Management Accounting

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Author’s Note
Table of Contents

1MANAGEMENT ACCOUNTING
Answer to Question 1..........................................................................................................2
Answer to Question 2..........................................................................................................2
Answer to Question 3..........................................................................................................3
Answer to Question 4..........................................................................................................5
Answer to Question 5..........................................................................................................7

2MANAGEMENT ACCOUNTING
Answer to Question 1
The calculation of the cost per unit of the two sewing models as per the traditional
costing system can be seen as $ 4.9 and $ 2.8.
1) Cost per unit of the two models of sewing machines
under the current traditional costing system
Basic
Model
Advance
Model Total
Units
produced and
sold 1700 1600 3300
Direct material
cost per unit 350 580
Direct Labour
cost per unit 175 280
Sales
Revenues 595000 928000 1523000
Direct Costs
Direct labour
costs 297500 448000 745500
Direct
materials cost 595000 928000 1523000
Total Direct
costs 892500 1376000 2268500
Cost Per unit 4.9 2.8
Answer to Question 2
The computation of cost per unit under Activity based Costing can be depicted as $ 14
and $2.
2) Calculation of cost per unit of the two models of sewing machines under
Activity based Costing
Particulars
Basic
Model
Advance
Model Total

3MANAGEMENT ACCOUNTING
Units Produced and Sold $1,700 $1,600 $3,300
Selling price/unit $120 $648
Direct Labour cost per unit $175 $280
Direct material cost per unit $350 $580
Sales Revenues $204,222 $1,037,326 $1,241,548
Direct Costs
Direct Labour Costs 297500 448000 $745,500
Direct material costs 595000 928000 $1,523,000
Total Direct Cost 892500 1376000 $2,268,500
Cost Per unit 14 2
Activity Pool
Basic
Model
Advance
Model
Total
Indirect/Overhead
cost
Activity
Rate
Basic
Model
Activity
Rate
Advance
Model
Inspection 210 760 30000 143 39
Assembly 4700 3500 100000 21 29
Production scheduling 60 510 110000 1833 216
Machine Set-up 120 270 40000 333 148
Activity Rate 280000 120 648
Answer to Question 3
As per the computation of the operating income of both Basic Model, Advance Model
with traditional income statement and ABC analysis it can be seen that the Advance Model is
more preferable. It can be further discerned that the operating income for Advance model is more
even after an additional 30% of price on the selling price for the overseas buyers (Weygandt
Kimmel and Kieso 2015).
It needs to be seen that calculating the finances of the company is identified to be crucial
with financial statements and tax filings. The importance of the accurate product costing may be
inferred with budget impact, income statement, considerations, assets and inventory. In terms of
income statement, the accuracy is identified in terms of product cost and COGS. The cost on
each product sold is seen to be subtracted from the total revenues which is earned in the