Management Accounting- Questions and Answers

Management Accounting- Questions
and Answers
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Table of Contents
Answer to Question No. 1...........................................................................................................................3
Answer to question No.2.............................................................................................................................3
Answer to Question no. 3............................................................................................................................5
Answer to Question No. 4...........................................................................................................................7
Answer to Question No. 5...........................................................................................................................8
References:................................................................................................................................................11
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Answer to Question No. 1
Sewing Easy Ltd
Traditional Costing System
Particulars Basic Model Advanced Model
Units Produced and sold 1600 1500
Direct Cost unit cost Total cost unit cost Total cost
Direct Material Cost
$
325.00
$
520,000.00
$
560.00
$
840,000.00
Direct Labor Cost
$
150.00
$
240,000.00
$
260.00
$
145,600.00
Overhead Costs
Allocated:
Inspection cost
$
6.00
$
10,323.00
$
6.00
$
9,677.00
Assembly Cost
$
29.00
$
46,452.00
$
29.00
$
43,548.00
Production Scheduling
$
34.00
$
54,194.00
$
34.00
$
50,806.00
Machine Setup
$
11.00
$
18,065.00
$
11.00
$
16,935.00
Total Cost
$
556.00
$
889,034.00
$
738.00
$
1,106,566.00
Working:
Allocation of overhead
cost Basic Model Advanced Model
Inspection cost
$
20,000.00
$
10,323.00
$
9,677.00
Assembly Cost
$
90,000.00
$
46,452.00
$
43,548.00
Production Scheduling
$
105,000.00
$
54,194.00
$
50,806.00
Machine Setup
$
35,000.00
$
18,065.00
$
16,935.00
Answer to question No.2
Sewing Easy Ltd
Activity Based Costing System
WORKING
Activity Basic Model Advanced model total
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setting up machine 100 250 350
Inspection cost 200 750 950
Assembly Cost
Machine hour 4600 3400 8000
Production
Scheduling Runs 50 500 550
Pre determined Overhead Rate
estimated
overhead cost
estimated cost
driver activity
Predetermined
overhead rate
setting up machine $ 35,000.00 350 100
Inspection cost $ 20,000.00 950 21.05
Assembly Cost
Machine hour $ 90,000.00 8000 11.25
Production
Scheduling Runs $ 105,000.00 550 190.91
Allocation of
overhead costs basic model advanced model
setting up machine $ 10,000.00 $ 25,000.00 $ 35,000.00
Inspection cost $ 4,211.00 $ 15,789.00 $ 20,000.00
Assembly Cost
Machine hour $ 51,750.00 $ 38,250.00 $ 90,000.00
Production
Scheduling Runs $ 9,545.00 $ 95,455.00 $ 105,000.00
Calculation of Product costing under Activity based costing system
Particulars Basic Model Advanced Model
Units Produced and
sold 1600 1500
Direct Cost unit cost Total cost unit cost Total cost
Direct Material Cost $ 325.00 $ 520,000.00 $ 560.00
$
840,000.00
Direct Labor Cost $ 150.00 $ 240,000.00 $ 260.00
$
145,600.00
$ 760,000.00
Overhead Costs
Allocated:
Inspection cost $ 3.00 $ 4,211.00 $ 11.00
$
15,789.00
Assembly Cost $ 32.00 $ 51,750.00 $ 26.00
$
38,250.00
Production
Scheduling $ 6.00 $ 9,545.00 $ 64.00
$
95,455.00
Machine Setup $ 6.00 $ 10,000.00 $ 17.00
$
25,000.00
Total Cost $ 997.00 $ 1,595,506.00 $ 773.00 $
1,160,094.0
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