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Assignment of Management Accounting Techniques

The document contains 11 questions related to management accounting techniques. Question 1 asks to calculate product cost using absorption and direct costing methods. Question 2 asks to prepare income statements using direct and absorption costing. The remaining questions ask to calculate variances, journal entries, cost of production reports, break-even points, and contribution margin ratios based on various cost and production data provided.

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116 views6 pages

Assignment of Management Accounting Techniques

The document contains 11 questions related to management accounting techniques. Question 1 asks to calculate product cost using absorption and direct costing methods. Question 2 asks to prepare income statements using direct and absorption costing. The remaining questions ask to calculate variances, journal entries, cost of production reports, break-even points, and contribution margin ratios based on various cost and production data provided.

Uploaded by

Sania
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment of Management Accounting Techniques

BS-VI
Date of submission: 10-03-2021
At: [email protected]
Hand written solution is required

Q. No.1

A manufacturing Company produces a product AJK30. Presents the following data for year
2020:

• Opening inventory: 0 Units


• Sales: 9,000 Units
• Production: 12,000 Units
• Direct materials: $25
• Direct labor: $30
• Variable manufacturing overhead expenses: $10
• Variable selling and administrative expenses: $8
• Fixed manufacturing overhead expenses: $120,000
• Fixed selling and administrative expenses: $80,000

Required: Using the data given above, compute the unit product cost of one bike under:

1. Absorption costing system.


2. Direct Costing system.
Q. No. 2
On Jan 1, 2020 the Alabama Company began production of a new model. First quarter sales
were 20,000 units at $10 per unit.
Unit production costs each quarter were:
Direct Material $ 1 per unit
Direct Labour $ 2 per unit
Variable FOH $ 1.5 per unit
Fixed FOH $ 62,440
The Marketing and administrative expenses consisted of $15,000 fixed and variable
portion was 5% of sales. During the quarter 22,000 units were produced.
Required:
Prepare Income Statement under direct and absorption costing
Q.3 The Sky Company has the following data for the year 2020:-
Cost Variable Fixed Total
Direct Materials 1,200,000 1,200,000
Direct Labor 1,600,000 1,600,000
Factory Overhead 550,000 1,350,000 1,900,000
Marketing expenses 250,000 300,000 550,000
Administrative expense 150,000 300,000 450,000
Total 3,750,000 1,950,000 5,700,000

The sales of the Company during the year was $5,000,000 for 1,250,000 units
Required:
Calculate Break-even sales volume in dollar and sales volume in units.

Q.No.4
During the year Klos Company produced and sold 100,000 units. The unit sales price was $100.
Standard and actual cost per unit based on a production of 100,000 units were:
Direct material $ 10
Direct Labour 5
Variable FOH 5
Fixed FOH 20
Variable Administrative and marketing 5
Fixed Administrative and marketing 30
Required:
i) Operating income according to the direct costing method
ii) Break-even point in dollar
iii) The volume of sales if company desires to earn a profit of $100,000

Q.No.5
The Ringo Ring Company has budgeted sales of $200,000, a profit of $60,000 and fixed
expenses of $40,000. Calculate Contribution margin ratio
Q. No.6
The Rose William Company has a Contribution Margin ratio of 36%. Break-even are 160,000.
The company earned a profit of $28,800 during the year.
Required:
i) Fixed expenses iii) Sales for the year
ii) Variable expenses for the year

Q.No.7

The standard factory overhead cost per unit for Blueman Company for manufacturing a product is 7 labour
hours @ $1.5 consisting of $22.,500 fixed factory overhead and $1.00 per hour variable factory overhead.
During the month of June, 2020 the company produced 7,400 units and the actual factory overhead is $
36,340. The planned production was 7,500 units whereas 7,400 units were produced during the month

Required:
FOH Controllable and volume variance

Q.No.8
The following data are available
Product A Product B
Standard cost per direct labour hour
Fixed Cost $ 2.00 $ 1.70
Variable Cost 3.50 2.50

Production 10,000 units 12,000 units

Each product unit requires three hours of direct labour when operation at standard. Fixed factory
overhead was budgeted $ 180,000 and actual factory overhead was $ 310,000

Required: FOH controllable and volume variance


Q. No.9
During November, these transactions took place in Singer Inc., a company that uses job order
costing:
a) Materials purchased on account $ 34,600
b) Materials issued to factory $25,250 out of which $ 1500 was for indirect use
c) Materials issued to complete defective units, $150
d) Freight paid for materials received $1,000
e) Materials returned to the vendors, $250
f) Scrape materials received in the storeroom were set up at a value of $175 and credit given
to factory overhead for that amount
g) Materials returned to the storeroom $ 1500 out of which $1200 was from job
h) Payroll of $ 27,000 was paid to the employees after deducting 6% income tax, 3% FICA
tax and 1% hospitalization plan
i) The employer’s FICA tax was recorded. State unemployment tax for Singer is 1.5% of
the total payroll, and the federal unemployment tax rate is 0.7% . These taxes were
charged to factory overhead control
j) The payroll was distributed as follows: direct labour, 70%; indirect labour balance of
payroll
k) Depreciation for the month; building$550; machinery, $700
l) Property tax accrued $750; insurance expired with a credit to prepaid insurance $850
m) Factory overhead is charged to the production at a rate of $1.50 per direct labour hour.
Record shows 19,000 direct labour hours worked during the month.
n) Close out over or under applied factory overhead
o) Cost of goods completed $ 60,000
p) Goods costing $ 55,000 were sold on account at a sales price of $90,750

Required:
1) Journal entries to record these transactions.
Q.No.10
A manufacturing company makes a single product in two departments i.e Department No1 and 2.
You are required to make a Cost of Production Report (CPR) of Department No.2 from the
following data:

Cost Data (Department 2)

Units received from Department No.1


50,000 units @ Rs. 2.50 per unit
Cost added by the department
Material Cost Rs. 117,500
Labor Cost Rs. 69,000
Factory overhead Cost Rs. 55,200

Production Data
Unit received from Department 1 50,000 Units
Unit completed and transferred to finished goods warehouse 45,000 Units
Unit in process 4,000 Units
Units lost during process 1,000 Units

At the end of month Raw material 50% completed and Labor and FOH 25%.

Q.NO.11
The standard price for material is Rs 11.45 per liter. During November 2020, material costing
Rs 24,000 were purchased at a unit price of Rs 12 per liter. The quantity of materials issued
during the month was 1800 liters and the quantity allowed for November production was 1825
liters
Required:
Calculate MPV at the time of purchase and at the time of issue and MUV

The processing of a product requires a standard of 1.08 direct labour hours per unit of operation
at a standard wage rate of $7.75 per hour. The 2,000 units actually required 1580 direct labour
hours at a cost of $6.90 per hour. Calculate labour rate and efficiency variance.

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