Management Accounting for Business - Assignment Example

The paper 'Management Accounting for Business' is a great example of a Finance and Accounting Assignment. The company may favor the second if overhead costs in the molding department have a cause-and-effect relationship with machine-hours, while those in the component and assembly departments have a cause-and-effect relationship with direct labor hours. In this case, the computed total manufacturing cost in part (2) is of similar magnitude to the cost in part (3), and therefore one might be inclined to use the simpler method in part (2) rather than the more accurate but more complex method in part (3).

Question 2

• Total prime costs = Cost of materials + Cost of direct labor = 1 050 000 + 47 500 = 1 340 000
• Total manufacturing overhead costs = Service department costs + On-costs for production supervisor + Depreciation on factory building + Production supervisor's salary + Total overtime premiums paid + Cost of idle time: production employees = 50 000 + 242 500 + 4 500 + 57 500 + 22 500 + 27 500 + 20 000 = 2 062 500
• Total conversion costs = Cost of direct labor + Indirect labor: on-costs + Indirect labor: wages + Manufacturing overhead costs = 47 500 + 15 000 + 70 000 + 2 062 500 = 2 195 000
• Total product costs (for external reporting purposes) = Cost of materials + Cost of direct labor + Manufacturing overhead costs = 1 050 000 + 47 500 + 2 195 000 = 3 292 500
• Total period costs = Administrative costs + Rental of office space for sales personnel + Sales commissions + Product promotion costs + Advertising expense = 75 000 + 7 500 + 2 500 + 5 000 + 49 500 = 139 500

Question 3

73 000 * $45 = $3,285,000

T11-007 = 300 * $45 = $13,500

N11-013 = 1,000 * $45 = $45,000

N11-015 = 1,400 * $45 = $63,000

D12-002 = 2,500 * $45 = $112,500

D12-003 = 800 * $45 = $36,000

Total = $270,000

To November

Projected manufacturing overhead = $3,285,000

Actual manufacturing overhead = $3,300,000

Manufacturing overhead is over-applied by $3,300,000 - $3,285,000 = $15,000.

During December

Projected manufacturing overhead = $270,000

Actual manufacturing overhead = $288,000

Manufacturing overhead is over-applied by $288,000 - $270,000 = $18,000.

Finished goods inventory = Beginning finished goods inventory + Cost of goods manufactured - Cost of goods

Finished goods inventory = 375 000 + 9 390 000 = $9 765 000

Schedule of cost of goods manufactured for Vision Pty Ltd

Direct materials

Beginning raw materials inventory

315000

Plus; Net purchases

2787000

Minus; Ending raw materials inventory

255000

Raw materials used in production

2847000

Direct labor

2775000

Manufacturing overhead

Indirect material

402000

Indirect labor

1125000

Utilities

801000

Depreciation

1260000

3588000

Total manufacturing cost

9210000

Beginning work in progress

180000

Cost of goods manufactured

9390000