Reference no: EM132598101
Information Quantity/Hours Cost/Rate per unit/hour
Materials
Material X 5 units $ 3 per unit of material
Material Y 5 units $ 2 per unit of material
Labour
Unskilled labour 10 hours $ 2 per hour
Semi- Skilled labour 8 hours $ 3 per hour
Manufacturing Overheads (estimated and allocated per quarter)
1st Quarter = $ 200,000
2nd Quarter= $ 200,000
3rd Quarter= $ 250,000
4th Quarter= $ 300,000
Expected Level of output
1st Quarter= 20,000 units
2nd Quarter= 25,000 units
3rd Quarter= 30,000 units
4th Quarter= 40,000 units
Table (B) McKennell manufactures and sells product B along with other products, which has following cost and selling price structure:
Information $ per unit
Selling Price ($) 1,000
Direct Material Cost per unit of B 600
Direct Labour cost per unit of B 200
Fixed Costs $ 800,000
Units Produced/Sold 10,000 units
Question (1) McKennell Company is applying the key success factors of cost, efficiency, quality and innovation to promote its sustainability.
Considering the above, Discuss the three key success factors of an organization and explain the role of management accounting in sustaining and strengthening the key success factors of McKennell Company.
Question (2) Using the information given above in (a) for Product A, Calculate the following:
(i) Total Prime Cost (Prime Cost i.e. Material + Labour)) for the output level of Product A to be manufactured in different quarters respectively (for all four quarters)
(ii) Total Cost per unit (Material + Labour + Allocated Overheads) in different quarters
Question (3) Using the information given above in (b),
(i) Calculate operating profit earned by the Company at the existing level of operations (i.e. selling 10,000 units) for Product B
(ii) Compute the Break Even Point (in Units and in Dollars ($)) and Prove your answer
(iii) Calculate the number of units that must be sold to earn a profit of $ 1,600,000 Prove your answer using the income statement approach