Reference no: EM131323995

Management Accounting Assignment

Question 1: a. How do fixed costs in a business create a problem for job costing?

b. Provide examples of wages that might be deemed to be (1) a direct cost and (2) an indirect costs.

Question 2: Estimated or budgeted cost and operating data for three companies for 2013 are given below:

	Company X	Company Y	Company Z
Units to be produced	10,000	8,000	12,000
Machine- hours	50,000	10,000	6,000
Direct labour- hours	12,000	16,000	36,000
Direct labour cost	$48,000	$64,000	$150,000
Factory overhead cost	150,000	40,000	60,000

Predetermined overhead rates are calculated on the following bases in the three companies:

	Overhead rate based on
Company X	Machine-hours
Company Y	Direct labour-hours
Company Z	Direct labour cost

Required:

a. Calculate the predetermined overhead rate to be used in each company during 2013.

b. Assume that three jobs are worked on during 2013 in company X. Machine-hours recorded by jobs are: job 23, 21,000 hours; job 29, 16,000 hours; and job 31, 11,000 hours. How much overhead will the company apply to work in process? If actual overhead costs total $149,000 for 2012, will overhead be over- or under-applied? By how much?

c. Of what value is the schedule of cost of goods manufactured and how does it tie into the profit and loss statement. Discuss.

Question 3: Tony's Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:

Men's		Boy's
Selling Price	$28.80	Selling Price	$24.00
Variable Cost	$20.40	Variable Cost	$16.80
Fixed costs are $38,400.

Required:

a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men's shirts?

b. What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts? 

c. What is meant by a product's contribution margin ratio and how is this ratio useful in the planning of business operations?

Question 4: Byron Sports is a manufacturer of sportswear. It produces all of its products in one department using a process costing system.

The information for the current month is as follows:

Beginning work in process (30% complete as to conversion cost) - 12,000 units

Units started - 90,000 units

Units completed and transferred out - ?

Ending work in process (70% complete as to conversion) - 8,000 units

Costs:

Beginning work-in-process direct materials - $28,800

Beginning work-in-process conversion - $5,040 

Direct materials added during month - $216,000

Conversion costs incurred during the month - $139,200

Direct materials are added at the beginning of the process. Conversion costs are incurred uniformly throughout the production process. Costing is handled on a FIFO basis.

Required:

a. Prepare a production cost worksheet using 5 steps approach.

b. Under what conditions would a process costing system be more appropriate than a job order costing system? Explain.