Reference no: EM13377431

Question1

a) List the four areas in which standards of ethical conduct exist for management accountants in Australia. For each standard, give an example that demonstrates compliance with that standard.

b) Classify each cost item of Ripon Printers into one of the following business functions of the value chain: (1) R&D, (2) design, (3) production, (4) marketing, (5) distribution or (6) customer service

Cost Items:

a. cost of customer order forms

b. cost of paper used to manufacture of books

c. cost of paper used in packing cartons to ship books

d. cost of paper used in display at national trade show

e. depreciation of trucks used to transport books to college bookstores

f.  cost of the wood used to manufacture paper

c) Isabelle Pty Ltd uses a budgeted factory overhead rate to apply overhead to production. The following data are available for the year 2010.

                                                       Budgeted               Actual

            Factory overhead           $675,000               $716,000

            Direct labour costs         $450,000               $432,000

            Direct labour-hours      12,500 DLHs              13,325 DLHs

Required:

a. Determine the budgeted factory overhead allocation rate based on direct labour-hours.

b. Compute the amount of under-or-overallocated overheads.

c. Describe the alternative ways to dispose of under-or-overallocated overheads costs.

Question 2

a) Explain the difference between a Product cost and a Period cost. What potential problems does an inaccurate classification of product and period costs cause?

b) How is it possible that a raw material such as a glue might be considered as an indirect material for one furniture manufacturer and as a direct material for another furniture manufacturer?

c) Evans Inc. had the following activities during 2012:

Direct Materials:

Beginning inventory                                                   $40,000

Purchases                                                                    $123,200

Ending inventory                                                        $20,800

Direct manufacturing labor                                         $32,000

Manufacturing overheads                                            $24,000

Beginning work in progress inventory                      $1,600

Ending work in progress inventory                           $8,000

Beginning finished goods inventory                        $48,000

Ending finished goods inventory                              $32,000

Required:

a. What is the cost of direct materials used during 2012?

b. What is the cost of goods manufactured for 2012?

c. What is cost of goods sold for 2012?

d. What amount of prime costs was added to production during 2012?

e. What amount of conversion costs was added to production during 2012?

Question 3

Super Product Ltd prepares monthly income statements. Data relating to the months of March and April 2012 are given below:

	March 2012	April 2012
Beginning Inventory	Nil	150 Units
Production	500 Units	400 Units
Sales	350 Units	520 Units
Variable Cost Data:
Manufacturing cost per unit produced	$100	$100
Operating Cost (Non-manufacturing Costs) per unit sold	$30	$30
Fixed Cost Data:
Manufacturing Costs	$20 000
Operating Costs (Non-manufacturing Costs)	$6 000
Selling Price per unit	$240
Stocks are valued on First In First Out (FIFO) basis.

Required:

a. Compute operating profit for March and April 2012 using absorption costing.

b. Compute operating profit for March and April 2012 using variable costing.

c. Reconcile and explain why the income was different each month using the two methods. Show computations.

d. Assume that the performance of the top manager is evaluated and rewarded largely on the basis of reported profit. Which costing method would the manager prefer? Why?