Reference no: EM132977555
DBA 211 Managerial Accounting
SECTION A (Compulsory)
Question.1
You are the Management accountant of an industrial concern and have been assigned the duty of preparing a cost accounting system. Initially it has been decided to prepare three production cost centers and two service cost centers.
The subsequent data relating to the next accounting period have been estimated as follows:
|
|
Production Cost Centres
|
Service Cost Centres
|
|
|
|
Milling
|
Assembly
|
Spraying
|
Stores
|
Maintenance
|
Total
|
|
No. of employees
|
30
|
75
|
25
|
6
|
14
|
150
|
|
Labour hours
|
1,510
|
3,320
|
950
|
252
|
595
|
6,627
|
|
Plant & Machines values ($)
|
225,000
|
75,000
|
45,000
|
17,000
|
85,000
|
447,000
|
|
Area (m2)
|
7,500
|
10,000
|
3,500
|
500
|
1,000
|
22,500
|
|
Material requisitions
|
1,400
|
300
|
250
|
-
|
550
|
2,500
|
|
Maintenance hours (minor works)
|
75
|
30
|
45
|
-
|
-
|
150
|
|
KWH ('000)
|
300
|
70
|
50
|
10
|
170
|
600
|
|
Machine hours
|
8,400
|
1,100
|
300
|
-
|
-
|
9,800
|
During the period the following data were recorded
|
|
Milling
|
Assembly
|
Spraying
|
Stores
|
Maintenance
|
Total ($)
|
|
Indirect materials
|
25,000
|
10,000
|
15,000
|
3,000
|
17,000
|
70,000
|
|
Indirect labour
|
15,200
|
25,000
|
22,000
|
42,000
|
110,000
|
214,200
|
|
Maintenance works
|
18,000
|
17,000
|
14,000
|
-
|
-
|
49,000
|
The following details were obtained from the accounts relating to the same period:
|
Fire insurance
|
$12,500
|
|
Power
|
$45,000
|
|
Heating $ Lighting
|
$20,000
|
|
Rent & Rates
|
$18,000
|
|
Machine depreciation
|
$84,000
|
|
Machine insurance
|
$85,000
|
|
Canteen deficit
|
$42,500
|
|
Balance of maintenance costs (excluding major works)
|
$17,500
|
Required:
Prepare an overhead analysis sheet showing how overhead costs should be apportioned between the departments.
For each allocation base you have used, explain reasons suggesting why you have preferred such an allocation base?
Question.2
Sony Inc. is a producer of music compact discs (CDs) and tapes. The following account balances are for the year ended December 31, 2020
|
Administrative expenses
|
$ 60,000
|
|
Depreciation expense - Manufacturing equipment
|
$50,000
|
|
Direct labor
|
$468,000
|
|
Manufacturing supplies expense
|
$40,000
|
|
Indirect labor
|
$36,000
|
|
Beginning inventories, January 1:
|
|
|
Direct materials
|
$14,000
|
|
Work in process
|
$20,000
|
|
Finished goods
|
$128,000
|
|
Ending inventories, December 31:
|
|
|
Direct materials
|
$44,000
|
|
Work in process
|
$56,000
|
|
Finished goods
|
$92,000
|
|
|
|
|
Direct materials purchases
|
$216,000
|
|
Rent expense - Factory
|
$28,000
|
|
Sales
|
$1,400,000
|
|
Selling expense
|
$72,000
|
|
Other manufacturing overhead
|
$126,000
|
Required;
Prepare a statement of cost of goods manufactured for Sony Inc. for the year ended December 31.
Prepare an income statement for the year ended December 31, 2020.
SECTION B
Attempt any Two Questions
Question .3
Chicago Inc. is careful in setting budgets in consultation with all relevant stakeholders rather than impose them on the different parts of the business. In this way, managers at all levels feel involved in the process and are more likely to feel motivated to achieve the targets in their budgets. The following financial data has been provided. It shows both actual and anticipated cash receipts and expenditures.
|
Month
|
Sales
($)
|
Purchases
($)
|
Wages
($)
|
General Expenses ($)
|
|
Jan. (Actual)
|
80,000
|
45,000
|
20,000
|
5,000
|
|
Feb. (Actual)
|
80,000
|
40,000
|
18,000
|
6,000
|
|
March (Actual)
|
75,000
|
42,000
|
22,000
|
6,000
|
|
April Budget
|
90,000
|
50,000
|
24,000
|
6,000
|
|
May Budget
|
85,000
|
45,000
|
20,000
|
6,000
|
|
June Budget
|
80,000
|
35,000
|
18,000
|
5,000
|
You are further informed that:
80% of Sale and 60% of purchase are for cash
The average collection period of debtors is 1/2 a month and credit purchases are paid off regularly after one month
Wages are paid half monthly and the rent of $500 excluded in expense is paid monthly
Cash and Bank Balance on April 1, was $70,000.
Required:
Prepare a Cash Budget for April, May and June in a columnar form using the above information. Show all the workings.
As a CFO of Chicago Inc. how would you accommodate unexpected changes in your budgets?
Explain the limitations of the budgeting process.
Question 4 Management accounting is regarded to have a wider scope, mention and explain the coverage of management accounting
You have been appointed a new management accountant of a manufacturing concern, how would you help the organization achieve its intended objectives?
In your opinion, do you think management accounting is similar to financial accounting? Discuss.
Question .5
The following direct costs were incurred on Job No. 108 of Hisense Engineering Works:
|
Materials
|
$3,600
|
|
Wages:
|
|
|
Department A
|
80 hours @ $2.5 per hour
|
|
Department B
|
60 hours @ $4 per hour
|
|
Overhead expenses were estimated as follows:
|
|
|
Variable Overheads:
|
|
|
Department A
|
$5,000 for 4000 direct labour hours
|
|
Department B
|
$6,000 for 3000 direct labour hours
|
Required:
Formulate a cost sheet for Job No. 108 and estimate the percentage of profit earned if the price quoted was $4,750.
In your opinion, explain the suitability of job costing method.
What are the key distinguishing features between job costing and process costing methods?
Question 6
A pharmaceutical company manufactures only one product called caviar c. The following information relates to the product:
|
Selling price per unit
|
$50
|
|
Direct material cost per unit
|
$6
|
|
Direct labour cost per unit
|
$2
|
|
Variable overhead cost per unit
|
$4
|
|
Sales level in units
|
10,000
|
Required;
Calculate the contribution per unit.
Calculate the number units that would be required to break-even.
Calculate the break even in dollars.
Calculate the level of activity that is required to generate a profit of, say, $40,000.
Assume that the company budgets to sell 13,000 units of it product, calculate the margin of safety in percentage.
Attachment:- Managerial Accounting.rar