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ACC200 : Introduction to Managerial Accounting

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Added on  2019-10-30

ACC200 : Introduction to Managerial Accounting

   Added on 2019-10-30

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Solution to the case study:(a)Calculation of cost per unit of products using the conventional approachParticularsFredMartha Direct Material4060Direct Labour3045Manufacturing overhead 96144Cost per unit1662491.Calculation of predetermined overhead rate:Total Budgeted Manufacturing Overhead= $816,000 Allocation basis= Direct Labour Hours Predetermined Overhead Rate= Budgeted Manufacturing Overhead/Direct Labour HoursPredetermined Overhead Rate (per hour)= $816,000/17,000 Predetermined Overhead Rate (per hour)= $48 2.Calculation of Direct Labour HoursFRED=(1000*2)=2,000 hoursMARTHA=(5000*3)=15,000 hoursTotal hours=17,000 hours(b)Calculation of cost per activity using Activity Based CostingOverheadsCost driverBudgeted LevelOverheadAmountCost peractivityMachine related costsMachine hours9,000450,00050Setup and inspectionNumber of production runs40180,0004,500EngineeringEngineering change order10090,000900Plant related costsSquare footage of space1,92096,00050816,0005,500
ACC200 : Introduction to Managerial Accounting_1
(c)Calculation of cost per unit of products using the Activity Based CostingParticulars Fred Martha Units Rate perunitTotal Units Rate perunitTotalDirect Material1,0004040,0005,00060300,000Direct Labour1,0003030,0005,00045225,000Manufacturing overheadMachine related costs4,00050200,0005,00050250,000Setup and inspection204,50090,000204,50090,000Engineering7590067,5002590022,500Plant related costs1,5365076,8003845019,200Total Costs504,300906,700No. of Units1,0005,000Cost per unit504.30181.34Cost per unit (rounded off)500.00180.00WN-1: Calculation of activity required by productsOverheadsCost driver Budgeted Level OverheadAmount Costperactivity Activity Required FRED MARTHAMachine related costsMachine hours9,000450,000504,0005,000Setup and inspectionNumber of production runs40180,0004,5002020EngineeringEngineering change order10090,0009007525Plant related costsSquare footage of space1,92096,000501,536384816,0005,5005,6315,429(d)Calculation of Selling Price under Activity Based CostingParticularsFREDMARTHACost per unit500180Add: Profit Margin10036Selling Price600216
ACC200 : Introduction to Managerial Accounting_2

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