Managerial Accounting Assignment: Budgeting and Cost Analysis

This managerial accounting assignment solution provides a comprehensive analysis of various concepts, including cost calculation, budgeting, and pricing strategies. It begins by computing the rate charged per hour of labor and the material loading percentage, followed by an estimated bill calculation. The assignment then delves into cost-plus pricing, calculating variable, fixed, and total costs per unit, as well as the desired ROI and target selling price under different production volumes. Furthermore, it includes the preparation of sales, production, and direct material budgets, along with a multiple-step income statement. The solution also evaluates different production plans based on sales and production budgets and concludes with projected budgets and direct material budgets for specific months. This document is a valuable resource for students seeking to understand and apply managerial accounting principles, and Desklib offers a wide range of similar solved assignments and past papers.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1MANAGERIAL ACCOUNTING
Table of Contents
Question 1:.......................................................................................................................................3
a) Computing the rate charged per hour of labor:............................................................................3
b) Computing the material loading percentage:...............................................................................3
c) Computing the estimated bill:......................................................................................................3
Question 2:.......................................................................................................................................4
a) Computing the variable cost per unit, total fixed cost per unit, and total cost per unit:..............4
b) Computing the ROI per unit:.......................................................................................................4
c) Computing the target selling price:.............................................................................................5
d) Computing the variable cost per unit, total fixed cost per unit, and total cost per unit for
60,000 units:....................................................................................................................................5
Question 3:.......................................................................................................................................6
a) Sales budget:................................................................................................................................6
b) Production budget:......................................................................................................................6
c) Direct material budget:................................................................................................................6
d) Direct labor:.................................................................................................................................7
e) Multiple-step income statement:.................................................................................................7
Question 4:.......................................................................................................................................8
a) Preparing a sales budget for 2017 under each plan:....................................................................8
b) Preparing a production budget for 2017 under each plan:..........................................................8
c) Computing the production cost per unit under each plan:...........................................................8
d) Indicating which plan should be accepted:..................................................................................9
Question 5:.......................................................................................................................................9

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a) Preparing a projected budget for Jan and Feb 2017:...................................................................9
b) Preparing a direct material budget for Jan 2017:........................................................................9
Bibliography:.................................................................................................................................11

3MANAGERIAL ACCOUNTING
Question 1:
a) Computing the rate charged per hour of labor:
Rate charged per hour of labor
Particulars Value rate per hour
Number of hours 6,250
Technicians wages and benefits $ 150,000.00 $ 24.00
Office employee salary and benefit $ 30,000.00 $ 4.80
overhead cost $ 15,000.00 $ 2.40
Total cost $ 195,000.00 $ 31.20
Profit level desired $ 38.00
Rate charged per hour of labor $ 69.20
b) Computing the material loading percentage:
Material loading percentage
Particulars Value % per parts
Invoice cost of parts and materials
$
700,000.00
Part's manager salary and benefits
$
34,000.00 4.86%
Office employee salary and benefit
$
15,000.00 2.14%
overhead cost
$
42,000.00 6.00%
Total budget
$
91,000.00 13.00%
Profit margin 80.00%
Material loading percentage 93.00%

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c) Computing the estimated bill:
Material loading percentage
Particulars Hour Value
Labor cost 80 $ 5,536.00
cost of materials $40,000.00
Material loading cost $37,200.00
Total estimated bill $82,736.00
Question 2:
a) Computing the variable cost per unit, total fixed cost per unit, and total cost per unit:
Compute the total variable cost per unit
Particulars Value
Direct labor (A) $ 25.00
Direct material (B) $ 40.00
Variable manufacturing overhead (C) $ 10.00
Variable selling and administrative expenses (D) $ 5.00
Total Variable cost per unit (A+B+C+D) $ 80.00
Compute the total fixed cost per unit
Particulars Value
Total budgeted units (A) 80,000.00
Fixed manufacturing overhead (B) $ 1,440,000.00
Fixed selling and administrative expenses (C) $ 960,000.00
Total fixed cost (D=B+C) $ 2,400,000.00
Fixed cost per unit (D/A) $ 30.00
Compute the total cost per unit
Particulars Value
Total Variable cost per unit (A) $ 80.00
Fixed cost per unit (B) $ 30.00
Total cost per unit (A+B) $ 110.00

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b) Computing the ROI per unit:
Desired ROI per units
Particulars Value
Total cost per unit
(A) $110.00
Markup@40% (B) 40.00%
ROI per Unit (AxB) $ 44.00
c) Computing the target selling price:
Target selling price
Particulars Value
Total cost per unit (A) $110.00
ROI per unit (B) $ 44.00
Target selling price (A+B) $154.00
d) Computing the variable cost per unit, total fixed cost per unit, and total cost per unit for
60,000 units:
Compute the total variable cost per unit
Particulars Value
Direct labor (A) $ 25.00
Direct material (B) $ 40.00
Variable manufacturing overhead (C) $ 10.00
Variable selling and administrative expenses (D) $ 5.00
Total Variable cost per unit (A+B+C+D) $ 80.00
Compute the total fixed cost per unit
Particulars Value
Total budgeted units (A) 60,000.00
Fixed manufacturing overhead (B) $ 1,440,000.00
Fixed selling and administrative expenses (C) $ 960,000.00
Total fixed cost (D=B+C) $ 2,400,000.00

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Fixed cost per unit (D/A) $ 40.00
Compute the total cost per unit
Particulars Value
Total Variable cost per unit (A) $ 80.00
Fixed cost per unit (B) $ 40.00
Total cost per unit (A+B) $ 120.00
Question 3:
a) Sales budget:
Sales Budget
Particulars JB 50 JB 50 Total
Expected unit sales (A) 400,000.00 200,000.00 600,000.00
Unit selling price (B) $ 20.00 $ 25.00
Expected sales (AxB) $ 8,000,000.00 $ 5,000,000.00 $ 13,000,000.00
b) Production budget:
Production Budget
Particulars JB 50 JB 50 Total
Expected unit sales (A) 400,000.00 200,000.00 600,000.00
Inventory ending (B) 30,000.00 15,000.00 45,000.00
Total units needed (C=A+B) 430,000.00 215,000.00 645,000.00
Inventory beginning (D) 25,000.00 10,000.00 35,000.00
Production (C-D) 405,000.00 205,000.00 610,000.00

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c) Direct material budget:
Direct Material Budget
Particulars JB 50 JB 50 Total
Production (A) 405,000.00 205,000.00 610,000.00
Direct material per unit (B) 2 3
Direct material needed (C) 810,000.00 615,000.00 1,425,000.00
Inventory ending (D) 60,000.00 45,000.00 105,000.00
Total material needed
(E=C+D) 870,000.00 660,000.00 1,530,000.00
Inventory beginning (F) 50,000.00 30,000.00 80,000.00
Purchase (G=E-F) 820,000.00 630,000.00 1,450,000.00
cost per pound (H) $ 3.00 $ 4.00
Direct material cost (GxH) $ 2,460,000.00 $ 2,520,000.00 $ 4,980,000.00
d) Direct labor:
Direct Labor Budget
Particulars JB 50 JB 50 Total
Production (A) 405,000.00 205,000.00 610,000.00
Direct labor per unit (B) 0.4 0.6
Total labor required (C=AxB) 162,000.00 123,000.00 285,000.00
Direct labor cost (D)
$
12.00 $ 12.00
Direct labor budget (CxD)
$
1,944,000.00 $ 1,476,000.00 $ 3,420,000.00
e) Multiple-step income statement:
Income Statement
Particulars JB 50 JB 50 Total
Expected sales $ 8,000,000.00
$
5,000,000.00 $ 13,000,000.00
Cost of goods $ 5,200,000.00 $ $ 9,200,000.00

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4,000,000.00
Gross profit $ 2,800,000.00
$
1,000,000.00 $ 3,800,000.00
Operating expenses
Selling expenses $ 560,000.00
$
360,000.00 $ 920,000.00
Administrative expenses $ 540,000.00
$
340,000.00 $ 880,000.00
Total operating expenses $ 1,100,000.00
$
700,000.00 $ 1,800,000.00
Interest expenses $ 100,000.00
$
50,000.00 $ 150,000.00
EBIT $ 1,600,000.00
$
250,000.00 $ 1,850,000.00
Tax $ 480,000.00
$
75,000.00 $ 555,000.00
PAT $ 1,120,000.00
$
175,000.00 $ 1,295,000.00
Question 4:
a) Preparing a sales budget for 2017 under each plan:
Sales Budget
Particulars Plan A Plan B
Sales in 2016
$
6,800,000.00 $ 1,100,000.00
Selling price per unit
$
8.00 $ 8.00
Unit sales in 2016 850,000.00 850,000.00
Unit sales in 2017 765,000.00 950,000.00
Selling price
$
8.40 $ 7.50
Total sales
$
6,426,000.00 $ 7,125,000.00

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b) Preparing a production budget for 2017 under each plan:
Production Budget
Particulars Plan A Plan B
Unit sales in 2017 765,000.00 950,000.00
inventory ending 38,250.00 47,500.00
Total 803,250.00 997,500.00
inventory beginning 40,000.00 40,000.00
Total production required 763,250.00 957,500.00
c) Computing the production cost per unit under each plan:
Production cost per unit
Particulars Plan A Plan B
Direct labor $ 1.80 $ 1.80
Direct material $ 1.40 $ 1.40
Variable overhead $ 1.20 $ 1.20
Fixed over head $ 2.48 $ 1.98
Total production
cost $ 6.88 $ 6.38
The cost of per unit under each plan is different due to the inclusion of alternative fixed
overhead.
d) Indicating which plan should be accepted:
Gross profit
Particulars Plan A Plan B
Total sales $ 6,426,000.00 $ 7,125,000.00
Total production $ 5,253,300.00 $ 6,108,000.00

10MANAGERIAL ACCOUNTING
cost
Gross profit $ 1,172,700.00 $ 1,017,000.00
From the relevant analysis, Plan A is selected for investment, as it has a higher gross
profit from operations in comparison to Plan B.
Question 5:
a) Preparing a projected budget for Jan and Feb 2017:
Production Budget
Particulars January February
Expected Unit Sales 10,000 12,000
Ending Finished Goods Inventory 2,400 2,600
Total Required Units 12,400 14,600
Beginning Finished Goods
Inventory 2,000 2,400
Required Production Units 10,400 12,200
b) Preparing a direct material budget for Jan 2017:
Direct Materials Budget
Particulars January
Units to Be Produced 10,400
Direct Materials Pounds per Unit 4
Total Pounds needed for Production 41,600
Pounds in Ending Direct Materials
Inventory 19,520
Total Materials Required 61,120
Beginning Direct Materials (Pounds) 16,640
Direct Materials Purchases 44,480
Cost per Pound $2
Total Cost of Direct Materials Purchases $88,960

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accounting for safety management. The case of a Spanish construction company. Safety
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