Management Accounting: Costing, Break Even, Overhead Rates, Journal Entries

Management Accounting

Table of Contents
Part-1................................................................................................................................................3
Costing calculation, Period cost, Break even, margin of safety, contribution margin, operating
leverage............................................................................................................................................3
PART-2............................................................................................................................................6
XYZ company journal entries with respect to movement of WIP inventory..................................6
Part-3................................................................................................................................................7
Awesome company: the plant wide overhead rate, overhead that would be assigned to each
product, departmental overhead rates, overhead per products........................................................7
Activity Rate for Activity Cost Pools, manufacturing overhead allocation between basic &
overhead model................................................................................................................................9
Total Selling & Administrative Cost For Basic & Advanced Models............................................9
Reference:......................................................................................................................................11
Appendix:......................................................................................................................................12

Part-1
Costing calculation, Period cost, Break even, margin of safety,
contribution margin, operating leverage
ABC company production unit range in units 20000-30000
Total cost per unit of 25000 units
being produced 31
Total manufacturing cost
(including the fixed & variable
cost) of producing 25000 units 775000
Per unit period cost incurred 11
Total period cost for producing
25000 units 275000
variable manufacturing cost per
unit(exclusive of variable
administrative expense) for
producing 24000 units 14
Fixed manufacturing cost per
unit(includes only overhead cost ) 6
Total fixed manufacturing cost for
producing 25000 units 150000
Average fixed manufacturing
overhead for producing 24000 units 6.25

variable manufacturing cost per
unit(exclusive of variable
administrative expense) for
producing 26000 units 14
Average fixed manufacturing
overhead for producing 26000 units
5.76923
1
unit Direct cost, that can be
identified to the cost object or units
of production(includes direct
material , direct labor, variable
manufacturing overhead,
administrative expenses per unit,
sales commission per unit ) 19
total direct cost for producing
27000 units 513000
unit indirect cost of manufacturing
(all fixed costs) 12
total indirect cost for producing
27000 units 324000
contribution margin per unit (unit
selling price -variable cost per unit ) 15
Contribution margin ratio per
unit[(sales-variable costs)/sales]
(Ward, 2012) 44%
Breakeven point in units[Q*S-
VC*Q-FC=0
(FC+VC)/s = Q, breakeven units]
for 25000 units 8824
Breakeven point in sales
dollar[(FC+VC)=Q*S=breakeven
sales] for 25000 units 775000