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