Management Accounting: Traditional and ABC Approach for Costing and Overhead Expenses

MANAGEMENT ACCOUNTING

Contents
Solution 1.......................................................................................................................................................3
Solution 2:......................................................................................................................................................5
Solution 3:......................................................................................................................................................7
Solution 4.....................................................................................................................................................10
Solution 5.....................................................................................................................................................13
Bibliography................................................................................................................................................15

Solution 1.
Statement of Cost- Traditional Approach
Particulars Basic Model Advance Model
Units produced and sold 1,700 1,600
Direct Material cost per unit 350 580
Direct Labor cost per unit 175 280
Total Material Cost 5,95,000 9,28,000
Total Labor cost 2,97,500 4,48,000
Total Allocated Overhead cost 1,60,488 1,19,512
Total Cost 10,52,988 14,95,512
Cost Price Per unit 619 935
Total cost
Basic Model:
Total cost =595000+297500+160488 =1052988
Number of units= 1700
Cost per unit = 1052988/1700 =619
Advance model:
Total cost = 928000+448000+119512= 1495512
Number of units = 1600
Cost per unit = 935
Allocation of Overhead-Traditional approach
Particulars Amount
Inspection 30,00

0
Assembly
1,00,00
0
Production Scheduling
1,10,00
0
Machine set-up
40,00
0
Total Overhead to be allocated
2,80,00
0
Total Machine Hours consumed
8,20
0
Overhead per Machine Hour
3
4
- Overhead Allocated to Basic Model
1,60,48
8
- Overhead Allocated to Advance Model
1,19,51
2
Total overhead to be allocated =30000+100000+110000+40000 =280000.
Total machine hour consumed =8200
Overhead allocation per machine hour= 280000/8200