Cost & Management Accounting (pdf)
Added on 2021-06-15
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1Running head: Cost and Management AccountingCost and Management AccountingSemester 1 2018Federation University of AustraliaStudent NameDate
2Cost and Management AccountingPart 2Question 1Models informationSpotter ($)Snooker ($)Stunner ($)Sales300,000500,000200,000Variable expenses150,000200,000145,000Contribution margin150,000300,00055,000Fixed expenses120,000230,00095,000Net income30,00070,000(40,000)a)Oceania current net incomeSpotter $ 30,000Snooker $ 70,000Stunner $ (40000)Total net income $ 60,000b)Net income if the company discontinuous Stunner product lineAllocation of the common costTotal $ 300,000Cost allocatedSpotter 300000800000∗300000=$112500Snooker ¿500000800000∗300000=$187500Total fixed cost per product lineSpotter ¿112500+30000=$142500Snooker ¿187500+80,000=$267500Spotter ($)Snooker ($)Sales300,000500,000Variable expenses150,000200,000Contribution margin150,000300,000Fixed expenses142,500267,500Net income7,50032,500The total oceanic net income
3Cost and Management AccountingSpotter $ 7,500Snooker $ 32,500Total $ 40,000c)Oceania should not eliminate the stunner product line. The Stunner product is recording more sales than the other product for this reason it is absorbing most of the fixed cost. This makes its net income to be negative. In a wide view the management may be convinced that the product is a loss maker. Analysing the item revenue deeply shows that with the stunner product being produced the company isgenerating $ 60,000 while after the elimination of the Stunner product line the revenue fell to $ 40,000. This data should be used to prove that the stunner product line should be retained.Question 2Tasman Company produces tennis rackets.a.Calculate1.Equivalent units of production for material and conversion costsOpening work in process 500 unitsAdded work in process 1000 unitsLess closing work in process 600 unitsTotal completed work 900 unitsmaterialMaterials are added at the beginning of the production processFor the month of July, the material added wereUnits started into production 1000 unitsConversion costsOpening units 500 were at 60% completeUnits started 1000 unitsClosing units 600The equivalent units for conversion cost were500 added 40% 900 added 100%
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