3.100.000.000,00
Total Rp 11.500.000.000,00

No. 6. Customer Profitability Analysis

A. The stand-alone revenue-allocation method, with selling prices as the weights

$ 15
- Comedy = $ 25 x 20 = $ 12

$ 10
- Action = $ 25
x 20 = $ 8

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B. The incremental revenue-allocation method. Assuming Comedy is the primary
product, followed by Action.

Cumulative Revenue
Product Revenue Allocated
Allocated
Comedy $15 $ 15
Action $5 $ 20
Total Revenue Allocated $20

C. The Shapley value method. Assuming equal unit sales between Comedy and Action.
First step – Primary product : Comedy
Cumulative Revenue
Product Revenue Allocated
Allocated
Comedy $15 $ 15
Action $5 $ 20
Total Revenue Allocated $20

Second step – Primary product : Action

Cumulative Revenue
Product Revenue Allocated
Allocated
Action $10 $ 10
Comedy $10 $ 20
Total Revenue Allocated $20

Third step – If bob’s movie store sells equal quantities of Action videos and movie
videos, then the shapley value method allocates to each product the average of the
revenues allocated as the primary and first incrimental products:

Action ($5+$10) : 2 = $ 7.5

Comedy ($15+ $ 10) : 2 = $ 12.5
Total $ 20

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D. Which method will you recommend?
The stand-alone revenue-allocation method allocates bundled revenues
using product-specific information on the bundle of products as the weights to
allocate the bundled revenues to the individual products. This method creates the
least dispute among managers. The incremental revenue-allocation method
ranks the individual products in the bundled product according to criteria
determined by management. This ranking is then used to allocate the bundled
revenues to individual products. One problem is how to determine the ranking.
Individual product managers want to ranked first so that as much of the revenue as
possible is allocated to their product. This can result in disputes between
managers. Shapley method has similar character with incremental but giving
more focus on weight of each quantity sales. Therefore, it's better to use stand
alone method.

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Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

MOJAKOE

AKUNTANSI MANAJEMEN

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1|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

MID TERM EXAMINATION

SEMESTER GENAP 2010/2011

Soal 1 (10%) - Regression, sudah dipelajari di AB.

Soal 2 (20%)

Below Information was taken from Jetstar’s website which was sent to all of the subscribers :

$1 FARES ON SALE IN APRIL!

In April 2011, we will have thousand of $1 sale fares to selected Australian Jetstar destination.
Other incredible sale fares to selected Australian and International destinations will also be
available in this exclusive sale. Please note that $1 fares will not be available to/from western
Australia and Northern territory. Book any return flight online at www.jetstar.com.au between
Tuesday 1 February and midnight Sunday 20 February 2011 where return travel is completed
between Tuesday 1 February and Thursday 31 March 2011.

Required :

1. You are asked to give a critical analysis on how could an airline compay charge $1 fare to
certain destinations in Australia?
2. What is (are) the purpose(s) of this airline company in providing a cheap fair like this to
their loyal customers?
3. How could they cover the costs?

ETHICS FOR CVP ANALYSIS

PT Melati, a company which produces plastic bags experiences poor profitability lately and is
considering to reduce its variabloe costs to 51% of revenues by reducing the costs related to
disposal of wasted plastic management. The president of the compny is concerned that this would
potentially expose the company to environmental liabilities in the future.
These are the conversations between the president and the accounting manager in the company :
President: “We would need to estimate some of the potentoal environmental costs and analyse
them”
Manager: “We cannot do this as we are not violating the law, there is a possibility that we might
incur environmental costs in the future and if we bring them now, the proposal in reducing the
costs will be rejected by the Senior Management Group”
Furthermore, the manager explained: “The market is quite tight and we are in a serious problem
and otherwise we need to shut down the company soon”
Below are some additional information about the company in 2011 :
Sales Revenue Rp 500,000,000
Variable Costs (Rp 300,000,000)
Fixed Costs (Rp 216,000,000)
Operating Income (Rp 16,000,000)
Required:

2|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

1. Calculate Breakeven sales for the company in 2011

2. Calculate the company’s breakeven revenue if variable costs were reduced ro 51% to sales
revenue
3. Calculate the company’s operating income if variable costs were reduced to 51% to sales
revenue
4. Give your comments about their decision in reducing variable costs for the company in the
long run.

Soal 3 (25%)
PT Perkasa Mutiara Teknik produces and sells lorries for the plantation. PT Perkasa manufactures
a single model, Braja. On October 2010, PT starts prepare budget for 2011. PT Perkasa expects to
sell 2,500 during 2011 at an estimated price Rp 5,000,000 per lorry. The company expects 2011
beginning inventory of 300 lorries and would like end 2011 with 350 lorries
Below Materials and Labor Requirements and the related price/rate.
2010 2011
Direct Material Per lorry
Cost per DM Unit/hour Cost per DM Unit/hour
Steel 5 Unit Rp295.000 Rp310.000
Metalic Cube 7 Unit Rp56.000 Rp61.000
Direct Labor per lorry 6 Jam Rp150.000 Rp180.000
The company expects 2011 beginning direct material inventory of 3100 units and ending
inventory 2600 units for steel, beginning direct material inventory of 1500 units and ending
inventory 2900 units for metalic tube.
Variable Manufacturing Overhead is Rp 70,000 per labor hour. There are also Rp 620,000,000 in
fixed manufacturing overhead costs budgeted for 2011. The company combines both variable and
fixed manufacturing overhead into a single rate based on direct manufacturing labor hours.
Variable marketing costs are allocated at the rate Rp 2,900,000 per sale visit. The marketing plan
calls for 36 sales visits during 2011. Finally, there are Rp 340,000,000 in fixed nonmanufacturing
cost budgeted for 2011
The inventoriable unit cost for ending finished good inventory on December 31, 2010 is Rp
3,150,000. Assume PT Perkasa uses a FIFO Inventory method for both direct materials and
finished good. Ignore work in process in your calculations.
Requirements :
Prepare 2011 budget for :
a. Revenue Budget
b. Production Budget
c. Direct Material Usage and Purchases Budget
d. Direct Labor Budget
e. Manufacturing Overhead Budget
f. Budgeted Manufacturing Overhead Rate
g. Budgeted Manufacturing Overhead cost per output
h. Budgeted Manufacturing Cost per unit
i. Prepare Ending Inventory budget for direct material and finished good
j. Prepare cost of good sold budget
k. Prepare budgeted income statement

3|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

Soal 4 (20%)
Champion Hardware is a hardware wholesalre. All sales are credit sales with the term of payment
5/10, EOM. Information about the store’s operation follows :
- December 2010 sales amounted to $400,000
- Sales are budgeted at $440,000 for January 2011 and $400,000 for february 2011
- Collections are expected to be 40% in the month ofsale within the discount period, 20%
also in the month of sale but after the discount period, and 38% in the month following the
sale. Two percentof sales are expected to uncollectible. Bad Debt Expense is recognized
monthly.
- Costof Goods Sold is 75% of sales.
- A total of 80% of the merchandise for resale is purchased in the month of the sale.
Payment for merchandise is made in the month following the purchase. The company
always take the benefit of 2% discount offered by the supplier for payment before the 10th
of the month
- Annual operating expenses for 2011 is budgeted for $1,400,000. From this amount
$800,000 is fixed cost which include $200,000 depreciation expense. The remaining
operating expense is considered variable. All operating expenses will be paid as incurred.
The Budgeted annual operating expenses is based on the expected annual sales of
$6,000,000.

The Company balance sheet as of december 31, 2010 is as follows :

Champion Hardware Inc.
Balance sheet
December 31,2010
Asets
Cash 44,000
Account Receivable (net of $7,000 allowance for uncollectible
accounts) 152,000
Inventory 280,000
Property and Equipment (net of $1,180,000 accumulated
depreciation) 1,724,000
Total Assets 2,200,000
Liabilities and Stockholder's Equity
Account Payable 324,000
Common Stock 1,590,000
Retained Earnings 286,000
Total Labilities and Stockholders' Equity 2,200,000
Required :
1. Prepare a cash budget for January 2011 in detail (Show your computation) to show the
expected cash balance at the end of January 2011.
2. Suppose you are preparing a budgeted balance sheet as of January 31, 2011 please show
the balance for the following account:
a. Cash
b. Account Receivable
c. Account Payable
4|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

3. If the company has minimum cash balance policy of $400,000, how this will affect your
answer?
Soal 5 (25%)
Zena,Inc manufactures a special fabric used to produce suits. Zena’s actual activity for the past
month follows :

Materials purchased........................ 18,000 meters at Rp9,500 per meter

Materials Used................................ 9,500 meters
Direct Labor................................... 2,100 hours at 62,500 per hour
Total Manufacturing Overhead..... Rp 109,800,000 consist of Rp 80,500,000 variable
costs and Rp 29,300,000 fixed cost)
Production..................................... 500 units
The company applies standard cost system and the standard costs are detailed as follows :
Direct material, 20 meters at Rp 9,000 per meter.............................. Rp 180,000
Direct Labor, 4 hours at Rp 60,000 per hour..................................... Rp 240,000
Manufacturing Overhead applied at five-sixths (5/6) of direct labor cost
(Variable costs = Rp 150,000 ; Fixed Costs= Rp 50,000).................. Rp 200,000
Total Unit Costs.................................................................................. Rp 620,000

Standards have been computed based on a budgeted activity level of 2,400 direct labor hours per
month.

Required
a. Prepare variance analysis for :
I. Direct Material
II. Direct Labor
III. Variable Overhead
IV. Fixed Overhead
b. Prepare Journals to record the transactions.

JAWABAN
Soal 2
a) Charge $1 fares
1. Dengan memberikan harga yang terlampau murah, seharusnya Australian Jetstar
Destination bisa membuat biaya-biaya yang dikeluarkan menjadi efektif dan efisien
tanpa mengurangi kualitas dari penerbangan. Cara untuk mengefektifkan biaya
yang dikeluarkan oleh Australian Jetstar Destination ini bisa dilakukan dengan
banyak hal antara lain : Meniadakan makanan di dalam pesawat, bila ada pun
penumpang harus membayar ekstra untuk itu, menggunakan awak, kabin yang
sama ke penerbangan kembali dengan membawa penumpang yang berbeda, dan
,menjual tiket hanya secara online untuk menghemat gaji penjaga counter dan
lainnya.
2. Memberikan tarif yang sangat murah pasti memiliki tujuan yang jelas dan strategi
yang dibawa pula, dengan biaya airline yang murah, dan yang cenderung

5|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

menggunakan jasa penerbangan adalah kalangan menengah ke atas, Australian

Jetstar pasti berharap nantinya dikenal dengan Low Fares High Quality Airlines.
Dengan demikian, perusahaan yang sering sekali mengirimkan pekerjanya keluar
negeri menjadi bisa mendapatkan extra price, yang kemudian dibalas dengan
special price untuk penayangan iklan atau publikasi lain. Dengan memberikan first
impression yang baik soal harga dan diikuti dengan kualitas yang mumpuni maka
word of moth akan terjadi secara langsung, dan orang-orang yang belum pernah
memanfaatkan transportasi udara akan langsung mencoba Australian Jetstar untuk
pengalaman pertama mereka.
3. Mencari barter bisa dimanfaatkan oleh Jetstar, mereka bekerjasama dengan
perusahaan publikasi lalu meminta jasa publikasi mereka agar bisa secara gratis
atau dengan potongan mengiklankan JetStar sehingga tidak perlu ada biaya iklan.
Dengan mengefektifkan biaya-biaya yang ada dan harga yang sangat terjangkau,
yang membuat pesawat selalu penuh dengan penumpang akhirnya akan membuat
biaya-biaya tsb tercover.
b) Breakeven, etc
1. Breakeven Revenue =

=540 juta
2. Breakeven Revenue =

= .

= 440,816,326.5
3. Operating Income = 500 juta –(0.51x500 juta)-216 juta
= 29 juta
4. Didalam long run cost, semua biaya menjadi biaya variabel, artinya setiap biaya
dipengaruhi oleh berapa jumlah output yang dihasilkan, dengan mengurangi
variable cost seperti dengan mengurangi harga bahan baku, atau mengubah tarif
gaji menjadi harian bukan gaji tetap. Dengan mengurangi variable cost terbukti
bahwa operating income manjadi positif, dan di jangka panjang pun demikian.
Soal 3
Schedule 1 Revenue Budget
Units Sold Selling Price Total Revenues

Lorries 2.500 5.000.000 12.500.000.000

6|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

Schedule 2 Production Budget In Units

Lorries
Budgeted Unit Sales 2.500
Add: Target Ending FG Inventory 350
Total Requirements 2.850
Less:Beginning FG Invetory 300
Units to be purchased 2550 units
Schedule 3A DM Usage
Physical Unit Budget Steel Metalic Cube Total
Steel 2550 x 5 12.750

Metalic Cube 2550 x 7 17.850

To be used in production 12.750 17.850

Cost Budget
Available for Beginning Inventory
Steel 3100 x295,000 914.500.000

Metalic Cube 1500 x 56,000 84.000.000

To Be used from purchase this period
(12750-
Steel 3100)x310000 2.991.500.000
(17850-
Metalic Cube 1500)x61000 997.350.000

Total Cost of DM to be used 3.906.000.000 1.081.350.000 4.987.350.000

Schedule 3b Purchase Budget
Physical Unit Budget Steel Metalic Cube Total

Production Unit 12.750 17.850

Add Target Ending Inventory 2.600 2.900

Total Requirements 15.350 20.750

Deduct Beginning Inventory 3.100 1.500

Available for Beginning Inventory 12.250 19.250

Cost Budget
Steel (12250*310000) 3.797.500.000

Metalic Cube( 19250*61000) 1.174.250.000

Purchases 3.797.500.000 1.174.250.000 4.971.750.000

7|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

Schedule 4 Direct Labor Budget

DML Hours/output Total Wage
Labor Category Cost Driver Unit unit Hours Rate Total

Manufacturing Labor 2.550 6 15.300 180.000 2.754.000.000

Schedule 5 Manufacturing Overhead Budget

Variable Manufacturing Overhead Rate 15300x70000 1.071.000.000
Fixed Manufacturing Overhead Cost 620.000.000
Total Manufacturing Overhead Costs 1.691.000.000

Budgeted Manufacturing Overhead Rate

1.691.000.000 = 110.522,8/hour
15.300
Budgeted Manufacturing Cost per output
1.691.000.000 = 663.137,2/output unit
2.550

Schedule 6A Budgeted Manufacturing Cost Per Unit

Direct Materials Cost per unit of input Input

Steel 310.000 5 1.550.000

Metalic Cube 61.000 7 427.000

Direct Manufacturing Labor 180000 6 1.080.000

Total Manufacturing Overhead 663.137,20

3.720.137
Schedule 7 COGS Budget
From Schedule

Beginning Finished Good Inventory 3150000*300 Given 945.000.000

DM Used 3A 4.987.350.000

Direct Manufacturing Labor 4 2.754.000.000

Manufacturing Overhead 5 1.691.000.000

Cost of Good Manufacturing 9.432.350.000

Cost of Good Available to sale 10.377.350.000

Ending Finish Good Inventory 6B 1.479.754.020

Cost of Good Sold 8.897.595.980

8|Page SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

Budgeted Income Statement

Revenues 12.500.000.000
COGS 8.897.595.980
Gross Margin 3.602.404.020
Operating Cost

Variable Marketing Cost 2900000*36 (104.400.000)

Fixed Nonmanufacturing cost (340.000.000)

Operating Income 3.158.004.020

Soal 4
1.
Cash Budget
January 31,2011
Cash Balance 1 January 2011 44.000
Cash Sales December 2010 38% x 400.000 152.000
Cash Sales January 2011 (40% x 440.000x(1-0.05)) +(20% x 440.000) 255.200
Total Cash available for needs 451.200
Deduct Cash Disbursment
Merchandise for Resale (75%*440.000)*(1-0.02))*80%paid in Jan 258.720
800.000*sales(440.000)/expected sales
monthly(500.000))/12 *(600.000/800.000)depr
Fixed Operating Expenses tidak dimasukkan 44.000
Variable Operating Expenses (600.000*(440.000/500.000)/12) 44.000
Payment of Materials in December
((75%*400.000)*(1-0.02))*20%
(20%) 58.800
Total Cash Disbursment in January 405.520
Ending Cash Balance 45.680
2.
Name Of Account Computation Balance at January 31,2011
Cash look at Cash Budget computation 45.680
Opening Balance (152,000)+Payment of
Account Receivable(38%*400.000)-AFDA(2%*440.000)+
Receivable Receivable(38%*440.000) 158.400
Opening Balance (324,000)- Payment of Payable
((75%*400.000)*(1-0.02))*20% +Payable for
Merchandise(75%*440.000)*(1-0.02))*20%paid following
Account Payable month 329.880
3.
Karena nilai dari cash balance pada Januari masih lebih dari 45.680 maka kebijakan tersebut tidak
memperngaruhi apa-apa, tetapi apabila angka cash balance ada dibawah 40,000 maka harus ada
langkah-langkah yang dilakukan seperti mempercepat collectible receivables, atau mengurangi
merchandise purchase.

9|Page SemesterGenap2010/2011
 Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

Soal 5

Actual Input Quantity*Budgeted

Actual Costs Incurred Price Flexible Budget

Actual Input Budgeted Input Quantity

Quantity*Actual Rate Purchase Usage Allowed*Budgeted Price
Direct
Material 9500*9500 9500 x 9000 9500*9000 10000*9000

90.250.000 85.500.000 85.500.000 90.000.000

4.750.000 U 4.500.000 F
Price Variance Efficiency Variance
Direct
Manufacturing
Labor 2100*62500 2100*60000 2000*60000

131.250.000 126.000.000 120.000.000

5.250.000 U 6.000.000 U
Price Variance Efficiency Variance

Flexible Budget Allocated

Actual Input Budgeted Input
Quantity*Budgeted Price Quantity Budgeted Input
Actual Cost Allowed*Budgeted Quantity*Actual Budgeted
Incurred Price Rate
Variable
(150000/4)*2100 (150000/4)*2000 (150000/4)*2000
Overhead 80.500.000

80.500.000 78.750.000 75.000.000 75.000.000

1.750.000 U 3.750.000 U
Spending Variance Efficiency Variance Never a Variance
Fixed (50000/4)*2400 (50000/4)*2400 (50000/4)*2000
Overhead 29.300.000

29.300.000 30.000.000 30.000.000 25.000.000

700.000 F 5.000.000 U
Spending Variance Never A variance Prod Volume Variance

10 | P a g e SemesterGenap2010/2011
Presented By: SPA-Accounting Study Division Mojakoe Akuntansi Manajemen

1 Variable MOH Control 80.500.000

Account Payable Control 80.500.000
WIP Control 78.750.000
Variable MOH Allocated 78.750.000

Variable MOH Allocated 75.000.000

Variable MOH Spending 3.750.000
Variable MOH
Efficiency 1.750.000
Variable MOH Control 80.500.000

Cost Of Good Sold 5.500.000

Variable MOH Spending 3.750.000
Variable MOH Efficiency Var 1.750.000

2 Fixed MOH Control 29.300.000

Wages Payable Control 29.300.000

WIP Control 25.000.000

Fixed MOH Allocated 25.000.000
Fixed MOH Allocated 25.000.000
Fixed MOH Prod Volume Var 5.000.000
Fixed MOH Control 29.300.000
Fixed MOH Spending 700.000
Fixed MOH Spending 700.000
COGS 700.000

11 | P a g e SemesterGenap2010/2011
 March 25

MOJAKOE
2013
Dilarang memperbanyak MOJAKOE ini tanpa seijin
SPA FEUI. Download MOJAKOE dan SPA Mentoring
Akuntansi
di : www.spa-feui.com Manajemen
 MOJAKOE

Question I : Cost-Volume-Profit Analysis

PT. Newstar is distributors that sells ‘Me-Pad’ a brand new type of gadget at an exhibition.
Newstar plans to sell ‘Me-Pad’ for $500 each. The company purchase Me-Pad from
manufacturer at $350 each, with the privilege of returning any unsold units for a full refund.
The exhibition offer Newstar with 2 alternatives :
1. A fixed payment of %5,000 during exhibition
2. 10% of total revenues earned during exhibition
Assume Newstar incur no other costs.

Required :
1. Calculate BEP in unit for option 1 and 2
2. At what level of unit sold will Newstar earn the same operating income under either
option? For what range of unit sales will Newstar prefer option 1 over option 2?
3. Calculate margin of safety and degree of operating leverage at sales of $100 units for
two rental option
4. Give your analysis on your answer to requirement 3

Question II : Master Budget!

PT. ABC is a local t-shirt manufacturer. In 2012 management projected that they can sell
8000 units of various types t-shirt. Data required to develop this year’s budget is as follows :
a. Finished goods inventory on January 1 is 100 units, each costing Rp15.000.
Management planned to maintain its current level of finished goods inventory at the
end of 2012.

b. Inputs include the following :

Price Quantity Inventory at Jan 1
Fabric Rp 10.000 per meter 1 meter per shirt 75 meter at Rp9.000
Dye Rp 1.000 per ounce 3 ounces per shirt 100 ounces at Rp750
Labor Rp 10.000 per DLH 0.25 DLH per shirt

c. Overhead costs for 2012 are estimated for fixed and variable components: (measured
in direct labor hour (DLH)). Overhead are allocated to finish product using direct
labor hour as the cost allocation base.
Fixed Cost Component Variable Cost Component
Supplies - Rp 500
Power - Rp 1.000
Maintenance Rp 20.000.000 -
Supervision Rp 60.000.000 -
Depreciation Rp 75.000.000 -
Other Rp 15.000.000 -
 MOJAKOE

Required :
Prepare a partial annual operating budget for the year 2012 :
(1) Production Budget
(2) Direct Material Usage Budget
(3) Direct Labor Cost Budget
(4) Manufacturing Overhead Cost Budget
(5) Cost of Goods Sold Budget

Question III : Cash Budget

Champion Hardware is a hardware wholesaler. All sales are credit sales with the term of
payment 5/10, n/end of month. Information about the store’s operation follows :

 December 2011 sales amounted to $500.000

 Sales are budgeted at $540.000 for January 2012 and $500.000 for February 2012
 Collection are expected to be 30% in the month of sale within the discount period,
30% also in month of sale but after the discount period, and 38% in the month
following the sale. Two percent of sales are expected to uncollectible. Bad debt
expense is recognized monthly.
 Cost of goods sold is 75% of sales.
 A total of 70% of the merchandise for resale is purchased in the month prior to the
month of the sale, and 30% is purchased in the month of the sale. Payment for
merchandise is made in the month following the purchase. The company always take
the benefit of 2% discount offered by the supplier for payment before the 10th of the
month.
 Annual operating expenses for 2012 is budgeted for $1.600.000. From this amount
$1.000.000 is fixed cost which include $200.000 depreciation expense. The remaining
operating expense is considered variable. All operating expense will be paid as
incurred. The budgeted annual operating expenses is based on the expected annual
sales $6.000.000
The company’s balance sheet of December 31,2011 is as follows :

Champion Hardware Inc.

Balance Sheet
December 31, 2011
Assets
Cash $ 44.000
Account Receivable (net $75.000 allowance for uncollectible accounts) $ 190.000
Inventory $ 280.000
Property and Equipment (net of $1.180.000 accumulated depreciation) $ 1.724.000
Total Assets $ 2.238.000
 MOJAKOE

Liabilities and Stockholder’s Equity

Account Payable $ 324.000
Common Stock $ 1.590.000
Retained Earning $ 324.000
Total Liabilities and Stockholder’s Equity $ 2.238.000

Required :
1. Prepare a cash budget for January 2012 in detail (show your computation) to show the
expected cash balance at the end of January 2012.
2. Suppose you are preparing a budgeted balance sheet as of January 31, 2012. Please
show the balance for the following account :
a. Cash
b. Account Receivable
c. Account Payable
3. If the company has minimum cash balance policy of $40.000, how this will affect
your answer.

Question IV : Flexible Budgets, Direct-Cost Variances, and Overhead-Cost Variances

The following information is provided to assist you in evaluating the performance of
Odysius, Inc. :
Actual Cost:
Direct Material Purchased and Used $ 188,700 (102,000 pounds)
Direct Labor $ 140,000 (10,700 hours)
Manufacturing Overhead $ 204,000 (61% is variable)

Standard Cost per Unit:

Direct Material $ 1.65x5 pounds per unit output
Direct Labor $ 14.00 per hour x 0.5 hour/unit
Variabel Overhead $ 11.90 per direct-labor hour
Production Budget:
Direct Material $ 165,000
Direct Labor $ 140,000
Manufacturing Labor $ 199,000
Variable overhead is applied on the bases of direct – labor hours. The company’s actual
production and sales was 21,000 units, which was 17,5% market share. Average selling price
 MOJAKOE

was $38. The company expected to get 20% market share. The exacted market for this
product is 100.000 units. Its selling price is budgeted at $40.

Required :
Prepare a complete various report and analysis consists of :
a. Direct-material price and quantity variances
b. Direct-labor rate&efficiency variances
c. Variable-overhead spending&efficiency variances
d. Fixed-overhead spending & production volume variances
e. Sales price variance
f. Sales volume variance
g. Sales quantity variance
h. Market Share and Market Size Variance
i. The flexible budget variance

Question V : Customer – Profitability Analysis

VITALIFE is a local distributor of herbal medicine products. With the growing
competitiveness in the industry, VITALIFE’s new controller, Budi Black, wants to use ABC
system instead of traditional costing to examine individual customer profitability within each
distribution market. He identified there are five activities related with customer cost: order
processing, line-item ordering, store deliveries, carton deliveries, and shelf-stocking. He
focuses first on the Blue Green Co. single store distribution market. Four customers are used
to exemplify the insight availability with the ABC approach. For the February 2012, he listed
the following data for those selected customers :

Arfi Blink Chand Durum

Pharmacy Pharmacy Pharmacy Pharmacy
Average Revenue per
Rp 10.500.000 Rp 8.400.000 Rp 6.300.000 Rp 6.300.000
Delivery
Average Cost of Goods Sold
Rp 8.750.000 Rp 7.350.000 Rp 6.300.000 Rp 5.775.000
per Delivery
Total Orders 12 13 16 10
Average Line Items per
8 9 7 18
Order
Total Store deliveries 10 7 5 10
Average cartons shipped per
15 22 14 20
store delivery
Average hours of shelf-
3 0 5 0.5
stocking per store delivery

He also collects the following information related with customer’s cost activities:

Activity Area Cost Driver Rate in 2012

Order Processing Rp 140.000 per order
Line-item ordering Rp 10.500 per line item
Store deliveries Rp 175.000 per store delivery
 MOJAKOE

Carton deliveries Rp 3.500 per carton

Shelf-stocking Rp 56.000 per stocking hour

Required :
1. Compute customer-level operating income using ABC approach for those selected
customers.
2. Based on the above calculations, what opinion shoul Budi Black consider with regard
to those selected individual customers.

Questions I : Cost-Volume-Profit Analysis

1. Break Even Point for Option I
 Total Revenue = Total Cost
$500 x Q = (350 x Q) + $ 5,000
Q = 33,33 atau 34 (pembulatan keatas)
Break Even Point for Option II
 Total Revenue = Total Cost
$500 x Q = (350 x Q) + (10% x 500 x Q)
100 Q =0
Maka Q =0
Hal ini terjadi karena semua cost bersifat variable sehingga biaya hanya akan
terjadi apabila PT. Newstar memproduksi atau menjual sebuah produk.
2. Operating Income Opt1 = Operating Income Opt2
500Q – 350Q – 5,000 = 500Q – 350Q – 50Q
Maka nilai Q = 100
3. Sales Quantity = 100 unit
Margin of Safety (MS) Degree of Operating Leverage (DOL)
Opt1 MS = Budgeted Sales Quantity - QBEP 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛
DOL = 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒
MS = 100 unit – 34 unit 500𝑥100 − 350𝑥100
DOL =
MS = 66 unit atau $33,000 500𝑥100 − 350𝑥100 − $ 5,000

DOL = 1.5
Opt 2 MS = Budgeted Sales Quantity - QBEP 500𝑥100 − 350𝑥100 − (50𝑥100)
DOL = 500𝑥100 − 350𝑥100 − (50𝑥100)
MS = 100 unit – 0 unit
DOL = 1
MS = 100 unit atau $50,000
4. Margin of Safety menunjukkan seberapa besar penurunan didalam pendapatan atau
kuantitas yang dijual agar tidak mencapai kerugian. Hal ini berarti, batas maksimal
 MOJAKOE

pendapatan PT. Newstar dapat menurun atau penjualan berukurang adalah sebesar
hingga $33,000 dan 66 unit pada Option I; jika lebih maka PT. Newstar akan
mengalami kerugian. Option II; batas maksimal pendapatan dan penjualan dapat
turun agar tidak mengalami kerugian adalah sebsar $50,000 dan 100unit.

Degree of Leverage menggambarkan efek dari adanya fixed cost terhadap perubahan
operating income akibat adanya perubahan pada unit yang terjual ataupun
contribution margin. Semakin besar fixed cost yang ada, maka DOL akan semakin
besar.
Option 1 : DOL = 1.5 artinya 1% perubahaan pada penjualan dan contribution margin
akan menghasilkan perubahan sebesar 1,5 kali pada operating income.
Option 2 : DOL = 1 artinya 1% perubahaan pada penjualan dan contribution margin
akan menghasilkan perubahan sebesar 1 kali pada operating income.

Questions II : Master Budget!

a. PRODUCTION BUDGET
PT. ABC
Production Budget (in Units)
For the Year Ending December 31, 2012

Product
Budgeted Unit Sales 8,000
Add Target Ending Inventory 100
Total Required Units 8,100
Deduct Beginning Inventory (100)
Units of Finished Good to be Produced 8,000

b. DIRECT MATERIAL USAGE BUDGET

PT. ABC
Direct Material Usage Budget (in Quantity and Rupiahs)
For the Year Ending December 31, 2012
Fabric Dye Total
Physical Units Budget
Direct Material Required 8,000 meter 24,000 ounces
(8,000 x 1 meter/unit) (8,000 x 3
ounces/unit)
(+) ending inventory 0 0
DM required 8,000 24,000
(-) beginning inventory (75) (100)
DM to be purchased 7,925 23,900
Cost Budget
Available from Beginning DM
Fabric Rp 675,000
Dye Rp 75,000
To be Purchased this period
Fabric (7,925 x Rp 10,000) Rp 79,250,000
Dye (23,900 x Rp 1000) Rp 23,900,000
Direct Material to be Used Rp 79,925,000 Rp 23,975,000 Rp 103,900,000
c. DIRECT LABOR COST BUDGET
 MOJAKOE

PT. ABC
Direct Labor Cost Budget
For the Year Ending December 31, 2012
Product
Unit Produced 8,000
DLH/unit 0.25 DLH/unit
Total Hours 2,000 hours
Wages per Hours Rp 10,000
Total DL Cost Rp 20,000,000

d. MANUFACTURING OVERHEAD COST BUDGET

PT. ABC
Manufacturing Overhead Cost Budget
For the Year Ending December 31, 2012

Fixed Cost Variable Cost Total

Supplies - Rp 1,000,000
( Rp 500 x 2000 DLH)
Power Rp 2,000,000
( Rp 1000 x 2000 DLH)
Maintenance Rp 20,000,000
Supervision Rp 60,000,000
Depreciation Rp 75,000,000
Other Rp 15,000,000
Total MOH Rp 170,000,000 Rp 3,000,000 Rp 173,000,000

e. COST OF GOODS SOLD BUDGET

PT. ABC
Direct Labor Cost Budget
For the Year Ending December 31, 2012
Beginning Inventory Rp 1,500,000
Cost of Goods Manufactured

 DM Used Rp 103,900,000
 DL Used Rp 20,000,000
 MOH Rp 173,000,000
COGM Rp 296,900,000
Cost of Goods Available for Sale Rp 298,400,000
Deduct Ending Inventory* (Rp 37,125 x 100 unit) Rp ( 3,712,500)
Cost of Goods Sold Rp 294,687,500
*) Cost of Ending Inventory/Unit =

Cost per Unit Input Allowed Total

 MOJAKOE

Fabric Rp 10,000 1 metre Rp 10,000

Dye Rp 1,000 3 ounces Rp 3,000
Labor Rp 10,000 0,25 DLH Rp 2,500
MOH Rp 86,5001 0,25 DLH Rp 21,625
Cost of Ending Invt/ unit Rp 37,125
1)MOH dialokasikan dengan cost-allocation base nya adalah DLH. Total budgeted DLH
adalah 2000 hours sedangkan budgeted MOH Rp 173,000,000 maka MOH rate nya adalah
Rp 86,500.

QUESTIONS III: Cash Budget

a.
Champion Hardware
Cash Budget
January 2012
Cash Balance, Dec 31 2011 44,000
Add Receipts :
30% cash received within discount period 153,900
(30%x95%x Rp540,000)
30% cash received after discount period 162,000
(30%x Rp540,000)
38% cash received from previous period 190,000
(38% x Rp 500,000)
Total Cash Receipt 505,900
Cash Available for Needs 549,900
Deduct Cash Disbursement :
Cash paid to supplier for January 2012 (277,830)
(75%x 70%x 98% x 540,000)
Cash paid to supplier for December 2011 (110,250)
(75%x30%x 98%x 500,000)
Cash paid to operating expense (126,000)
(540,000/6,000,000) * (1,600,000 – 200,000)
Total Cash Disbursement (514,080)
Ending Cash Balance 35,820

b. Cash 35,820
Account Receivable 205,200
= Beg AR – Collection + AR in January
= 190,000 – 190,000 + (38% x Rp540,000)
Account Payable 312,240
= Beg AP – Payment + AP in January
= 324,000 – 388,080 + {(75%x70%x98%xRp500,000)+
(75%x30%x98%xRp 540,000)}

c. If company has minimum cash balance policy 40,000; therefore company should do
financing by borrowing 4,180 ( 40,000 – 35,820); so the ending cash balance will be
40,000.
 MOJAKOE

QUESTIONS IV : Flexible Budgets, Direct-Cost Variances, and Overhead-Cost

Variances
a. Direct-material price and quantity variances

b. Direct-labor rate&efficiency variances

 MOJAKOE

c. Variable-overhead spending&efficiency variances

d. Fixed-overhead spending & production volume variances

e. Sales price variance

= ( Actual Price – Budgeted Price ) x Actual Quantity
= ($38 - $40) x $21.000
= 42.000 (U)
f. Sales volume variance
= ( Actual Quantity – Budgeted Quantity ) x Budgeted Contribution Margin
 MOJAKOE

= ( 21.000 – 21.000) x $18.8* = 18.800 (F)

*) Contribution Margin = $40 – ($1,65x5) – (0,5*$14) – (0,5 * 11,9) = $18,8
g. Sales quantity variance; jawaban digabung dengan point H.
h. Market Share and Market Size Variance

Note : Jika perusahaan hanya memiliki 1 jenis product, secara otomatis Sales
volume Variance akan sama dengan Sales Quantity Variance

i. The flexible budget variance

Note : Flexible Budget Variance terdiri dari Selling Price Variance, DM Variance,
DML Variance, MOH Variance. Maka... jumlahkan semua variance tersebut!
Perhatikan (U) dan (F) nyaa

Flexible Budget variance = (15.450) + 7.000 + 510 + 440 + (42.000) = 49.500 (U)

QUESTIONS IV: Customer Profitability Analysis

a) Perhitungan analisa
Chand Durum
Arif Pharmacy Blink Pharmacy Pharmacy Pharmacy
Revenue from each customer Rp105.000.000 Rp58.800.000 Rp31.500.000 Rp63.000.000
Cost of Goods Sold each
customer Rp87.500.000 Rp51.450.000 Rp31.500.000 Rp57.750.000
Gross Margin Rp17.500.000 Rp7.350.000 Rp0 Rp5.250.000
Operating Expenses :
Order Processing
(14.000 x 12; 13; 16; 10) 1.680.000 1.820.000 2.240.000 1.400.000
Line Item Ordering
(10.500 x average linexorder) 1.008.000 1.228.500 1.176.000 1.890.000
 MOJAKOE

Store Deliveries
(175.000 x 10; 7; 5; 10) 1.750.000 1.225.000 875.000 1.750.000
Carton Deliveries
(3.500 x average carton x total
deliveries) 525.000 539.000 245.000 700.000
Shelf-Stocking
(56.000 x average shelf hour x
delivery) 1.680.000 - 1.400.000 280.000
Customer Level
Operating Cost 6.643.000 4.812.500 5.936.000 6.020.000
Customer Level Operating
Income Rp10.857.000 Rp2.537.500 (Rp5.936.000) (Rp770.000)

b) Dari perhitungan diatas, first rank the customer :

1. Arif Pharmacy
2. Blink Pharmacy
3. Durum Pharmacy
4. Chand Pharmacy
Option that Budi Black should consider, include :
o Meningkatkan perhatian kepada Arif dan Blink Pharmacy sebab mereka
adalah “key customer” dari VITALIFE. Untuk menarik mereka tetap
melakukan pembelian, Budi Black bisa memberikan sedikit penurunan harga
sehingga konsumen mau membeli dengan kuantitas yang banyak.
o Meningkatkan harga atau mencari cara menurunkan biaya dalam memberikan
jasa kepada Durum Pharmacy. Budi Black dapat menurunkan biaya pada
aktivitas line item ordering.
o Memutuskan hubungan kepada konsumen yang sangat tidak profitable dalam
hal ini adalah Chand Pharmacy. Bisa dilihat, pada dasarnya Chand tidak
memberikan apapun tetapi mengeluarkan banyak biaya. Jadi, Budi dapat
mengambil keputusan untuk tidak lagi memberikan jasa kepada Chand namun
tetap membangun hubungan dengan pelanggan yang profitable.
  

 
  

              2  

 
  

              3  

 
  

              4  

 
  

              5  

 
  

              6  

 
  

              7  

 
  

PROBLEM  1  

Price  :  $30  @  unit  

Beginning  :  100.000  units  

Ending  :  50.000  units  

Sales  :  250.000  units  

Unit  cost  in  beg.  Inventory  =  cost  per  unit  produced  during  the  year  

DM  :  $11  per  unit  

DML  :  $2.25  per  unit  

Variable  Man.  Cost  :  $1.75  per  unit  

Sales  commissions  :  $3  per  unit  

Fixed  Man.  Cost  :  $400.000  per  year  

Administrative  :  $150.000  per  year  

Production   =  Sales  -­‐  beg.  Inventory  +  ending  inv.  

=  250.000  -­‐  100.000  +  50.000  =  200.000  units  

Fixed  FOH  Rate  =  Fixed  Man.  Cost/Production  =  $400.000/200.000  =  $2  

Assumes  that  in  budgeted  production  =  actual  production  

a. Absorption  
Revenue  (30  x  250.000)               7.500.000  

COGS  :  

Beg.  Inv.  (100.000(11+2.25+1.75+2))       1.700.000  

DM  (200.000  x  11)           2.200.000  

DML  (200.000  x  2.25)           450.000  

              8  

 
  

Variable  Man.  Cost  (200.000  x  1.75)       350.000  

Fixed  FMOH  (200.000  x  2)         400.000    +    

COGAS               5.100.000  

-­‐  Ending  Inv.    (50.000(11+2.25+1.75+2))       (850.000)  

 Variance                 0    +  

COGS                     4.250.000  -­‐  

Gross  Margin                 3.250.000  

Sales  Commissions  (3  x  250.000)           (750.000)  

Administrative  Expenses             (150.000)+  

Operating  Income                 $2.350.000  

Variable  

Revenue  (30  x  250.000)               7.500.000  

COGS  :  

Beg.  Inv.  (100.000(11+2.25+1.75))       1.500.000  

DM  (200.000  x  11)           2.200.000  

DML  (200.000  x  2.25)           450.000  

Variable  Man.  Cost  (200.000  x  1.75)       350.000    +  

COGAS               4.500.000  

-­‐  Ending  Inv.    (50.000  (11+2.25+1.75))       (750.000)  

 Variance                 0    +  

VCOGS               3.750.000  

              9  

 
  

Sales  Commissions  (3  x  250.000)         750.000    +  

4.500.000  -­‐  

Contribution  Margin                 3.000.000  

Fixed  Man.  Cost                 (400.000)  

Fixed  Administrative  Expenses             (150.000)+  

Operating  Income                 2.450.000  

b.  The  difference  of  operating  income  between  the  two  costings  is  $100.000.  This  is  the  
amount   of   fixed   overhead   of   ending   inventory   (not   yet   sold)   =   $2   x   50.000   unit.   In  
absorption   costing   we   calculate   the   ending   inventory’s   cost   is   $850.000   ($17/unit   x  
50.000   unit).   Then,   we   know   that   $850.000   consists   of   $750.000   VC   (DM,   DML,   and  
FOH).  While,  the  $100.000  is  the  amount  of  fixed  overhead  cost.  

PROBLEM  2  

Ticket  Price  :  Rp300.000  per  person  (has  been  corrected  from  initial  Rp3.000.000)  

Administrative  and  Marketing  Fees  :  Rp18.000.000  

Band  Fees  :  Rp8.000.000  

Option  1  :  FC  =  Rp10.000.000  and  VC  =  Rp120.000  per  person  

Option  2  :  FC  =  Rp30.000.000  and  VC  =  Rp80.000  per  person  

              10  

 
  

Notes  :    

1) Option  1  =   FC/(Price  -­‐  VC)  =  (18.000.000  +  8.000.000  +  10.000.000)  

(300.000  -­‐  120.000)  

=  36.000.000  =  200  person  

     180.000  

Option  2  =  (18.000.000  +  8.000.000  +  30.000.000)  =  56.000.000  =  254,55  

(300.000  -­‐  80.000)                  220.000  

So,  option  1  needs  only  200  people  to  attend  the  event  to  be  breakeven  compared  to  
option  2  which  needs  255  people  to  attend.  Option  1  has  the  lowest  BEP.  

2) Option  1  =  OI   =  (P  -­‐  VC)  Q  -­‐  FC  

=  (300.000  -­‐  120.000)  600  -­‐  36.000.000  

=  72.000.000  

Option  2  =    OI   =  (P  -­‐  VC)  Q  -­‐  FC  

=  (300.000  -­‐  80.000)  600  -­‐  56.000.000  

=  76.000.000  

So,  option  2  has  the  greatest  operating  income  if  600  people  attend  the  event.  

3) Option  1   =  DOL   =  (P  -­‐  VC/unit)  Q  =  (300.000  -­‐  120.000)  600  =  1,5  
   OI       72.000.000  

Option  2  =  DOL  =  (300.000  -­‐  80.000)  600  =  1,737  

76.000.000  

              11  

 
  

If  600  people  attend  the  event,  option  II  will  have  greater  degree  of  operating  leverage  
than   option   I.   Because   Option   II   has   bigger   FC   than   Option   I.   DOL   shows   the   cost  
structure   (between   fixed   and   variable).   The   greater   the   DOL,   it   shows   that   the   FC   is  
greater   than   the   VC.   DOL   also   shows   how   many   percent   the   profit   will   increase   if   we  
increase  1%  of  the  sales.  

4) Option  I  :  Margin  of  Safety  =  400  person;  DOL  =  1,5%  

Option  II  :  Margin  of  Safety  =  345  person;  DOL  =  1,74%  

The   option   will   be   riskier   if   the   safety   margin   is   low   when   the   operating   leverage   is  
high.   In   this   case,   Option   I   has   the   least   amount   of   risk   because   it   has   high   margin   of  
safety  and  low  degree  of  operating  leverage.  

PROBLEM  3  

AQ  for  DM  =  3.000  units  x  4  =  12.000  

SQ  for  DM  =  3.000  units  x  5  =  15.000  

A. Price  Variances  for  DM  =  (2500  -­‐  1600)  x  12.000  =  10.800.000  

(unfavorable,  because  actual  >  budgeted)  

Efficiency  Variances  for  DM  =  (12.000  -­‐  15.000)  x  1600  =  4.800.000  

(favorable,  because  actual  <  budgeted)  

Flexible  Budget  Variances  for  DM  =  6.000.000  (unfavorable)  

Note  :   Price  Variances  =  (AP-­‐SP)  x  AQ  

Efficiency  Variances  =  (AQ  -­‐  SQ)  x  SP  

AQ  =  3.000  x  3  =  9.000  

              12  

 
  

SQ  =  3.000  x  2,5  =  7.500  

B.  Price  Variances  for  DL  =  (2000  -­‐  3000)  x  9.000  =  9.000.000  

(favorable,  because  actual  <  budgeted)  

Efficiency  Variances  for  DL  =  (9.000  -­‐  7.500)  x  3000  =  4.500.000  

(unfavorable,  because  actual  >  budgeted)  

Flexible  Budget  Variances  for  DL  =  4.500.000  (favorable)  

C.  Variable  OH  Spending  and  Efficiency  

 
Actual  cost  incurred   Actual  input=2x3000  =   Budg.  Input  =  1,4  
 
(3000  x  3000  =   6000   Actual  input=  3000  
9.000.000)  
 
Budg.  Price  =  2000   Budg.  Price  =  2000  
  (6000x2000  =   (1,4x3000x2000)  =  

  8.400.000)  

Spending  Variance  =  12.000.000  -­‐  9.000.000  =  3.000.000  (favorable)  

Efficiency  Variance  =  12.000.000  -­‐  8.400.000  =  3.600.000  (unfavorable)  

Flexible  Budget  =  3.600.000  -­‐  3.000.000  =  600.000  (unfavorable)  

D.  Fixed  OH  Spending  and  Production  Volume  Variance  

FOH  Allocation  to  each  unit   =  Total  Budg.  Fixed  OH/Budg.  Production  

=  4.200.000/3500  =  1200  

 
Actual  cost  incurred   Budg.  Unit  =  3500   Actual  Unit  =  3000  
 
4.500.000   Budg.  Price/unit  =  1200   Budg.  Price/unit  =  1200  

(3500  x  1200  =   (3000  x  1200  =  

              13  

 
  

Spending  Variance  =  4.500.000  -­‐  4.200.000  =  300.000  (unfavorable)  

Production  Volume  Variance  =  4.200.000  -­‐  3.600.000  =  600.000  (unfavorable)  

E.  It  can  be  caused  by  price  differences  (price  variance)  and  also  can  be  caused  by  the  
increasing  efficiency  (for  example,  it  needs  only  fewer  amount  of  materials  to  produce  
the  same  number  of  output/efficiency  variance)  

PROBLEM  4  

a. Sales  Price  Variance  =  (Act.P/unit  -­‐  budg.  P/unit)  x  actual  sales  

=  (38  -­‐  40)  x  21000  =  42.000  (unfavorable)  

b.     Sales  Volume  Variance  =  (actual  -­‐  budg.  Unit  sold)  x  budg.  CM/unit  

Budg.  Unit  sold  =  (140.000/14)  x  2  =  20.000  

Budg.  CM/unit   =  (40  -­‐  (1,65x5)  -­‐  (14  x  1/2)  -­‐  (11.9  x  1/2)  

=  18,8  

Sales  Volume  Variance  =  (21.000  -­‐  20.000)  18,8  =  $18.800  (favorable)  

c.   Sales  Quantity  Variance   =  Flexible  Budget  II  -­‐  master  budget  

=  (18,8)  (21.000)  -­‐  (18,8)  (20.000)  =  $18.800  

   (favorable)  

d.   Sales  Mix  Variance  =  0  (manufacture  and  sold  only  one  type  of  product)  

e.   Market  Share  and  Market  Size  Variance  

              14  

 
  

Flexible  Budget  II  =  17,5%  x  120.000  x  18,8  =  $394.800  

Flexible  Budget  III  =  20%  x  120.000  x  18,8  =  $451.200  

Master  Budget  =  20%  x  100.000  x  18,8  =  376.000  

Market  Share  Variance  =  451.200  -­‐  394.800  =  56.400  (unfavorable)  

Market  Size  Variance  =  75.200  (favorable)  

f.   Flexible  Budget  Variance  

Sales  Price  Variance  =  $42.000  (unfavorable)  

Variable  Cost  Variance  :  

DM   =  (actual  -­‐  budgeted  cost  of  DM)  x  actual  unit  sold  

=  (1,85  -­‐  1,65)  x  21.000  =  $4200  (unfavorable)  

DL   =  (actual  -­‐  budgeted  cost  df  DL)  x  actual  unit  sold  

=  (13,08  -­‐  14)  x  21.000  =  $19.320  (favorable)  

VMOH  =  (actual  -­‐  budgeted  cost  of  VMOH)  x  actual  unit  sold  

=  (5,93  -­‐  5,95)  x  21.000  =  $420  (favorable)  

              15  

 
  

PROBLEM  5  

A.   Direct  Material  Purchase  Budget    

  Q1   Q2   Q3   Q4  

DM  needed  for   100.000/10x0,5   120.000/10x0,5   140.000/10x0,5    155.000/10x0,5  

production   =  5000   =  6000   =  7000   =  7750  

+/-­‐  desired   0,3%  x  120.000   0,3%  x  140.000   0,3%  x  155.000   0,3%  x  140.000  

Ending  inv.   =  360   =  420   =  465   =  420  

Total  DM   5360   6420   7465   8170  

available  

+/-­‐  beg.  inv.   2325/7,5   360   420   465  

=  310  

DM  Purchased   5050   6060   7045   7705  

(liter)  

Standard  Price/   8   8   8   8  

liter  

DM  Purchased   $40.400   $48.480   $56.360   $61,640  

($)  

B.  Direct  Material  Cash  Disbursement  Budget  

  Q1   Q2   Q3   Q4   TOTAL  

Q4  2015   15.200         15.200  

              16  

 
  

Q1  2016   24.240   16.160       40.400  

Q2  2016     29.088   19.392     48.480  

Q3  2016       33.816   22.544   56.360  

Q4  2016         36.984   36.984  

TOTAL   39.440   45.248   53.208   59.528   197.424  

C.  Cash  Budget  

  Q1   Q2   Q3   Q4  

Beg.  Cash   4500   162.560   256.787   446.379  

balance  

Cash  Receipt   210.000   224.000   266.000   283.500  

(70%)  

Cash  Receipt   85.000   40.000   96.000   114.000  

(30%)  

Total  Cash   299.500   426.560   618.787   843.879  

Available  

Cash  Disbursement  

         

Payment  of  DM   39.440   45.248   53.208   59.528  

Payment  of  LTD   -­‐   -­‐   20.000   -­‐  

(part)  

Payment  of   1500   1500   1200   1200  

Interest  exp.  

Payment  of  Tax   -­‐   18.625   -­‐   -­‐  

              17  

 
  

Payment  of  FOH   20.000   21.000   21.200   22.000  

Payment  of  DL   22.000   26.400   30.800   34.100  

Purchase  of   15.000   15.000   -­‐   -­‐  

Equipment  

Payment  of  SGA   39.000   42.000   46.000   51.500  

Total  Cash   136.940   169.773   172.408   168.328  

Disbursement  

Minimum  Cash   3000   3000   3000   3000  

Balance  

Total  Cash   139.940   172.773   175.408   171.328  

Needed  

Excess   159.560   253.787   443.379   672.551  

(deficiency)  
cash  

Financing  

Borrowing   -­‐   -­‐   -­‐   -­‐  

(repayment)  

Receive  (pay)   -­‐   -­‐   -­‐   -­‐  

interest  

Total  financing   -­‐   -­‐   -­‐   -­‐  

Add  back  :   3000   3000   3000   3000  

minimum  cash  
balance  

              18  

 
  

Ending  Cash   162.560   256.787   446.379   675.551  

Balance  

              19  

 
 MOJAKOE
MOdul JAwaban KOEliah

Manajement Accounting
UAS Semester Genap 2014/2015

t@spafebui fSPA FEB UI

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Problem I
Current Monthly Profits :

Revenue :
(15.000 units * $4.8) $72.000
Variable Costs :
(15.000 units * $2.5) $37.500
Contribution Margin $34.500
Fixed Costs $20.000
Operating Income $14.500

A. Selling Price = $4.8+$1.5 = $6.3.

Monthly Sales = 15.000-1.800 = 13.200 units

Revenue :
(13.200 units * $6.3) $83.160
Variable Costs :
(13.200 units * $2.5) $33.000
Contribution Margin $50.160
Fixed Costs $20.000
Operating Income $30.160

Monthly profit will increase by -> $30.160-$14.500 = $15.660

B. Selling price = $4.8-$1.8 = $3

Monthly Sales = 15.000 + 6.000 = 21.000 units

Revenue :
(21.000 units * $3) $63.000
Variable Costs :
(21.000 units * $2.5) $52.500
(1.000 units * $0.2 *50%) $ 100
Contribution Margin $10.400

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Fixed Costs $20.000
Operating Income (Loss) ($9.600)

Monthly profit will decrease by -> $14.500-($9.600)=$24.100

C. Incremental Revenue : 4.000 units * $4 = $16.000

Incremental Cost : 4.000 units * $2.45 + $500 = $10.300
Incremental Profit : $ 5.700

D.
Incremental method:
Incremental Revenue/saving
One time order (8,000 x $4.00) = $32,000
Saving of VS for Regular order
(15,000 – 12,000)*$2.5 = $ 7,500
Incremental cost/opportunity loss
Regular sales forfeited
(15,000-12,000) * $4.8) = ($14,400)
VC for special order
(8,000 x $2.45) = ($19,600)
Additional Selling n Administrative = ($ 500)
-----------------------
Total $5,000
Final Copy should accept this option, because it gives total operating income $ 5,000

Alternative Method
Monthly Capacity = 20.000 units
Australian distributor order = 8.000 units
Others = 12.000 units

Revenue :
(12.000 units * $4.8) $57.600
(8.000 units * $4) $32.000
Variable Costs :

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(12.000 units * $2.5) $30.000
(8.000 units * $2.45) $19.600
Contribution Margin $40.000
Monthly Fixed Costs $20.000
Additional Fixed SGA Costs $ 500
Operating Income $19.500

Monthly profit will increase by -> $19.500-$14.500 = $5.000

E.
Incremental Method
Incremental Revenue or Saving
Used space rental $ 1,000
Reduced VC (0.4*2.5*15,000) $ 15,000
Incremental Cost
Fee for Mexican Manufacturer ($ 15,000)
($1 x 15,000)
--------------
$ 1,000
At a current level of sales, Final copy should accept the offer, because it gives an
incremental $ 1,000 of operating income.

Alternative method:
Revenue :
(15.000 units * $4.8) $72.000
Rent $ 1.000

Variable Costs :
(15.000 units * $2.5 *60%) $22.500
(15.000 units * $1) $15.000
Contribution Margin $35.500
Fixed Costs $20.000
Operating Income $15.500

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Monthly profit will increase by -> $15.500-$14.500 = $1.000

F. Revenue:
(15.000 units * $5.05) $75.750
Variable Costs:
(15.000 units * ($2.5+$0.1) $39.000
Contribution Margin $36.750
Fixed Costs $20.000
Operating Income $16.750

Monthly profit will increase by -> $16.750-$14.500 = $2.250

Problem II
1.
Activity Amount (in thousand USD)
Prevention Costs :
Machine maintenance 330
Supplier training 40
Design reviews 200
Total Prevention Costs 570
Appraisal Costs :
Incoming inspections 63
Final testing 203
Total Appraisal Costs : 266
Internal Failure Costs :
Rework 112
Scrap 67
Total Internal Failure Costs 179
External Failure Costs :
Warranty repairs 68
Customer return 188
Total External Failure Costs 256

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Dilarang memperbanyak MOJAKOE ini tanpa seijin SPA FEB UI
From the data above, it can be seen that the company intends to be very careful
before the bad quality products appear by incurring Prevention Costs as the highest
proportion of the costs of quality. The company also really prevents bad products
from moving furthermore by incurring Appraisal Costs as the second highest
proportion of the costs of quality. As a result, the Internal Failure Costs are very low
among all costs of quality. However, the company actually can’t detect many quality
defects that can be seen by high External Failure Costs and must rectify all of that
quality defects.

2. Value added Cost is a cost that, if eliminated, would reduce the actual or perceived
value or utility (usefulness) customers experience from using the product or service.
Non Value added Cost is a cost that, if eliminated, would not reduce the actual or
perceived value or utility (usefulness) customers experience from using the product or
service.

Activity Amount (In Thousand USD)

Value Added Cost :
Design reviews 200
Total Value Added Cost 200

Non Value Added Cost :

Incoming inspections 63
Machine maintenance 330
Scrap 67
Warranty repairs 68
Customer return 188
Rework 112
Supplier training 40
Final Testing 203
Total Non Value Added Cost 1.071

3. Yes, because by using “activity based costing”, the company is forced to separate
value added cost and non value added cost and it provides a useful overall framework

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Dilarang memperbanyak MOJAKOE ini tanpa seijin SPA FEB UI
for value engineering. The company then should increase the efficiency of
value-added activities and reduce, or possibly eliminate, non value added costs. The
pricing policy must be based on the value added cost because it reflects the customers’
willingness to pay.

Problem III
A. ROI (Return on Investment) = Operating Income / Total Assets
(NOTE : All calculations are in Rp000)
ROI of Car Division = 2.475.000 / 33.000.000 = 7.5%
ROI of Spare-Part Dvision = 2.565.000 / 28.500.000 = 9%

B. RI (Residual Income) = Operating Income - (Required Rate of Return * Measure

of Investment) (NOTE : All calculations and answers are in Rp000)
1. Total assets minus current liabilities as measure of investment :
RI of Car Division = 2.475.000 - (12% * (33.000.000 - 6.600.000)) =
-693.000
RI of Spare-Part Division = 2.565.000 - (12% * (28.500.000 - 8.400.000)) =
153.000

2. Total assets as measure of investment :

RI of Car Division = 2.475.000 - (12% * 33.000.000) = -1.485.000
RI of Spare-Part Division = 2.565.000 - (12% * 28.500.000) = -855.000

The appropriate measurement of investment is by using total assets as measure of

investment because it reflects overall company’s balance sheet.

B. WACC (Weighted Average Cost of Capital) = Cost of Debt * Percentage of Debt

Funding * (1-Tax Rate) + Cost of Equity * Percentage of Equity Funding

Percentage of Debt Funding = Rp18 billion / (Rp 18 billion + Rp 12 billion) = 60%

Percentage of Equity Funding = Rp12 billion / (Rp 18 billion + Rp 12 billion) = 40%

WACC = 10% * 60% * (1-40%) + 15% * 40% = 9.6%

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Dilarang memperbanyak MOJAKOE ini tanpa seijin SPA FEB UI
Or WACC= (Cost of Debt (net of tax)*Total Debt + Cost of Equity * Total Equity) /
Total Debt + Total Equity

WACC = ((10% *(1-25%)*Rp18 Billion) + (15%*Rp12 Billion))/ Rp18 Billion +

Rp12 Billion
= 9.6%

EVA (Economic Value Added) = Net Operating Profit After Tax - {WACC * (Total
Invested Capital - Non interest bearing Liabilities) }

!!! Assume all current liabilites in this question are non interest bearing
liabilites!!!
(NOTE: All calculations and answers are in Rp000)

EVA of Car Division = 2.475.000 * (1-40%) - {9.6% * (33.000.000 - 6.600.000)} =

-1.049.400

EVA of Spare-Part Division = 2.565.000 * (1-40%) - {9.6% * (28.500.000 -

8.400.000)} = -390.600

Based on ROI,RI, and EVA, it can be seen that the ROI of Spare-Part division is
higher than Car division, RI of Spare-Part division from both measurement of
investments is higher than Car division, and EVA of Spare-Part division is higher than
Car division. Overall, the performance of Spare-Part division is better than Car
division maybe because Spare-Part division production is more efficient and effective
than Car division.
D.
Because Car Division operates in Thailand and uses Baht as reporting currency, PT
Angkasa has to make a translation for the further apple to apple analysis between all
of its divisions. According to Accounting principle, Operating Income have to be
converted using average exchange rate, and Assets have to be converted using closing
rate at the date of balance sheet.

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Exchange rate beginning of 2013 = Rp360
Exchange rate at closing date = Rp380
Average Exchange Rate = Rp370

in Baht Converted to rupiah

Operating Income 7,000,000 2,590,000,000
Total Assets 85,000,000 32,300,000,000
ROI 8.02%

Based on the calculations, Thailand car division has higher ROI comparing to
Indonesia’s division. (8.02% > 7.5%)

Problem IV
A. Assuming Atlantic division has reach its full capacity, minimum selling price
should be :
Minimum Price for Atlantic at full capacity = Incremental Cost + Opportunity
Cost
= $575 + ($1000 - $575)
= $1000
So, based on Atlantic perspective, they shouldn’t accept the $500 order, because
minimum transfer price is higher than that.

B. If both division have excess capacity, the minimum selling price is only variable
costs of equipment production.
Minimum Price = $90 + $ 400 = $490
So, if there is a buyer willing to pay $500 per unit, the company should accept it.
Because the company can get an incremental contribution margin of $10 per unit
($500 - $490)

As a whole, the company will get an incremental profit of $100 (10 units * $10)

C. The disadvantage is that Atlantic Division occurs loss because the variable costs
are higher than the selling price.
The advantage is if one day Pacific Division couldn’t sell all of its parts to outside

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manufacturers, Atlantic Division could occur income because the buyer has become
the regular customer of Atlantic Division.

D. Atlantic Division needs to know whether Pacific Division has excess capacity or
not, because the variable cost of parts from Pacific Division in Atlantic Division’s cost
and revenue structure has a big influence in Atlantic Division’s decision making.
Problem V
1.
Strategic Objectives Measures
Financial Perspective (Evaluate the profitability of
the strategy and the creation of shareholder issue) :
A. Increase revenue from new products Revenue growth
C. Decreasing operating expenses Cost reduction
J. Increase return on Investment (ROI) ROI from productivity gain
Customer Perspective (identifies targeted customer
and market segments and measures the company’s
success in these segments :
H. Increase customer satisfaction Customer-satisfaction ratings
I. Increase customer acquisition Number of new customers
Internal Business Process Prospective (Focus on
internal operations that create value for customer)
D. Decrease cycle time for the development of Number of new innovative products
new products
E. Decrease rework Decrease of internal failure costs
L. Decrease the collection period for accounts Increase of accounts receivable
receivable turnover
Learning and Growth Perspective (capabilities the
organizations must excel at to achieve superior
internal processes that in turn create value for
customers and shareholders)
B. Increase implementation of employee Percentage of line workers
suggestions empowered to manage processes
F. Increase employee morale Employee-satisfaction ratings
G. Increase access of key employees to customer Percentage of manufacturing

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and product information processes with real-time feedback
K. Increase employee productivity Employee-productivity ratings
M. Increase employee skills Percentage of employees trained in
process and quality management

2.

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2.
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Problem VI
1.

2. The analysis of operating income indicates that a significant amount of the increase
in operating income resulted from successful implementation of its product
differentiation strategy.

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 MOJAKOE Dilarang memperbanyak MOJAKOE
ini tanpa seijin SPA FEUI. Download
MOJAKOE dan SPA Mentoring di :
AKUNTANSI http://spa-feui.com
SPA FEUI
2014

MANAJEMEN
MOJAKOE AM 2012/2013

UNIVERSITAS OF INDONESIA
FACULTY OF ECONOMICS – DEPARTMENT of ACCOUNTING

FINAL EXAM
EVEN SEMESTER 2012/2013
SUBJECT : MANAGEMENT ACCOUNTING (ACCT 12103)
LECTURER : TEAM LECTURER
TYPE : CLOSED BOOK
DATE : June 13, 2013
DURATION : 180 MINUTES

PROBLEM 1 (20%)
Pekas Corp. (PC) operates as a decentralized multidivision company, with each
manufacturing division operating as a separate profit center. Division A can sell all its
products, CR7, to the outside market at a price of $100 per unit, after incurring a variable
marketing and distribution cost of $10 per unit. Division B can purchase CR7 in the open
market for $100 per unit but must incur variable purchasing cost of $5 per unit. B’s annual
purchases of CR7 is 5,000 units.
A’s Variable cost for manufacturing CR7 is $60 per unit and Fixed cost per unit of CR7 is
$10. Division A has an annual production capacity of 30,000 units.
1. Assume that there is no excess capacity in the division A. What is the minimum
transfer price and the maximum transfer price for CR7?

2. Assume that division A is currently working at 80% of capacity. What is the

minimum transfer price for CR7?

3. Assume that division A is currently working at 90% of capacity. What is the

minimum transfer price for CR7 if division A has to transfer 5,000 units to division
B?

PROBLEM 2 (30%)
Following a strategy of product differentiation, Mourinho Corporation makes a high-end
smart phone, CR7, that is superior and unique from competition. Mourincho Corporation
believes that putting additional resources into R&D and staying ahead of the competition
with technological innovations are critical to implementing its strategy. Mourinho
Corporation presents the following data for the years 2011 and 2011:

2010 2011
Units of CR7 produced and sold 5,000 5,500
Selling price $400 $440

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MOJAKOE AM 2012/2013

Direct materials (pounds) 15,000 15,375

Direct materials costs per pound $40 $44
Manufacturing capacity for CR7 (units) 10,000 10,000
Conversion costs $1,000,000 $1,100,000
Conversion costs per unit of capacity $100 $110
Selling and customer-service capacity (customers) 60 58
Total selling and customer-service costs $360,000 $362,500
Selling and customer-service capacity cost per customer $6,000 $6,250

Mourinho Corporation produces no defective units but it wants to reduce direct materials
usage per unit of CR7 in 2011. Manufacturing conversion costs in each year depend on
production capacity defined in terms of CR7 units that can be produced. Selling and
customer-service costs depend on the number of customers that the customer and service
functions are designed to support. Mourinho Corporation has 100 customers in 2010 and 115
customers in 2011. The industry market size for high-end computer monitors increased 5%
from 2010 to 2011.

Required:

Part I
Identify at least one key element that you would expect to see included in the balanced
scorecard:
a. for the financial perspective.
b. for the customer perspective.
c. for the internal business process perspective.
d. for the learning and growth perspective.

Part II
Using the formulas given below, answer the following questions:

a. What is operating income for 2010?

b. What is operating income in 2011?
c. What is the change in operating income from 2010 to 2011?
d. What is the revenue effect of the growth component?
e. What is the cost effect of the growth component? (Hint: this is the sum of the cost
effects of growth for variable costs, fixed conversion costs and fixed selling and
customer-service costs)
f. What is the net effect on operating income as a result of the growth component?
g. What is the revenue effect of the price-recovery component?
h. What is the cost effect of the price-recovery component? (Hint: this is the sum of the
cost effects of price recovery for variable direct materials, fixed conversion costs and
fixed selling and customer-service costs)
i. What is the net effect on operating income as a result of the price-recovery
component?
j. What is the net effect on operating income as a result of the productivity component?
(Hint: this is the residual of increase in operating income not contributed by the
growth component and price-recovery component)
k. Is Mourinho’s operating income gain consistent with the product differentiation
strategy? Explain briefly.

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MOJAKOE AM 2012/2013

PROBLEM 3 (15%)
Toota and Co. manufactures automobile accessories and parts. The following are the total
processing costs for each unit. (Rp)
Direct material cost 5,000
Direct labour cost 8,000
Variable factory overhead 6,000
And Total Fixed cost 50,000

The same units are available in the local market. The purchase price of the component is
Rp22,000 per unit. The fixed overhead would continue to be incurred even when the
component is bought from outside, although there would be reduction to the extent of Rp2,000
per unit. However, this reduction does not occur, if the machinery is rented out.
Required:
a. Should the part be made or bought, considering that the present capacity when released
would remain idle?
b. In case, the released capacity can be rented out to another manufacturer for Rp4,500 per unit,
what should be the decision?

PROBLEM 4 (20%)
Mulan Manufacturing Company is using 4 types of machine to produce its three very
specialized doll. The three dolls are called, Standard, Special, and Unique. Demand for the
standard doll per month is 450 dolls, while the demand for Special and Unique dolls are 300
dolls and 100 dolls respectively.
Capacity for the 4 machine are as follows, machine I - 3.000 minutes, machine II - 4.500
minutes, machine III - 4.200 minutes, and machine IV - 2.000 minutes.
Selling price per unit, variable costs per unit and production minutes required for each type of
dolls are as follows :

Selling Direct Minutes Requires per Unit for Each Machine

Price Material I II III IV
Standard Dolls $ 50 $ 20 3 5 2 -
Special Dolls $ 100 $ 55 4 6 8 -
Unique Dolls $ 150 $ 75 6 8 20 12

All of the machines used are rented by the company. If the machine is not used, the company
can cancel the rent, and therefore avoid the rent expense. Rent expense per month is $ 4.000
for
machine I, $ 2.000 for machine II, $ 3.500 for machine III, and $ 3.800 for machine IV.
Salary expenses for the month is $ 4.500, while other fixed expenses is $ 500 per month
Required:
a. Based on the information given, determine the best product mix that can maximize
company's
operating income per month.
b. Calculate the amount of operating income based on your answer in point(a).

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MOJAKOE AM 2012/2013

PROBLEM 5 (10%)
First Media uses ROI to measure divisional performance. Here is the performance division
Home Cable last two years and Required Return for the year 2012.
2011 2012
Return on Sales (ROS) 10% 9.6%
Investment Turnover 2 1.67
Sales 20 Billion 25 Billion
Required Return - 23%

First Media Management less satisfied with the performance of the division Home Cable
because although sales increased 25% from last year, but down significantly ROI.
Required:
1. Calculate for 2011 and 2012 : (a) ROI, (b) Invested Capital, (c) Operating Income.
Calculate
as well the Expected Operating Income in 2012
2. What factors do you think that may have contributed to the decline in First Media ROI in
2012? Give your analysis.

-------- GOOD LUCK ----------

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MOJAKOE AM 2012/2013

Jawaban :

Problem 1
1. Assume that there is no excess capacity in the division A. What is the minimum
transfer price and the maximum transfer price for CR7?
Full capacity
Minimum transfer price = Incremental cost/unit (Variable cost/unit) + Opportunity
cost
Minimum transfer price = $ 60 + ( $ 100 - $ 70*)
Minimum transfer price = $ 90/unit

* $ 70 = Variable cost + Fixed cost

$ 70 = $ 60 + $ 10

Maximum transfer price (total costs apabila beli dari luar) = $ 100 + $ 5
Maximum transfer price = $ 105/unit

2. Assume that division A is currently working at 80% of capacity. What is the

minimum transfer price for CR7?

Idle capacity = 20% x 30.000 unit = 6.000 units

Production = 80% x 30.000 unit = 24.000 units
30.000 units

Idle = 6.000 units

Request = 5.000 units
No opportunity cost

Minimum transfer price = Incremental cost/unit (Variable cot/unit) + Opportunity

cost
Minimum transfer price = $ 60 + $ 0
Minimum transfer price = $ 60

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MOJAKOE AM 2012/2013

3. Assume that division A is currently working at 90% of capacity. What is the

minimum transfer price for CR7 if division A has to transfer 5,000 units to division
B?

Current capacity = 90% x 30.000 units = 27.000 units

Idle = 10% x 30.000 units = 3.000 units

Idle = 3.000 units

Request = 5.000 units

5.000 units -> 3.000 units yang pertama. Minimum TP = $ 60/ unit
-> 2.000 units yang selanjutnya
Opportunity costs = 2000 units x ($100 – 70) = $60,000.
Opportunity costs per unit = 60,000/5,000 units = $12/ unit

Minimum TP = $60 + $12 = $72

Problem 2
Part I
Identify at least one key element that you would expect to see included in the
balanced scorecard:
a. for the financial perspective (Evaluates the profitability of the strategy and the
creation of shareholder value)

Income measures : Operating income (for example : operating income growth from
charging higher margins for CR7), gross margin percentage

Revenue and cost measures : Revenue growth, revenues from new products, cost
reductions in key areas

Income and investment measures : Economic value added (EVA), return on

investment

b. for the customer perspective (identifies targeted customer and market segments and
measures the company’s success in these segments)

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MOJAKOE AM 2012/2013

Market share (for example : market share in the high-end smart phone), new
customer, customer satisfaction, customer-retention percentage, time taken to
fulfill customers’ requests, number of customer complaints.

c. for the internal business process perspective (focuses on internal operations that
create value for customer)

- Innovation Process (creating products, services, and processes that will meet the
needs of customers) :
Operating capabilities, number of new products or services, new-product
development times, and number of new patents

- Operations Process (producing and delivering existing products and services that
will meet the needs of customers) :
Yield, defect rates, new product features added, time taken to deliver product to
customers (for example : order delivery time), percentage of on-time deliveries,
average time taken to respond to orders, setup time, manufacturing downtime

- Postsales Service Process (providing service and support to the customer after the
sale of a product or service):
Time taken to replace or repair defective products, hours of customer training for
using the product

d. for the learning and growth perspective (capabilities the organization must excel at
to achieve superior internal processes that in turn create value for customers and
shareholders)

Employee measures : Development time for new features, improvements in

manufacturing technologies, employee education and skill levels, employee satisfaction
ratings, employee turnover rates, percentage of employee suggestions implemented,
percentage of compensation based on individual and team incentives

Technology measures : Information system availability, percentage of processes with

advanced controls

Part II

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MOJAKOE AM 2012/2013

a. What is operating income for 2010?

2010
Revenue
(5.000 units x $ 400) $2.000.000
Costs:
Direct material costs
(15.000 pounds x $ 40) $600.000
Conversion costs
(10.000 units x $ 100) $1.000.000
Selling and customer service costs
(60 customer x $ 6.000) $360.000
Total costs $1.960.000
Operating income $40.000

b. What is operating income in 2011?

2011
Revenue
(5.500 units x $ 440) $2.420.000
Costs:
Direct material costs
(15.375 pounds x $ 44) $676.500
Conversion costs
(10.000 units x $ 110) $1.100.000
Selling and customer service costs
(58 customer x $ 6.250) $362.500
Total costs $2.139.000
Operating income $281.000

c. What is the change in operating income from 2010 to 2011?

Change in Operating income = Operating income 2011 – Operating income 2010
Change in Operating income = $ 281.000 - $ 40.000
Change in Operating income = $ 241.000 F

d. What is the revenue effect of the growth component?

Revenue effect of growth = (Actual units of output sold in 2011 – Actual units of
output sold in 2010) x Selling price in 2010
Revenue effect of growth = (5.500 units – 5.000 units) x $ 400
Revenue effect of growth = $ 200.000 F

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MOJAKOE AM 2012/2013

e. What is the cost effect of the growth component? (Hint: this is the sum of the cost
effects of growth for variable costs, fixed conversion costs and fixed selling and
customer-service costs)
1. Cost effect of the growth for variable cost
Cost effect of the growth for variable cost = (Units of input required to produce
2011 output in 2010 – Actual units of input used to produce in 2010 output) x Input
price in 2010
5.500 𝑢𝑛𝑖𝑡𝑠
Cost effect of the growth for variable cost = ( 15.000 pounds x 5.000 𝑢𝑛𝑖𝑡𝑠
- 15.000
pounds ) x $ 40/pound
Cost effect of the growth for variable cost = $ 60.000 U

2. Cost effect of the growth for fixed cost

Cost effect of the growth for fixed cost = (Actual units of capacity in 2010 because
adequate capacity exists to produce 2011 output in 2010 – Actual units of capacity
in 2010) x Price per unit of capacity in 2010
Cost effect of the growth for fixed cost :
Conversion cost = ( 10.000 units – 10.000 units) x $100/unit =$
0
Selling & Customer service = (60 customers – 60 customer) x $ 6.000/customer = $
0
Cost effect of the growth for fixed cost =$
0

*Notes :
The units of input required to produce 2011 output in 2010 can also be calculated as
follows :

15.000 𝑝𝑜𝑢𝑛𝑑𝑠
Units of input per unit of output ini 2010 = 5.000 𝑢𝑛𝑖𝑡𝑠
= 3 pound/unit

Units of input required to produce 2011 output of 5.500 units in 2010 = 3 pound/unit x
5.500 units = 16.500 pounds

Conversion costs are fixed costs at given level of capacity. Mourinho has manufacturing
capacity to process 10.000 units/30.000 pounds in 2010 at a cost of $ 100 per unit/ 33.33
per pound. To produce 5.500 units of output in 2010, Mourinho needs to process 16.500

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MOJAKOE AM 2012/2013

pounds of direct materials, which is less than the available capacity of 30.000 pounds.
Throughout this chapter (CH 13), we assume adequate capacity exists in the current
year (2010) to produce next year’s (2011) otuput. Under the assumption, the cost effect
of growth for capacity-related fixed costs is, by definition, $0.

Cost effect of the growth component = Cost effect of the growth for variable cost
+ Cost effect of the growth for fixed cost
Cost effect of the growth component = $ 60.000 + $ 0
Cost effect of the growth component = $ 60.000 U

f. What is the net effect on operating income as a result of the growth component?
The net increase in operating income as a result of the growth component equals the
following :
Revenue effect of the growth = $ 200.000 F
Cost effect of the growth = $ 60.000 U
Change in operating income to growth = $ 140.000 F

g. What is the revenue effect of the price-recovery component?

Revenue effect of the price-recovery = (Selling price in 2011 – Selling price in 2010)
x Actual units of output sold in 2011
Revenue effect of the price-recovery = ( $ 440 - $ 400) x 5.500 units
Revenue effect of the price-recovery = $ 220.000 F

h. What is the cost effect of the price-recovery component? (Hint: this is the sum of
the cost effects of price recovery for variable direct materials, fixed conversion
costs and fixed selling and customer-service costs)
1. Cost effect of price recovery for variable cost
Cost effect of price recovery for variable cost = (Input price in 2011 – Input price
in 2010) x Units of input required to produce 2011 output in 2010
Cost effect of price recovery for variable cost = ( $ 44 - $ 40) x 16.500 pounds*
Cost effect of price recovery for variable cost = $ 66.000 U

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*Units of input required to produce 2011 output in 2010

5.500 𝑢𝑛𝑖𝑡𝑠
= 15.000 pounds x 5.000 𝑢𝑛𝑖𝑡𝑠

= 16.500 pounds

2. Cost effect of price recovery for fixed cost

Cost effect of price recovery for fixed cost = (Price per unit of capacity in 2011 –
Price per unit of capacity in 2010) x Actual units of capacity in 2010 (because
adequate capacity exists to produce 2011 output in 2010)
Cost effect of price recovery for fixed cost :
Convension cost = ( $ 110/unit - $ 100/unit) x 10.000 units = $100.000 U
Selling & Customer Service = ( $ 6.250/customer -$ 6.000/customer) x 60 customer
= $ 15.000 U
Cost effect of price recovery for fixed cost = 115.000 U

Note that the detailed analyses of capacities were presented when computing the cost
effect of growth.

Cost effect of the price-recovery component = Cost effect of price recovery for
variable cost + Cost effect of price recovery for fixed cost
Cost effect of the price-recovery component = $ 66.000 U + 115.000 U
Cost effect of the price-recovery component = $ 181.000 U

i. What is the net effect on operating income as a result of the price-recovery

component?
The net increase in operating income attributable to price recovery equals the following
:
Revenue effect of the price-recovery = $ 220.000 F
Cost effect of the price-recovery component = $ 181.000 U
Change in operating income due to price recovery = $ 39.000 F

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j. What is the net effect on operating income as a result of the productivity

component? (Hint: this is the residual of increase in operating income not
contributed by the growth component and price-recovery component)
Cost affect of productivity for variable cost = (Actual units of input used to
produce 2011 output – Units of input required to produce 2011 output in 2010) x
Input price in 2011
Cost affect of productivity for variable cost = (15.375 pounds – 16.500 pounds*) x $
44/pound
Cost affect of productivity for variable cost = $ 49.500 F

*Units of input required to produce 2011 output in 2010

5.500 𝑢𝑛𝑖𝑡𝑠
= 15.000 pounds x 5.000 𝑢𝑛𝑖𝑡𝑠

= 16.500 pounds

Cost affect of productivity for fixed cost = (Actual units of capacity in 2011 –
Actual units of capacity in 2010 because adequate capacity exists to produce
2011 output in 2010) x Price per unit of capacity in 2011

Cost affect of productivity for fixed cost :

Conversion cost = (10.000 units – 10.000 units) x $110/ unit
=$0
Selling & Customer Service = (58 customers – 60 customers) x $ 6.250/Customs
= $ 12.500
Cost affect of productivity for fixed cost = $ 12.500 F

Cost affect of productivity = Cost affect of productivity for variable cost + Cost affect
of productivity for fixed cost
Cost affect of productivity = $ 49.500 F + $ 12.500 F
Cost affect of productivity = $ 62.000 F

The net effect on operating income as a result of the productivity component :

Revenue affect of productivity =-
Cost affect of productivity = $ 62.000 F
Net effect on operating income = $ 62.000 F

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MOJAKOE AM 2012/2013

k. Is Mourinho’s operating income gain consistent with the product differentiation

strategy? Explain briefly.
Income Income
Statement Revenue and Revenue and Cost Cost Effect of Statement
Amount Cost Effects of Effects of Productivity Amount
Growth
Component in Price Recovery Component
in 2010 2011 Component in 2011 in 2011 in 2011
Revenues $2.000.000 $ 200.000 F $ 220.000 F - $2.420.000
Costs $1.960.000 $ 60.000 U $ 181.000 U $ 62.000 F $2.139.000
Operating income $40.000 $ 140.000 F $ 39.000 F $ 62.000 F $281.000

Change in operating income = 241.000 F

Conclusion : Generally, Mourinho corporation have succesfully differentiated their

products, because it shows favorable price recovery and growth components. In this
case, Mourinho consistent with its strategy and its implementation, productivity
contributed $ 62.000 to the increase of operating income, growth contributed $ 140.000
to the increase of operating income, and price recovery contributed $ 39.000 to the
increase of operating income. However, Mourinho Price implemented a strategy of
product differentiation, price recovery still contributed $ 39.000 to the increase of
operating income because, even as input prices increased, the selling price of product
increased.

Problem 3
a. Should the part be made or bought, considering that the present capacity when
released would remain idle?

Make
Direct Material Rp 5.000,-
Direct Labor Rp 8.000.-
Variable Factory Overhead Rp 6.000,-
Total cost Rp 19.000,-

Buy
Purchase Price Rp 22.000,-
Reduction in fixed cost per unit Rp 2.000,- (given)
Total cost Rp 20.000,-/ unit

Company make on its own because the total cost is lower.

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MOJAKOE AM 2012/2013

b. In case, the released capacity can be rented out to another manufacturer for
Rp4,500 per unit, what should be the decision?
Make
Relevant cost to make Rp 19.000,-

Buy
Purchase Price Rp 22.000,-
Rent income Rp 4.500,- (given)
Total cost Rp 17.500,-/ unit

Company buy from another manufacturer because the total cost is lower.

Problem 4
a. Based on the information given, determine the best product mix that can maximize
company's operating income per month.

b. Calculate the amount of operating income based on your answer in point(a).

Minutes Requires for Each

Unit Machine
(Qd) I II III IV
Standard Dolls 450 1350 2250 900 0
Special Dolls 300 1200 1800 2400 0
Unique Dolls 100 600 800 2000 1200
Demand 3150 4850 5300 1200
Constraint in
Supply 3000 4500 4200 2000 Machine III

Notes :
1. Minutes Requires for Each Machine = Unit (Qd) x Minute Requires per Unit for
Each Machine
2. Demand = Total Minutes Required for Each Machine
3. Supply = Machine Capacity

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 MOJAKOE AM 2012/2013

Machine III
Throughput Minute Throughput Unit Throughput
Per unit Constraint Per Minute Priority Sold Per unit
Standard Dolls 30 2 15 I 450 30 13500
Special Dolls 45 8 5,625 II 300 45 13500
Unique Dolls 75 20 3,75 III 45 75 3375
Total Throughput 30375
Total Fixed Costs 18300
Total Operating
Income 12075

Notes :
1. Throughput = Selling price - Direct Material
2. Total Fixed Costs = Rent expense machine I + Rent expense machine II + Rent
expense machine III + Rent expense machine IV + Salary Expense + Other Fixed
Expenses
Total Fixed Costs = $ 4.000 + $ 2.000 + $ 3.500 + $ 3.800 + 4.500 + 500
Total Fixed Costs = $ 18.300

However,since machine IV is used only for producing Unique Dolls, and the rent can be
cancelled. If the company did not produced Unique Dolls (and Unique Dolls has the
lowest throughput per minute constraint), therefore we have to calculate the option of not
producing Unique Dolls and its impact on company's operating income (in this case total
fixed costs is relevant costs and we can not compare based on throughput only).

Minutes Required
Unit I II III IV
Standard
Dolls 450 1350 2250 900 0
Special Dolls 300 1200 1800 2400 0
Demand 2550 4050 3300 0
No
Supply 3000 4500 4200 Constraint

If the company do not produce unique dolls, there will be no constraint face by the
company, and the total throughput and operating income for the company will be

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MOJAKOE AM 2012/2013

Throughput Minute Throughput Unit

Throughput per Unit Constraint Per Minute Priority Sold
Standard Dolls 30 2 15 I 450 30 13500
Special Dolls 45 8 5.625 II 300 45 13500
Total Throughput 27000
Total Fixed Costs 14500
Total Operating
Income 12500

Notes :
1. Total Fixed Costs = Rent expense machine I + Rent expense machine II + Rent expense
machine III +Salary Expense + Other Fixed Expenses
Total Fixed Costs = $ 4.000 + $ 2.000 + $ 3.500 + 4.500 + 500
Total Fixed Costs = $ 14.500
Therefore, it is better for the company not to produce the Unique Dolls, but only
produce 450 Standard Dolls and 300 Special Dolls (Operating income will be $
12.500/month).

Problem 5
1. Calculate for 2011 and 2012 : (a) ROI, (b) Invested Capital, (c) Operating Income.
Calculate as well the Expected Operating Income in 2012
a. ROI (Return on Investment) = Return on Sales x Investment turnover
Return on Investment 2011 = 10% x 2 = 20%
Return on Investment 2012 = 9.6% x 1.67 = 16,032%

b. Invested Capital
Revenues/ Sales
Investment Turnover = 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

Revenues/ Sales
Investment = 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
20 Billion
Investment 2011 = 2
= 10 Billion
25 Billion
Investment 2012 = 1,67
= 14,970, 059,880

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MOJAKOE AM 2012/2013

c. Operating Income = Return on Sales (ROS) x Sales

Operating Income 2011 = 10% x 20 Billion = 2 Billion
Operating Income 2012 = 9,6% x 25 Billion = 2.4 Billion

d. Expected Operating Income 2012 = 14,970,059,880 x 23% = Rp 3,443, 113,772

2. What factors do you think that may have contributed to the decline in First Media
ROI in 2012? Give your analysis.
The DuPont method of profitability analysis (recognizes the two basic ingredients in
profit making: increasing income per dollar revenues and using assets (can be investment)
to generate more revenues)

Operating Operating Income Revenues Operating Income

Income Revenues Investment Revenues x Investment = Investment

2 Billion 20 Billion
2011 2 Billion 20 Billion 10 Billion 20 Billion x 10 Billion = 20%

14,97 2,4 Billion 25 Billion

2012 2,4 Billion 25 Billion Billion 25 Billion x 14,97 Billion = 16,032%

Secara keseluruhan, ROI turun karena meskipun operating income meningkat

(memperbesar pembilang), namun investasi yang digunakan untuk menghasilkan
revenue juga meningkat ( memperbesar penyebut) dengan persentase yang lebih besar.

Pada Metode analisis ini, diketahui bahwa income per dollar revenues nya/ROS
menurun dari 0.1 menjadi 0.096, sedangkan revenues per investment nya/Investment
Turnover nya juga menurun dari 2 menjadi 1.67 sehingga menyebabkan ROI turun dari
0.2 menjadi 0.16032.

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Presented By: SPA-Accounting Study Division Akuntansi Manajemen

MOJAKOE

AKUNTANSI MANAJEMEN

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Final Term Examination

Even Semester 2010/2011

Question 1 (20%)-Sales Variance(Not included in test material)

Question 2 (30%)

Casiopea LTD, is a company with a very diversivied operation. The company have several division, such as
farming machinery division, fertilizer division, etc. Recently, due to the intense competition, chemical
division is showing a declining trend on its profitability. The Chemical Division produces and sells two type
of chemical, XIF and ZAC. The profitability of each product and the total division for 2010 were as follows:

XIF ZAC
10.000 Unit 15.000 Unit Total
Sales 3.100.000 1.875.000 4.975.000
Direct Materials 500.000 300.000 800.000
Direct Labor 300.000 375.000 675.000
Variable Factory Overhead 150.000 225.000 375.000
Fixed Factory Overhead 224.000 336.000 560.000
Selling Expense-Variable 120.000 120.000 240.000
Selling Expense-Fixed 150.000 150.000 300.000
Administration Expense-Fixed 112.000 168.000 280.000
Corporate Costs Allocated 44.800 67.200 112.000
Total Costs 1.600.800 1.741.200 3.342.000
Operating Income 1.499.200 133.800 1.633.000
*)The Chemical Division used the same product facility to produce XIF and ZAC. As a result they share the
same common overhead. Total Fixed Overhead costs were allocated based on actual production
capacity(in units)

*)The Chemical Division is adopting JIT system. Therefore the actual unit produced is the same as the
actual unit sold.

*)Administrative expenses and Corporate costs were allocated using actual production unit.

*)Each of the products has its own selling force. Therefore the variable and fixed selling expenses are
direct costs and not a result of allocation.

In 2011, The division predicts that there will be a new player in the chemical industry which will specialize
in producing ZAC. This new company is expected to sell this product with a price of Rp 100 per unit. As a
result, the Chemical Division will be forced to decrease the price of ZAC to Rp 100 per unit. In 2011, the
Chemical division also predicts that direct material for both the products (XIF and ZAC) will increase by
10%. The other costs are predicted to remain the same. Selling price for XIF is also predicted to remain
the same. To cope with this condition, the Chemical Division already considering four alternatives. Those
are:

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1. Chemical division will notdo anything, and just decrease the price of ZAC to Rp 100 per unit. Using
the assumption the chemical division predicts that it can sell 12,000 unit of XIF, and 16,000 unit of
ZAC in 2011.
2. Another alternative will be to discontinue ZAC. If ZAC is discontinued, then all the sales people of
ZAC will not be fired, but they will be assigned to sell XIF. Therefore the fixed selling expenses will
not be changed, and the Chemical division predicts that it can sell 15,000 unit of XIF
3. The third alternative will be to outsource the production of ZAC to another company. Recently
the Chemical division has offer to purchase productsx similar to ZAC from Sunshine Ltd, with a
pridce of Rp 58 per unit. Using this scheme, it is estimated that the chemical division can sell
12,000 unit of XIF and 16,000 unit of ZAC.
4. The last alternative will be to implement a cost reduction program. After several try, the chemical
division finally feels optimistic that it can reduce the fixed factory overhead by 20%,
administrative expenses by 10%, and variable selling expenses for ZAC by 10%, while the other
costs could not be reduced.

Required:

 Calculate the profit for XIF, ZAC, and Chemical division as a total for each of the alternative, and
decide which alternative is the most profitable one quantitatively.
 Explain two requirements in which costs can be categorized as Relevant costs, and give examples
for each of the requirements.

Question 3 (30%)

Part A (15%)-Transfer Pricing and Utilization of Capacity.

The California Instrument Company (CIC) consists of the Semiconductor Division and the process-control
Division, each of which operates as an independent profit center. The Semiconductor division employs
craftsmen who produce two different electronic components : the new high-performance super-chip and
an older product called Okay-Chip. These two products have the following cost characteristics :

Super-Chip Okay-Chip

Direct Materials $2 $1

Direct Manufacturing Labor, 2 hours x $14;0.5 hour x $14 $28 $7

Annual Overhead in the semiconductor division totals $400,000, all fixed. Due to the high skill level
necessary for the craftsmen, the semiconductor Division’s capacity is set at 50,000 hours per year.

One Customer orders a maximum of 15,000 Super-Chips per year, at a price of $60 per chip. If CIC
cannot meet this entire demand, the customer curtails its own production. The rest of the semiconductor
division’s capacity is devoted to the okay-chip, for which there is unlimited demand at $12 per chip.

The process-control division produces only one product, a process control unit, with the following
cost structure:

 Direct Materials (circuit board):$60

 Direct Manufacturing Labor (5 hours x $10) :$50

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Fixed Overhead cost of the process-control division are 80,000 per year. The curret market price for the
control unit is $132 per unit.

A joint research project has just revealed that a single super-chip could be substituted for the
circuit board currently used to make the process control unit. Using super chip require an extra one hour
of labor per control unit for a new total of six houes per control unit.

Required :

1. Calculate the contribution margin per unit of selling super chip and okay chip. If no transfer of
super-chip are made to the process control division, how many super chips and okay chips should
the semiconductor division sell? Show your computations..
2. The Process control division expects to sell 5,000 process control units this year, From the
viewpoint of California instruments as a whole, should 5,000 super chips be transferred to the
process control division to replace circuit boards? Show your computations.
3. If demand for the process control unit is certain to be 5,000 units but its price is uncertain, what
should the transfer price, what should the transfer price of super chip be to ensure that the
division managers’ actions maximize operating income for CIC as a whole? (All other data are
unchanged)

Part B (15%)

Key Information for the Plymouth Division(PD) of Bennington Industries for 2009 follows.

Revenues $16,000,000

Operating Income $2,000,000

Total Assets $12,500,000

PD’s managers are evaluated and rewarded on the basis of ROI defined as operating income divided
by total assets, Bennington Industries expexts its divisions to increase ROI each year.

Next year, 2010, appears to be a difficult year of PD. PD had planned a new investment to
improve quality butm in view of poor economic conditions, has postponed the investment ROI for
2010 was certain to decrease if PD had made the investment,

Management is now considering ways to meet its target ROI of 20% for next year. It anticipates
revenue to be steady at $16,000,000 in 2010.

1. Calculate PD’s return on sales (ROS) and ROI for 2009,

2. a. By how much would PD need to cut costs in 2010 to archieve its target ROI of 20%, assuming
no change in total assets between 2009 and 2010?
b. By how much would PD need to decrease total assets in 2010 to archieve its target ROI of 20%,
assuming no change in operating income between 2009 and 2010?
3. Calculate PD’s RI in 2009 assuming a required rate of return on investment of 15%.
4. PD wants to increase RI by 50% in 2010, Assuming it could cut costs by $55,000 in 2010 by how
much would PD need to decrease total assets in 2010?

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5. Bennington industries is concerned that the focus on cost cutting, asset sales, and no new
investments will have an adverse long-run effect on PD’s customers, Yet Bennigton wants PD to
meet its financial goals, What other measurement, if any do you recommend that bennington
use? Explain briefly.

Question 4 (20%)

The balanced scorecard for a small food ingredients company is shown below, The firms’ product and
services are used by a diverse set of customers, including different types of food processors
(Indofood, Belfoods, ABC Food, Farmhouse, etc.) Restaurant chainsm bakeries, supermarkets, and the
like, The company is located in a large city.

BALANCED SCORECARD FOR A FOOD INGREDIENTS COMPANY

GOALS SCORECARD MEASURES
Financial Perspective
Capture an increasing share of industry growth Company growth versus industry growth
Secure the base business while remaining the Volume trend by line of business; Revenue trend
preferred supplier to our customers by line of business; Gross Margin
Expand aggresively in global markets. Ratio of Asian sales to International Sales
Percentage of sales from product launched
Commercialize a contiuous stream of profitable within the past five years; Gross Profit from new
new ingredients and services products
Customer Perspective
Total cost of using our product and services
Become the lowest cost supplier relative to total cost of using competitive
products and services
Tailor Products and services to meet local needs
Expand those products and services that meet Percent of product in R&D pipeline that are
customers' needs better than competitors. being test-marketed by our customers
Customer Satisfaction Customer Survey
Internal Perspective

Our total cost relative to number one

Maintain lowest cost base in the industry
competitor; Inventory turnover; Plant Utilization

Maintain consistent, predictable production First-pass success rate

processes
Continue to improve distribution efficiency Percentage of perfect orders
Build Capacity to screen and identidy profitable Change in customer profitability
products and services
Integrate acquisitions and alliances efficiently Revenues per sales dollar
Learning and Growth Perspective
Link the overall strategy to reward and Net Income per dollar of variable pay
recognition system
Foster a culture that supports innovation and Annual preparedness assessment; Quarterly
growth report

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ANSWERS

Question 2

XIF-price 310 ZAC-price 100

1st Alternative 12.000 units 16.000 units Total
Sales 3.720.000 1.600.000 5.320.000
Direct Materials (XIF-55/unit;ZAF-22/unit) 660.000 352.000 1.012.000
Direct Labor(XIF-30/unit;ZAF-25/unit) 360.000 400.000 760.000
Variable Factory Overhead (15/unit) 180.000 240.000 420.000
Fixed Factory Overhead rate 22.4 268.800 358.400 627.200
Selling Expense-Variable 120.000 120.000 240.000
Selling Expense-Fixed 150.000 150.000 300.000
Administration Expense-Fixed rate 11.2 134.400 179.200 313.600
Corporate Costs Allocated rate 4.48 53.760 71.680 125.440
Total Costs 1.926.960 1.871.280 3.798.240
Operating Income 1.793.040 (271.280) 1.521.760

XIF-price 310 ZAC-price 100

2nd Alternative 15.000 units 0 units Total
Sales 4.650.000 - 4.650.000
Direct Materials (XIF-55/unit;ZAF-22/unit) 825.000 - 825.000
Direct Labor(XIF-30/unit;ZAF-25/unit) 450.000 - 450.000
Variable Factory Overhead (15/unit) 225.000 - 225.000
Fixed Factory Overhead rate 22.4 336.000 - 336.000
Selling Expense-Variable 240.000 - 240.000
Selling Expense-Fixed 150.000 150.000 300.000
Administration Expense-Fixed rate 11.2 168.000 - 168.000
Corporate Costs Allocated rate 4.48 67.200 - 67.200
Total Costs 2.461.200 150.000 2.611.200
Operating Income 2.188.800 (150.000) 2.038.800

XIF ZAC
3rd Alternative 12.000 units 16.000 units Total
Sales 3.720.000 1.600.000 5.320.000
Direct Materials (XIF-55/unit;ZAF-22/unit) 660.000 - 660.000
Direct Labor(XIF-30/unit;ZAF-25/unit) 360.000 - 360.000
Purchase products (56/unit) 928.000
Variable Factory Overhead (15/unit) 180.000 - 180.000
Fixed Factory Overhead rate 22.4 268.800 358.400 627.200
Selling Expense-Variable 120.000 120.000 240.000
Selling Expense-Fixed 150.000 150.000 300.000
Administration Expense-Fixed rate 11.2 134.400 179.200 313.600
Corporate Costs Allocated rate 4.48 53.760 71.680 215.440
Total Costs 1.926.960 1.807.280 3.734.000

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Operating Income 1.793.340 (207.280) 1.586.060

XIF ZAC
4th Alternative 10.000 units 15.000 units Total
Sales 3.100.000 1.500.000 4.600.000
Direct Materials (XIF-55/unit;ZAF-22/unit) 550.000 330.000 880.000
Direct Labor(XIF-30/unit;ZAF-25/unit) 300.000 375.000 675.000
Variable Factory Overhead (15/unit) 150.000 225.000 375.000
Fixed Factory Overhead(-20%) rate 22.4 179.200 268.800 448.000
Selling Expense-Variable(for ZAC -10%) 120.000 108.000 228.000
Selling Expense-Fixed 150.000 150.000 300.000
Administration Expense-Fixed(-10%) 100.800 151.200 252.000
Corporate Costs Allocated 48.000 64.000 112.000
Total Costs 1.598.000 1.672.000 3.270.000
Operating Income 1.502.000 (172.000) 1.330.000
 The only alternatives that exceeds 2010 total operating income is alternative 2. So. Batter ZAC
project discontinued, and the selling workers assigned to sell XIF. The Operating income will be
increases to 2.038.800
 To be recognized as relevant cost, they must
o Occured in the future-every decision deals with some selecting course of action based on
ecpected future result. Ex: there are efficiency, the decreasing cost will be occured in the
future.
o Differ among the alternative courses of action- cost and revenue that do not differ will
not matter and, hence, will have no bearing on the decision being made. Ex: Efficiency
increase production, still in the capacity, so the fixed cost can’t define as relevant cost.

Question 3

Part A

 Contribution Margin Super-Chip

=Selling Price – Variable Cost
=Selling Price- (Direct Material per chip+Direct Manufacturing Labor)
=60-(2+28)
=$30/chip
Contribution Margin Okay-Chip
=12-(1+7)
=$4/chip
Superchip Maximal Order =15,000 unit, needs 2 hours per unit, so we need 30,000 hours, and
then the rest 20,000 hours (50,000-30,000) goes to produce Okay Chip. One Okay Chip needs half
an hour to make, so with 20,000 hours we can produce 40,000 Okay Chip. In the end, we get
15,000 Super-Chip and 40,000 Okay-Chip.

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 Assumption : When the 5000 unit of superchip was transferred, the rest 10.000 superchips were
sold to the customer and 5000 unit was processed furthermore for creating process control unit.
First, we compute the Operating Income for Semiconductor Division :


Semi Conductor Division 5.000 Unit was NOT Transfered 5.000 Unit WAS Transferred
: (15.000 x $30) + : (10.000 x $30 ) +
Contibution Margin 610.000 (40.000 x $4) 460.000 (40.000 x $4)

Fixed Costs (400.000) (400.000)

Revenue from 5.000 Unit that : ( 5.000 x ( $30 +
aaaaaawas Transfered - 300.000 ($60-$30)))
Cost of Production for 5.000
aaaaaaUnit - (150.000) : 5.000 x (28+2$)

Operating Income 210.000 210.000

5.000 Unit WAS

Process Control Division 5.000 Unit was NOT Transfered Transferred
Revenue 660.000 : 5.000 x $132 660.000
DM Cost (300.000) : 5.000 x $60 (300.000)
DL Cost (250.000) : 5000 x $50 (300.000)
Fixed Overhead Cost (80.000) (80.000)
Operating Income 30.000 -20.000
So It Is BetterTo Produce itself 5.000 units of Process Control Unit by Process Control Division, Because it
will contribute more Operating Income to CIC (240.000) than transfer (190,000)

 The original Operating Income is 240.000 (210.000 + 30.000). The Operating Income if 5.000unit
was from Super Chip was 190.000 (210.000 – 20.000). So In order to maximize its operating
income, the total operating Income must be higher than the original operating incomeof 240.000

Original Price per Process Control Unit $132

First Operating Income : 240.000
Second Operating Income (: 190.000)
Difference : 50.000
Unit Sold : 5.000 Unit
Increase in selling price : 50.000/5.000 unit 10 $
New Selling Priceto get Breakeven 142$

So, If the selling price is 142$, CIC will maintain its operating income of 240.000. To Maximize it,
than the selling price of Process Control Unit Must be Higher than 142$ ( >142$)

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Part B

1. Return On Sales(ROS)= 2,000,000/16,000,000 =12.5%

Return On Investment =2,000,000/12,500,000=16%

2. a. ROI Target=OI/Total Assets

20%= , ,
Operating Income =2,500,000
Sales =16,000,000
Cost =16,000,000-2,500,000
=13,500,000, sehingga cost perlu dipotong sebesar 500,000 (14,000,000-13,500,000)
b. ROI Target= OI/Total Assets
, ,
20%=
Total Assets =10,000,000
Jadi aset harus diturunkan sebanyak 2,500,000(12,500,000-10,000,000)
3. Residual Income = Operating Income –(rrr x Investment)
=2,000,000- (15% x 12,500,000)
=2,000,0000-1,875,000
=125,000
4. Residual Income increase by 50%.
New Residual Income =187,500(125,000+(50% x 125,000)
Costs decreased 55,000, new cost =13,945,000
New Operating Income =16,000,000-13,945,000
=2,055,000
Berapa Penurunan Nilai Total Asset di 2010?
187,500 = 2,055,000-(15% * x)
X= 1,867,500/0.15
=12,450,000
Aset harus turun sebesar 50,000 (12,500,000-12,450,000)

Question 4
 From the financial perspective, we can know that the company wants to expand
aggressively in global markets, this is one of cost leadership characteristic, with low cost,
you must cover it with many customers, and high sales. From this perspective too, we can
see that the company want to secure the base business, and commercialize a continous
stream of profitable new ingredients, it shows the company wants to get many customers
and make them satisfied with our quality.
 From the customer perspective, stated that the goals of the company is become the
lowest cost supplier, it shows us that the competitive strategy goes to cost leadership.
Moreover, customer needs and customer satisfaction still the point to get cost
leadership. Low cost product is have a big relation with poor quality, to proof this
perspective wrong, low cost product from the company should make customer satisfied
after sales.

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Presented By: SPA-Accounting Study Division Akuntansi Manajemen

 From Internal Perspective, maintain lowest cost base in the industry and make it sure
with smooth production processes results in low cost product. Change in customer
profitability with lower cost they must paid for same product with higher price in another
supplier makes us sure that it was characteristic cost leadership.
 From the learning and growth perspective, reward and recognition system is made to
appraise the worker, and it makes them creates more via innovation and growth they can
do.

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 June 1

MOJAKOE
2013
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Akuntansi
di : www.spa-feui.com Manajemen
 MOJAKOE

Question I : Decision Making and Relevant Information

Madison Industries received an order for a piece of special machinery from Concrad
Company. Just as Madison completed the machine, Concrad Company declared bankrupty,
defaulted on the order, and forfeited the 10 percent deposit paid on the selling price $92,500.
Madison’s manufacturing manager identified the costs already incurred in the production of
the special machinery for Jay Company as follows:
Direct Material.............................................. ............... $26,600
Direct Labor............................................................ ..... $21,400
Manufacturing Overhead Applied :
Variable........................................................ ..... $10,700
Fixed............................................................. ..... $ 5,350 $16,050
Fixed selling and administrative cost .................................................. $15.405
Total.................................................................................................. ........ $79.455
Anothe company, Johnson Corporatio, will buy the special machinery if it is reworked to
Johnson’s specificatios. Madison industries offered to sell the reworked machinery to
Johnson as special order for $68,400. Johnson agreed to pay the price when it takes delivery
in two months. The additional identifiable costs to rework for the machinery to Johnson’s
specifications are as followsL
Direct Material...................................................... .... $16,200
Direct Labor........................................................... .... $ 4,200
Total...................................................................... .... $ 20.400
A second alternative available to Madison’s management is to convert the special
machinery to the standard model, which sells for $60,000. The additional identifiable costs
for this conversion are as follows :
Direct Material........................................................ .... $ 8.800
Direct Labor............................................................ .... $ 3.300
Total....................................................................... .... $11.100

 All cost information above doesn’t include the overhead and operating cost yet.
A third altenative for Madison Industries is to sell the machine as is for price of $ 40,000.
However, the potential buyer of the unmodified machine does not want it for 60 days. This
buyer has offered a $7,000 down payment, with the remainder due upon delivery. No
commission will be paid on this transaction.
The following additional information is available regarding Madison’s operation.

 The sales commission rate on sales of standard models is 3%, while the rate on
special orders is 5% of the sales price.

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 MOJAKOE

 Normal credit terms for sales of standard models are 2/10, net/30. This means that
a customer receives 2% discount if payment is made within 10 days, and payment is
due no later than 30 days after billing. Most customer take 2% discount. There is
no discount for special order item.
 The allocation rates for manufacturing overhead and fixed sellinh and
administrative costs are as follows :
Manufacturing Cost
Variable....................................................................... 50% of DL Cost
Fixed........................................................................... 25% of DL Cost
Fixed selling and administrative costs............................ 10% of the total of
direct material, direct labor, and manufacturing-overhead cost

REQUIRED :
1. Determine the dollar contribution each of the thre alternatives will add to Madison
Industries before tax profit. Which alternative Madison should choose?
2. If based on decision in question 1 Madison doesn’t choose Johnson as a buyer, what is
the lowest price Madison should accept from Johnson for the reworked machinery?
Explain your answer!
3. Referring to the 3rd alternative, if right now there is still no potential buyer who wants
to buy the product, and Madison Industries can not make any modification at all (the
machine has to be sold as it is). What is the minimal price that Madison Industries
should accept for this machine?

Question II : Transfer Pricing

The Gaga Furniture Company produces all types of desks. The company divides its activities
into 2 division (HouseHold Division and Office Division). The Household Division is
currently producing 10.000 desks per year with a capacity of 15.000. The variable costs
assigned to each desk are Rp600.000 and annual fixed costs of the division are
Rp1.800.000.000. The desk division sells the desk for Rp800.000.
The Office Division wants to buy 5.000 desks for its custom office design business. The
Household Division Manager refused the order because the price is too low (below the
market price). The Office Division manager argues the order because the order should be
accepted because it will lower the fixed cost per desk from Rp180.000 to Rp120.000 and will
take the division to its capacity, thereby causing operations to be at their most efficient level.
The Office Division Manager can buy the same model of desks from the other supplier at
Rp640.000 per unit.

REQUIRED :
a. Should the order from the Office Division be accepted by the Household Division?
Why?
b. Please determine the maximum and minimum price of the desk!
c. From the perspective of the Gaga Company, should the order be accepted if the
Office Division plans on selling the desks in the outside market for Rp840.000 after
incurring additional costs of Rp200.000 per desk?

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

d. Refer to your answer in question a and c, what action should the Gaga Company
president take to solve the transfer pricing problem?

Question III : Performance Measurement,Compensation &Multinational Consideration

The top management at Green Thumb Company, a manufacturing of gardening equipment, is
attempting to recover from a fire that destroyed some of their accounting records. The main
computer system was also severly damaged. The following information was salvaged :

Jakarta Division Bandung Division Surabaya Division

Sales 10,000,000 (a) 2,400,000
Net Operating Income 1,000,000 1,440,000 600,000
Net Assets (b) (c) 2,000,000
Return on Investment* 0.20 0.10 (d)
Return on Sales (e) 0.12 0.25
Investment Turnover (f) (g) 1.2
*) Use net assets

REQUIRED :
1. Calculate the missing amounts
2. The company’s desired rate of return is 15% of net assets. Are any of division is in
danger of being closed due to lack of performance?
3. Division manager who achieves desired rate of return will receive bonus of 50% of
residual income. Calculate anticipated bonus for 2011 each manager!

Question IV : Cost of Quality

A. PRODUCTIVITY
Petro Company has recently installed a computer-aided manufacturing system. The decision
to automate was made so that material waste could be reduced. Better quality and a reduction
of labor inputs were also expected. After on year of operation, management wants to see if
the expected productivity improvements have materialized. The CEO is particularly
interested in knowing whether the trade-off between capital, labor and materials was
favorable. Below is data pertaining output, materials, labor and capital :

Year Before
Year After Implementation
Implementation
Output 120.000 150.000
Input Quantities
Materials (kgs) 25.000 21.000
Labor (hours) 5.000 3.000
Capital (dollars) 10.000 300.000
Input Prices
Materials $5 $5.5
Labor $10 $10
Capital 10% 11%
REQUIRED :
By how much does profit increase due to productivity? Assuming that these are the only three
inputs, evaluate the decision to automate.

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

B. COST OF QUALITY
Describe the difference between the traditional view of conformance and the robus (zero
defect) view.

Question V : Balance Scorecard

Following is a random order listing of perspective, strategic objectives, performance
measures for the balanced scorecard.

PERFORMANCE
MEASURES STRATEGIC
OBJECTIVES
Percentage of products
passing the cost of quality Increase market share
Return on Assets Increase shareholder value
Number of patents or Maintain Customer
copyrights satisfaction
Employee turnover rate Improve manufacturing
quality
PERSPECTIVE Net Income
Develop profitable
Internal Business Process Percentage of processes customer
Customer with realtime feedback
Increase proprietary
Learning and Growth Return on Equity products
Financial Product Cost per unit Increas Information
Salesman profitability System Capabilities
Percentage of error-free Enchance Employee
inovices Competence
Customer cost per unit On time delivery by
suppliers
Earnings Per Share
increase Salesman
Number of new customer productivity
Percentage of customer Introduce new product
loyalty.
minimize invoice error rate

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

PROBLEM I – DECISION MAKING AND RELEVANT INFORMATION

1. Determine dollar contribution of each alternatives; diasumsikan Madison sudah

memproduksi mesin yang dipesan Conrad Company
alternative 1

Price $ 68.400
Direct Material $ 16.200
Direct Labor $ 4.200
Sales Commission ( 5% x 68.400) $ 3.420
Manufacturing Overhead :
VOH (50% x 4.200) $ 2.100
FOH (25% x 4.200) $ 1.050
Fixed Selling and Administrative Cost $ 2.355 (10% x 23.550)
Total Cost $ 29.325
Total Operating Income $ 39.075

alternative 2

Price $ 60.000
Sales Discount (2% x 60.000) ($ 1.200)
Direct Material $ 8.800
Direct Labor $ 3.300
Sales Commission ( 3% x 60.000) $ 1.800
Manufacturing Overhead :
VOH (50% x 3.300) $ 1.650
FOH (25% x 3.300) $ 825
Fixed Selling and Administrative Cost $ 1.457,5 (10% x 14.575)
Total Cost $ 17.832,5
Total Operating Income $ 40.967,5
*) Fixed SGA didasarkan pada DM+DML+MOH

alternative 3
Price $ 40.000
Additional Cost -
Total Operating Income $ 40.000

Based on calculation above, Madison choose alternative 2, since it gives highest

operating income among others.
2. Not choose alternative 1; so the minimum price should be :
Price = X
X – ( 16.200 + 4.200 + 0,05X + 2.100 + 1.050 + 2.355 ) = 40.967,5
X – ( 25.905 + 0,05X ) = 40.967,5
0,95 X = 66.872,5
X = 70.392,1
3. There is still no potential buyer; therefore relevant cost is the original cost of special
machinery. Minimum price is the variable cost of special machinery :
Direct Material 26,600

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

Direct Labor 21,400

MOH
Variable 10,700
Total Cost 58.700

PROBLEM II – TRANSFER PRICING

Transfer Pricing – adalah harga yang sebuah sub-unit dalam sebuah perusahaan kenakan
untuk intermediate product atau jasa kepada sub-unit lain dalam perusahaan yang sama.
Keduanya harus profit center.

Transfer pricing from Household Division to Office Division

Household Division

Produce 10.000 units

Capacity 15.000 units

Variable Cost 600.000

Fixed Cost 1.800.000.000

Price 800.000/ unit

Office Ordered

Quantity 5.000

Price 560.000/unit

Market Price 640.000/unit

a) Revenue (5.000 x 560.000) 2.800.000.000

Variable Cost (5.000 x 600.000) 3.000.000.000
CM (200.000.000) reject
b) Maximum TP ; market yaitu 640.000/unit
Minimum TP ; variable cost + Opportunity Cost = 600.000/unit
Opportunity Cost yaitu harga yang dia relakan hilang ketika dia kapasitasnya
misalnya 10.000 dan dia sudah berproduksi pada kapasitasnya. Ketika household
minta 5.000, jadi dia harus ngurangin 5.000 pesanan untuk pelanggan yang udah ada.
Tapi karena ini masih ada excess capacity jadi Opportunity Costnya 0.
c) Company as a whole
HouseHold; Revenue 5.000 x 560.000 = 2.800.000.000
Cost 5.000x 600.000 = (3.000.000.000)
Incremental OI (200.000.000)
Office; Revenue 5.000 x 840.000 = 4.200.000.000
Cost 5.000 x 200.000 = (1.000.000.000)

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

TIC from House Hold 5.000 x 560.000 = (2.800.000.000)

Incremental OI 400.000.000
Incremental OI for company as a whole 200.000.000
Should accept the order
d) Pada dasarnya, kegiatan transfer pricing ini tidak menguntungkan House Hold
Division karena Transfer Price yang ditawarkan lebih rendah dibandingkan Variable
Cost yang seharusnya di cover. Pada point (c) TP diterima karena selling price pada
Office Division ( 840.000 ) dapat menutupi VC house hold dan tambahan biaya
sebesar 200.000. Oleh sebab itu, manajer harus mempertimbangkan kembali harga
Transfer Pricingnya, sehingga kedua divisi saling untung.

PROBLEM III – PERFORMANCE MEASUREMENT

ROI = Income/ Investment

ROS = Income/ Sales

Investment Turnover = Sales/ Investment

a) Missing amounts!
 Sales = 1.440.000/0.12 = 12.000.000
 Net Asset = 1.000.000/0.2 = 5.000.000
 Net Asset = 1.440.000/0.1 = 14.400.000
 ROI = 600.000/2.000.000 = 0.3
 ROS = 1.000.000/10.000.0000= 0.1
 Investment turnover = 10.000.000/5.000.000 =2
 Investment turnover = 12.000.000/14.400.000=0.83

b) Calculate the Residual Income

Jakarta Division = Net Income – ( RR x Investment)
= 1.000.000 – (0.15 x 5.000.000)
= 250.000
Bandung Division = Net Income – (RR x Investment)
= 1.440.000 – ( 0.15x14.400.000)
= (720.000) ; danger
Surabaya Division = Net Income – (RR x Investment)
= 1.440.000 – (0.15x2.000.000)
= 300.000
c) Anticipated Bonus
Jakarta Division = 50% x 250.000
= 125.000
Surabaya Division = 50% x 300.000
= 150.000

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

 MOJAKOE

PROBLEM IV – COST OF QUALITY

a) Productivity – (menggunakan cara Hansen Mowen)

Before After
Materials 120.000/25.000 =4.8 7.14
Labor 120.000/5.000 = 24 50
Capital 120.000/10.000 =12 0.5

Productivity Neutral Quantity of Input (PQ)

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑂𝑢𝑡𝑝𝑢𝑡
𝑃𝑄𝑐𝑜𝑠𝑡 = 𝑥 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝐼𝑛𝑝𝑢𝑡
𝐵𝑎𝑠𝑒 − 𝑃𝑒𝑟𝑖𝑜𝑑 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜

 Material = 150.000/4.8 x $5.5 =171.875

 Labor = 150.000/24 x $ 10 = 62.500
 Capital = 150.000/12 x $11% = 1.375
 Total = 235.750

Actual Quantity

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 = 𝐴𝑐𝑡𝑢𝑎𝑙 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑥 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝐼𝑛𝑝𝑢𝑡

 Material = 21.000 x 5.5 = 115.500

 Labor = 3.000 x 10 = 30.000
 Capital = 300.000 x 11% = 33.000
 Total = 178.500

Profit-linked effect = Total PQ Cost – Total Current Cost

= 235.750 – 178.500 = 57.250 (F)

# Jika menggunakan Balance Scorecard

Cost Effect :

 Variable Cost =
150.000
Material : (21.000 – 120.000 x 25.000) x $5.5 = (56.375)
150.000
Labor : (3.000 - 120.000 x 5.000) x $10 = (32.500)
150.000
Capital : (300.000 - 120.000 x 10.000) x 11% = 31.625
Profit-Linked effect 57.250 (F)

“Karena seharusnya kita ngeluarin 235.750; tp krn produktivitas kita bisa hemat 57.250 ”

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 MOJAKOE

b) Traditional View vs Zero Defect View

Traditional View (AQL View) Zero Defect View

Mengasumsikan bahwa ada trade-off antara Lebih menekankan kepada zero-defect atau
Control Cost dengan Failure Cost. Jadi jika titik target kualitas produksi. Sehingga,
control costnya meningkat seharusnya failure terkesan understate (tidak menitikberatkan)
costnya menurun. AQL adalah point dimana kepada total quality cost yang rendah.
TQC paling rendah yaitu saat Control Cost
dan Failure Cost berpotongan (sama).

PROBLEM V – BALANCED SCORECARD

Perspective Strategic Objectives Performance Measures

Financial Perspective - Increase Shareholder Value - Net Income
- Grow Operating Income - Earning per Share
- Return on Equity
- OI from productivity gain
- OI from growth
- Revenue Growth
Customer Perspective - Increase Market Share - Customer cost per unit
- Maintain Customer - Number of New Customer
Satisfaction - Percentage of Customer
- Develop Profitable Loyalty
Customer - Market Share in
Communication Network
Agreement
- Customer’s satisfaction
rating
Internal Business Process - Improve Manufacturing - Percentage of Product
Quality Passing the QC
- Increase proprietary - Return on Asset
products - Number of Patents or
- On time delivery by Copyrights
supplier - Percentage of Processes
- Introduce new product with real time feedback
- Improve Manufacturing - Product Cost per Unit
Capabilities

Learning and Growth - Increase information- - Employee turnover rate

system capabilities - Salesman profitability
- Increase salesman - Percentage of error free
productivity invoices
- Minimize Invoice Error - Employee rating
Rate satisfaction rating

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 MOJAKOE

- Align employee and

organization goals
- Develop process skill

Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

    
      

  2  
      

  3  
      

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Problem I- Tactical Decision Making

1 Direct Material $ 9.00

Direct Labor $ 3.00
VOH $ 2.50
FOH $ 2.20
Relevant cost $ 16.70

Part UB233 price (outside supplier) $ 16.00

The New Castle Company should buy part UB233 from outside supplier
because the relevant cost is bigger than the cost when company buy
from outside supplier

2 The most New Castle would be willing to pay to outside supplier is equal to
relevant cost $16.70
3 The Income would increase by $28,000.00
4 all of the fixed overhead is common fixed overhead :
Direct Material $ 9.00
Direct Labor $ 3.00
VOH $ 2.50
FOH $ -
Relevant cost $14.50

a. The New Castle Company should make part UB233 because the relevant cost
is less than the cost when company buy from outside supplier

b.The most New Castle company would be willing to pay to outside supplier is equal to
relevant cost $14.50

c. The income would decrease by $ 60,000.00

  6  
      

Problem II- Transfer Pricing and Retun on Investment

a Direct material Rp 2,500.00

Direct Processing Labor Rp 1,250.00
Variable Processing Overhead Rp 600.00
Fixed Processing Overhead Rp 1,000.00
Total Rp 5,350.00
Last Year Demand (liters) 1,400,000.00
Annual capacity (liters) 2,000,000.00
Demand from cooking division 800,000.00

Operating Income for the coconut oil division using transfer price Rp 10,000.00
Revenue (2,000,000 x 10,000) Rp 20,000,000,000.00
Cost :
Variable Cost (2,000,000(2,500+1,250+600)) Rp 8,700,000,000.00
Fixed Cost (2,000,,000 x1,000) Rp 2,000,000,000.00
Total Cost Rp 10,700,000,000.00
Operating Income Rp 9,300,000,000.00

Operating Income for the coconut oil division using transfer price Rp 5,350.00
Revenue (1,200,000 x 10,000 + 800,000 x 5,350) Rp 16,280,000,000.00
Cost :
Variable Cost (2,000,000(2,500+1,250+600)) Rp 8,700,000,000.00
Fixed Cost (2,000,,000 x1,000) Rp 2,000,000,000.00
Total Cost Rp 10,700,000,000.00
Operating Income Rp 5,580,000,000.00

b i)The manager of the coconut oil division will prefer transfer at market price method.
The manager of the coconut oil division will apeal to the existence of a competitive market
to price transfer at market price (Rp 10,000.00). Using market prices for transfer in these
condition leads to goal congruence.

ii)The manager of cooking division will prefer transfer at cost price (Rp 5,350.00) because
it is lower than market price (Rp 10,000.00)

  7  
      

iii)The management will prefer transfer price between Rp 5,350.00 - Rp 10,000.00 because
It will be profitable to coconut oil division by selling the oil above the cost needed to make
and the cooking oil division will buy below the market price

c 800,000.00 liters sold between the relevant cost and the market price
relevant cost Rp 4,350.00
market price Rp 10,000.00
transfer price Rp 7,175.00
1,200,000.00 liters sold at market price

Revenue (1,200,000 x 10,000)+(800,000 x7,175)) Rp 17,740,000,000.00

Cost:
Variable Cost (2,000,000 x (2,500+1,250+600)) Rp 8,700,000,000.00
Fixed Cost (2,000,000 x1,000) Rp 2,000,000,000.00
Total Cost Rp 10,700,000,000.00
Operating Income Rp 7,040,000,000.00

Problem III- Theory of Constraint

The Molding Process

Minutes
Component Unit Required Capacity
x 300 1500
y 500 5000
Total 6500 4320

The Grinding Process

Minutes
Component Unit Required Capacity
x 300 3000
y 500 7500
Total 10500 11760

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The Finishing Process

Minutes
Component Unit Required Capacity
x 300 4500
y 500 10000
Total 14500 16800

the production of metal component is constraint by the molding process

because the capacity is less than the minutes required

2 Throughput Margin = selling price - direct material

TM component X = $ 90 - $ 40
$ 50
TM component Y = $ 110 - $ 50
= $ 60
TM X/ minute = $50/ 5 = $10
TM Y/minute = $60/10 = $6

component X = 300 units

component Y = (4320 - 1500)/ 10

= 282 units

Optimal Daily Throughput = 300 x $50 + 282 x $60

= $ 31920
3 No Answer , because the finising process have no set up time required, so there is nothing to reduced
but if we assume that the manufacturing engineering found a way to reduce the grinding set-up time ,
it doesn’t affect the product mix and daily throughput because the grinding process has no constraint

Problem VI- Pricing, Target Pricing, EVA

1 ROI = Income/ Invesment

ROI = 12%
investment $ 27,000,000.00
income $ 3,240,000.00

  9  
      

variable cost /hour $ 33.00

fixed cost $ 2,850,000.00
hours of service 25,000.00
Operating Income = Revenue - Variable Cost- Fixed Cost
Revenue = Operating Income + Variable Cost + Fixed Cost
= $ 3,240,000.00 + $ 33.00 x 25,000 + $ 2,850,000.00
= $ 6,915,000.00
Revenue / hour = $ 276.60

2 EVA = After tax-Operating Income-( WACC (Total Assets -Current Liabilities))

Tax 30%
Debt to equity ratio 3
cost of equity 15%
cost of debt 10%
After Tax-Operating
Income $ 2,268,000.00
WACC 9.00%
Total Assets $ 27,000,000.00
Current Liabilities 0

EVA = $ 2,268,000.00 - (9%( 27,000,000 - 0))

= $ (162,000.00)

3 maximum selling price $ 265.00

Operating Income = ($ 265.00 - $ 33.00) x 25000 - $ 2,850,000.00
= $ 2,950,000.00

ROI = $2,950,000.00/ $ 27,000,000.00

= 11 %
if the maximum selling price is $ 265.00 the company cannot attain 14 % ROI

4 14% = (($ 265.00- $ 33.00) x hours) - $ 2,850,000.00)/ $ 27,000,000.00

hours = 28.577,58

5 15% = ((price- $ 33.00) x 25,000.00- $ 2,850,000.00)/ $ 27,000,000.00

price = $309.00

  10  
      

Problem V – Balanced Scorecard and Strategic Profitability Analysis

Part I
a. Financial Perspective
• Operating income from productivity gain
• Operating income from growth
• Revenue Growth
b. Customer Perspective
• Market share in communication- network segment
• Number of new customer
• Customer-satisfaction ratings
c. Internal-Business Process Perspective
• Service Response Time
• Yield
• Order-delivery time
• On-time delivery
• Number of major improvements in manufacturing and business processes
• Percentage of processes with advanced controls
d. Learning-and-Growth Perspective
• Employee-satisfaction ratings
• Percentage of line workers empowered to manage processes
• Perecentage of employees trained in process and quality management
• Percentage of manufacturing process with real-time feedback

Part II

a. Operating Income 2010

Revenue (400 x 5,000) $ 2,000,000.00
COGS
Direct Material (40 x 15,000) $ 600,000.00
Conversion Cost $ 1,000,000.00
Selling and customer service cost $ 360,000.00
Total Cost $ 1,960,000.00

  11  
      

Operating Income $ 40,000.00

b. Operating Income 2011

Revenue (440 x 5,500) $ 2,420,000.00
COGS
Direct Material (44 x 15,375) $ 676,500.00
Conversion Cost $ 1,100,000.00
Selling and customer service cost $ 362,500.00
Total Cost $ 2,139,000.00
Operating Income $ 61,000.00

c. 𝑇ℎ𝑒  𝑐ℎ𝑎𝑛𝑔𝑒  𝑖𝑛  𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔  𝑖𝑛𝑐𝑜𝑚𝑒  𝑓𝑟𝑜𝑚  2010  𝑡𝑜  2011  

= $61,000.00 −    $40,000.00   =  $21,000.00  
d. 𝑇ℎ𝑒  𝑟𝑒𝑣𝑒𝑛𝑢𝑒  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑔𝑟𝑜𝑤𝑡ℎ  𝑐𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡      
=  5,500  –  5,000 𝑥  $  400.00 = $  200,000.00  
e. 𝐶𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑔𝑟𝑜𝑤𝑡ℎ  𝑐𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡   =  𝑐𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑔𝑟𝑜𝑤𝑡ℎ  𝑓𝑜𝑟  𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒  𝑐𝑜𝑠𝑡   +
 𝑐𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑔𝑟𝑜𝑤𝑡ℎ  𝑓𝑜𝑟  𝑓𝑖𝑥𝑒𝑑  𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛  𝑐𝑜𝑠𝑡   +
 𝑐𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑔𝑟𝑜𝑤𝑡ℎ  𝑓𝑜𝑟  𝑓𝑖𝑥𝑒𝑑  𝑠𝑒𝑙𝑙𝑖𝑛𝑔  𝑎𝑛𝑑  𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟  𝑠𝑒𝑟𝑣𝑖𝑐𝑒  𝑐𝑜𝑠𝑡  
• Cost effect of the growth for variable cost
!!""
=(  ×15000 − 15000)  ×$  40.00 = $ 60,000.00
!"""

• Cost effect of the growth for fixed conversion cost

= $ 1,000,000.00- $ 1,000,000.00 = $ 0
( adequate capacity to produce 2011 output in 2010)
• Cost effect of the growth for fixed selling and customer –service cost
= $ 360,000.00- $ 360,000.00 = $ 0
(adequate capacity to produce 2011 output in 2010)
• 𝐶𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑔𝑟𝑜𝑤𝑡ℎ  𝑐𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡    
                           =  $  60,000.00   +  $0   + $0   =  $  60,000.00  

f. 𝑇ℎ𝑒  𝑁𝑒𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑛  𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔  𝑖𝑛𝑐𝑜𝑚𝑒𝑎𝑠  𝑎  𝑟𝑒𝑠𝑢𝑙𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑔𝑟𝑜𝑤𝑡ℎ  𝑐𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡  
                             =  $200,000.00 −  $60,000.00
g. 𝑇ℎ𝑒  𝐶𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦  𝑓𝑜𝑟  𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒  𝑐𝑜𝑠𝑡𝑠    
5500
                             = 15,375.00 −  15,000.00 ×  ×$44.00 =   −$45,000.00   𝑓𝑎𝑣𝑜𝑟𝑎𝑏𝑙𝑒  
5000
h. 𝑇ℎ𝑒  𝑐𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦  𝑓𝑜𝑟  𝑓𝑖𝑥𝑒𝑑  𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛  𝑐𝑜𝑠𝑡𝑠  
                             =  10,000.00 − 10,000.00   ×$110.00   = $  0.00    

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i. 𝑇ℎ𝑒  𝑐𝑜𝑠𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑓  𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦  𝑓𝑜𝑟  𝑠𝑒𝑙𝑙𝑖𝑛𝑔  𝑎𝑛𝑑  𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 − 𝑠𝑒𝑟𝑣𝑖𝑐𝑒  𝑐𝑜𝑠𝑡𝑠  
                           = (58.00 − 60.00)  ×$6,250.00 =   −$12,500.00  (𝑓𝑎𝑣𝑜𝑟𝑎𝑏𝑙𝑒)  
j. 𝑇ℎ𝑒  𝑛𝑒𝑡  𝑒𝑓𝑓𝑒𝑐𝑡  𝑜𝑛  𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔  𝑖𝑛𝑐𝑜𝑚𝑒  𝑎𝑠  𝑎  𝑟𝑒𝑠𝑢𝑙𝑡  𝑜𝑓  𝑡ℎ𝑒  𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦  𝑐𝑜𝑚𝑝𝑜𝑛𝑒𝑛𝑡  
                           = −$45,000.00   +  $  0,00 − $12,500.00 =   −$57,500.00  (𝑓𝑎𝑣𝑜𝑟𝑎𝑏𝑙𝑒)  
The company has successfully implemented the cost leadaership strategy. It is proven by the favorable net
effect on operating income as a result of the productivity component which means the company operates
more efficient than what it did in the previous year.

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