University Finance Module: Intermediate Managerial Accounting Homework

This assignment solution covers several key concepts in Intermediate Managerial Accounting. It begins with an analysis of Tata Steel Corporation, addressing requirements related to cost accounting. The solution then delves into DNA Consulting, exploring overhead allocation methods including direct, s...Read More

Running head: INTERMEDIATE MANAGERIAL ACCOUNTING
Intermediate Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1INTERMEDIATE MANAGERIAL ACCOUNTING
Table of Contents
Question 1: Tata Steel Corporation............................................................................................3
Requirement 1:.......................................................................................................................3
Requirement 2:.......................................................................................................................3
Requirement 3:.......................................................................................................................3
Requirement 4:.......................................................................................................................4
Question 2: DNA Consulting.....................................................................................................4
Requirement 1:.......................................................................................................................4
Part a:.................................................................................................................................4
Part b:.................................................................................................................................5
Part c:.................................................................................................................................5
Requirement 2:.......................................................................................................................6
Question 3: Express Copy & Paste Photocopy Services............................................................6
Requirement 1:.......................................................................................................................6
Requirement 2:.......................................................................................................................7
Question 4: The Hive and Data Technology Center..................................................................8
Requirement 1:.......................................................................................................................8
Requirement 2:.......................................................................................................................8
Question 5: HIMYM Inc............................................................................................................8
Requirement 1:.......................................................................................................................8
Requirement 2:.......................................................................................................................9

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References:...............................................................................................................................10

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Question 1: Tata Steel Corporation
Requirement 1:
Requirement 2:
Requirement 3:

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Requirement 4:
Question 2: DNA Consulting
Requirement 1:
Overheads could be defined as the total of indirect cost incurred on different activities
associated with sales, administration and production. The indirect materials and labour
employed in these activities and different indirect expenses constitute part of overheads
(Kaplan & Atkinson, 2015).
Part a:
Direct method assigns costs of each support department to only the operating
departments. However, it does not assign the costs of one support department to another
support department.
Allocation base:
Support department AS: 40:35 or 8:7
Support department IS: 30:60 or 1:2

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Part b:
The step-down method assigns the costs of the support department to the other
support departments as well as operating departments sequentially (Langfield-Smith et al.,
2017).
Allocation base:
Support department AS: 25:40:35 or 5:8:7
Support department IS: 30:60 or 1:2
Part c:
The step-down method assigns the costs of the support department to the other
support departments as well as operating departments sequentially.
Allocation base:

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Support department IS: 10:30:60 or 1:3:6
Support department AS: 40:35 or 8:7
Requirement 2:
Methods Government Corporation Total
Direct method $ 11,20,000 $18,80,000 $ 30,00,000
Step method (AS first) $ 10,90,000 $19,10,000 $ 30,00,000
Step method (IS first) $ 11,68,000 $18,32,000 $ 30,00,000
The direct method does not take into account any support department services to the
other support department. The step-down method partially takes into account the support
department services to the other support department. In addition, the sequence of assigning
support department has impact on the costs assigned to the operating departments.
Question 3: Express Copy & Paste Photocopy Services
Requirement 1:
The overhead costs of the service departments are assigned to the user departments
with the help of three methods, which include direct method, step method and reciprocal
method. The reciprocal method realises all the services that a department provides along with

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those provided from the end of the other departments as well (Malmi, 2016). Express Copy &
Paste Photocopy Services has P1 and P2 as production departments along with S1 and S2 as
service departments. At present, the cost of the service department is assigned to the
production department based on the provided percentages. In this method, the cost of the
service department is computed with the help of the simultaneous equation method:
Cost of the service department = Direct service department cost + Cost assigned to the
service department
The equations are provided as follows:
S1 = $90,000 + 0.10S2
S2= $60,000 + 0.20S1
Requirement 2:
In order to allocate the service department cost to the production departments, it is
necessary to compute the values of S1 and S2. By substituting the first equation into the
second equation, the following calculations are made:
S2 = $60,000 + 0.20S1
S2 = $60,000 + [0.20 * ($90,000 + 0.10S2)]
S2 = $60,000 + $18,000 + 0.02S2
0.98S2 = $78,000
S2 = $79,592
S1 = $90,000 + (0.10 * $79,592)
S1 = $90,000 + $7,959

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S1 = $97,959
Question 4: The Hive and Data Technology Center
Requirement 1:
Requirement 2:
Question 5: HIMYM Inc
Requirement 1:
Two problems associated with monthly allocation report developed by Ted for the
month of November 2017 at HIMYM Inc include the following:

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 The base used to ascertain the rate per kilowatt hour is not accurate. This is because
rate is ascertained actually at the time of budget preparation (Quattrone, 2016).
 As the allocation is made based on the determined rate, mistake in cost allocation took
place.
Requirement 2:

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References:
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R., & Thorne, H. (2017). Management
accounting: Information for creating and managing value. McGraw-Hill Education
Australia.
Malmi, T. (2016). Managerialist studies in management accounting: 1990–
2014. Management Accounting Research, 31, 31-44.
Quattrone, P. (2016). Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research, 31, 118-122.