BMAC5203/JAN17/USTY
ASSIGNMENT QUESTION
Task 1
Activity-Based Activity-Based Costing
Objective
To enable the learner to differentiate between traditional costing and activity based costing in decision making.
Marks allocated
30 marks
QUESTION
Persiaran Sdn. Bhd. makes makes a product in two qualities, called ‘Basic’ and ‘Super’. The business is able to sell these products at a price that gives a standard profit mark-up mark-up of 25 per cent of full f ull cost. Full cost for one unit is calculated by charging overheads to each type of product on the basis of direct labour hours. The costs are as follows: follows: Basic ($) 40 15
Direct labour ($ 10 per hour) Direct material
Super ($) 60 20
The total overhead are $1,000,000 Based on experience over recent years, in the forthcoming year the business expects to make and sell 40,000 Basics and 10,000 Supers. Recently, the management has undertaken an exercise to identify cost drivers based on various activities. The finding has revealed revealed that following analysis analysis of the annual overhead: overhead: Activity (and cost driver)
Cost ($) ‘000
Number of machine set-ups Number of quality-control quality-control inspections Number of sales orders processed General production (machine hours) Total
280 220 240 260 1,000
Annual number of activities Total Basic Super 100 20 80 2,000 500 1,500 5,000 1,500 3,500 500,000 350,000 150,000
Required: a)
Determine the full cost and selling price of each of the two products based on the present costing system. (10 marks)
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b)
Determine the full cost and selling price of each product on an activity-based costing first need to download it. basis, taking accounting of the management’s recent investigation. (10 marks)
Download Print What conclusions can youCancel draw? What advice And would you offer the management of the business? (10 marks)
c)
Task 2
Profit Planning and Budgetary Control System
Objective
To enable the learner to prepare the whole master budget of an organisation.
Marks allocated
40 marks
QUESTION
Berjaya Sdn. Bhd. Is preparing budgets for the quarter ending September 30. information is shown as below: Budgeted sales for the next few months are: May 15,000 units June 20,000 units July 30,000 units August 40,000 units September 50,000 units October 35,000 units November 25,000 units
Related
The selling price is $12 per unit. All sales are on credit and the collection methods are: (i) 50% collected in the month of sales (ii) 30% collected in the month following sales (iii) 20% collected in two month following sales The management at Berjaya Sdn. Bhd. determines the ending inventory in units to be equal to 20% of the following month’s budgeted sales. To product one unit of output, 2 kilograms of direct material are needed. Berjaya decides to have direct materials on hand at 10,000 kgs every month Cost of direct material is estimated at $1.50 per kg. The payment of direct materials is below: (i) 50% purchases is paid in the month of purchase (ii) 50% purchases is paid in the following month of purchase To product one unit of output, 0.1 hours of direct labor is required. Berjaya pays $8 per hour to its direct labor. All wages are paid at the end of the month Manufacturing is divided into variable and fixed overhead. Variable overhead is applied to each units of output on the basis of direct labor hours. The variable overhead rate is $10 per direct labor hour. Fixed overhead is estimated at $40,000 cash per month. Ending Finished Goods Inventory is made up from direct material, direct labor and manufacturing OH. Cost of Goods sold is computed based on the unit production cost $5.79 per unit. Selling and administrative cost is divided into variable and fixed components. Variable selling and administrative costs is estimated at $1.50 per unit sold.
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Fixed selling and administrative cost is estimated at $50,000 per month, where $5,000 is first needexpense. to download it. depreciation and not cash Berjaya identifies the cash policy as follows: (i) Minimum cash balance of $50,000 is required for every month (ii) Any deficiency of Cancel cash, will Download be makingAnd up Print by loans and repays back at the following month. (iii) The interest on loan is charged at 15% per year. (iv) Purchase an equipment in August totaling $150,000 (v) Beginning balance of cash balance on 1 July is $55,000 Berjaya’s account balances as follows: Property $ 458,047.50 Equipment 150,200 (net) Ordinary Shares 500,000 Retained earnings 335,777.50
Required: To prepare the whole master budget (Sales budget up to budgeted Statement of Financial Position) for Berjaya Sdn. Bhd. for July, August and September. (40 marks)
Task 3
Short Term Decision Making
Objective
To enable the learner to identify relevant and irrelevant costs and benefits associated to assist in decision making.
Marks allocated
30 marks
QUESTION
Builders SdnBhd offers three products for the construction industry: blocks, bricks and tiles. The following income statement shows the projected results, by products, for 2010 (in $ thousands) :
Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Advertising Salaries Depreciation Total direct expenses PRODUCT margin Less: common fixed expenses Operating income
BLOCKS (‘000) $500 250 250 10 37 53 100 $ 150
BRICKS (‘000) $800 480 320
TILES (‘000) $150 140 10
10
10 40
35
40 90 $230
10 55 $(45)
TOTAL $1450 870 580 30 112 103 245 $335 125 $210
This is the third consecutive year that the tiles segment is reporting losses. The managing director is considering dropping the product line as it would mean saving $45,000 by dismissing the line’s supervisor and also eliminating depreciation.
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BMAC5203/JAN17/USTY
In order to print this document from Scribd, you'll firsttiles needdivision to download it. be closed based on the above information? (a) Do you agree that the should
(14 marks) Cancel And Print (b) What qualitative factors would need toDownload be considered before a decision on whether to keep or drop a product is adopted? (6 marks)
(c) The marketing manager suggested that if the tile product is dropped, sales and variable costs of blocks would reduce by 10%, and sales and variable costs of bricks by 8% since customers tend to buy all three products together. Hence if the tile product is dropped, customers will buy blocks and bricks elsewhere. Does this mean it is better to keep the tile product line? (10 marks) (TOTAL: 100 MARKS)
