Management accounting

Posted: August 12th, 2013

Management Accounting

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Management Accounting

Question 1

a)         The manufacturing overhead cost per unit for the company’s two products under traditional costing system is calculated as:

Manufacturing Overhead Cost = Total Estimated Manufacturing Overhead Cost/Total        Labor Hours

                                                     = 1464480/24000

= RM 61.02 per hour

Thus, Manufacturing Overhead Cost

for product E100                          = Overhead Cost per unit X Direct Labor hours

= 61.02 X 0.40

= RM 24.41 per unit

Manufacturing Overhead Cost for

for product L200                          = 61.02 X 1.2

= RM 73.22 per unit

Total Manufacturing Overhead Cost

Per unit                                         = 24.41 + 73.22

= RM 97.63 per unit

b)         Calculating Manufacturing Overhead Cost per unit under Activity Based Costing involves:

i) Predetermined Overhead Rate = Estimated Overhead Cost/Estimated labor hours

= 1464480/24000

= RM 61.02 per hour

ii) Unit Product Cost

iii) Activity Based Cost

iv)  Manufacturing Overhead Cost per unit =Total ABC/Produced Units

E100 = 679619.52/30000 = RM 22.65 per unit

L200 = 784783/10000      = RM 78.48 per unit

Total Manufacturing Overhead Cost per unit = 22.65 + 78.48 = RM 101.13 per unit

Question 2

I) a)      Number of Units Sold in 2012, if national income = 125000, selling price per unit = RM 100, variable costs per unit = RM 70, fixed costs = RM 475000

Let Number of units sold = x

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(100x – 70x) – 475000 = 125000

30x – 475000 = 125000

30x = 125000 + 475000

X = 600000/30

= 20000 Units

b)         Number of Units sold if national income is increased by RM 60000

Let Number of units sold = y

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(100y – 70y) – 475000 = (125000 + 60000)

30y – 475000 = 185000

30y = 660000 + 475000

y = 600000/30

= 22000 Units

c)         Selling Price per unit if number of units sold in 2013 is same as 2012 and net income is increased by RM 60000

Number of units sold = 20000, national income = 185000

(Sales Revenue – Variable Cost) – Fixed Cost = National Income

(20000y – [70X20000]) – 475000 = 185000

20000y = 185000 + 475000 + 1400000

Y = 2060000/20000

= RM 103

II)        Units used in making component = 6000 units

Question 3

a)

b)