Management Accounting Assignment Term 1 2018

Assignment Term 1 2018
Management Accounting
Assignment Term 1 2018
Institution Name
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Assignment Term 1 2018
1. Calculating the cost per unit of the two models of sewing machines under the
traditional costing system.
Basic model
Units produced and sold 1600
overhead costs
Inspection $ 20000
Assembly $ 90000
Product scheduling $ 105000
Machine set-up $ 35000
Total indirect costs $ 250000
Allocating the overhead cost using the traditional costing system with using machine
hours to assign the costs
Total machine hours 8000
Hours consumed by the basic model 4600
Allocated overhead 4600
8000∗250000=$ 143,750
Overhead cost per unit produced $ 143750
1600 =89.84
The total cost per unit of the basic model will be
Direct material cost $ 325
Direct labour cost $150
Direct overhead per unit $ 89.84
Total $ 564.84
Advance model
Units produced and sold 1500
Total overhead cost consumed $ 250000
Allocating the overhead cost using the traditional costing system with machine hours
to assign the cost
Total machine hours 8000
Machine hours consumed by the advance model 3400
Allocated overhead cost ¿ 3400
8000∗250000=$ 106,250

Assignment Term 1 2018
Cost of overhead per unit produced 106250
1500 =$ 70.83
The total cost per unit of the advance model
Direct material per unit $ 560
Direct labour per unit $ 260
Overhead cost per unit $ 70.83
Total 890.83
2. Calculating the cost of the models under the Activity based costing system
Basic model
Total overhead cost $ 250,000
Allocation of the cost suing the Activity based system (Hurlburt & Kirshstein, 2014).
Activity Cost driver Allocated cost
Inspection inspections ¿ 200
950∗20000=$ 4210.53
Assembly Machine hours ¿ 4600
8000∗$ 51,750
Production scheduling Runs 50
550∗105000=9545.45
Machine set-up Set-up ¿ 100
350∗35000=$ 10000
Total overhead allocated $ 75505.98
Overhead allocated per unit ¿ 75505.98
1500 =$ 47.19
The cost per unit of the basic model
Direct material cost $325
Direct labour cost $ 150
Overhead cost per unit 47.19
Total cost $ 522.19
The advance model
Total indirect costs
Overhead allocation table