HI5017 Managerial Accounting Online Tutoring
Question 1: TikTok Coffee Tables
A: Total Manufacturing Cost for X10
| Direct Materials Used in Manufacturing | $22,800 |
| Direct Labor Cost ($16 x 600 L.hours) | $9,600 |
| Manufacturing Overheads ($30 x 400 M.hours) | $12,000 |
| Total Man. Cost | $44,400 |
B: Cost Per Coffee Table for X10
| Total Manufacturing Cost (Job X10) | $44,400 |
| Number of Coffee Tables | 150 |
| Cost Per Table for X10 ($44,400/150) | $296/table |
C: Two Uses of Unit Cost Information for TikTok Management
The unit cost information is beneficial for TikTok Management because;
- It can help in determination of selling price after markup calculation
- It can help in determination of process improvement initiatives to be taken by company after analyzing the different cost heads.
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Question 2: TikTok Aluminum Fibre Tripods
A: Activity Rates
The ABC overhead rate is calculated as = Estimated OH/Expected use of Cost Driver
| (A) | (B) | (A)/(B) | |||
| Activity Cost Pool | Estimated OH | Estimated use of Cost Driver | Cost Driver | Activity Based OHR | |
| Purchasing | $1,200,000 | 40,000 | Orders | $30 | Per order |
| Machine Setup | $900,000 | 18,000 | Setups | $50 | Per setup |
| Machining | $4,800,000 | 120,000 | Machine Hours | $40 | Per Machine Hour |
| Quality Control | $700,000 | 28,000 | Inspection | $25 | Per Inspection |
B: Unit Cost of TRI-X
Cost Assigned = Cost Driver x ABC Overhead Rates from part A.
| Activity Cost Pool | TRI-X | ||
| Cost Driver
(A) |
ABC Overhead Rate
(B) |
Cost Assigned
(A) x (B) |
|
| Purchasing | 17,000 orders | $30/order | $510,000 |
| Machine Setup | 5,000 setups | $50/setup | $250,000 |
| Machining | 75,000 machine hours | $40/machine hour | $3,000,000 |
| Quality Control | 11,000 inspections | $25/inspection | $275,000 |
| Total Cost Assigned
(C) |
$4,035,000 | ||
| Units Produced
(D) |
26,000 | ||
| Overhead Cost Per Unit (C)/(D) | $155.19 | ||
Hence Total Cost/Unit of TRI-X
| Direct Material | $700 |
| Direct Labor | $120 |
| OH Cost | $155.19 |
| Total Unit Cost | $975.19 |
C: Gross Profit
| Sale Price | $1,600,00 |
| Less: Manufacturing Cost | – $975.19 |
| Gross Profit | $624.81/unit |
TRI-X should be continued because it is achieving gross profit of more than $600 under ABC costing system.
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Question 3: Trackit
A: Cash Receipt Budget (July-Sep)
| TRACK IT: Sales Budget | |||||
| Month | July | August | September | Total | Notes |
| Budgeted Sales (units | 1000 | 1500 | 2000 | 4500 | A |
| Sell Price | 140 | 140 | 140 | B | |
| Budgets Sales ($) | $140,000 | $210,000 | $280,000 | $630,000 | C = A x B |
| Cash Receipt Budget | July | August | September | Total | Note |
| 15% of Credit Sales in Same Month | 21,000 | 31,500 | 42,000 | 94,500 | D = C x 15% |
| 25% of Credit Sales Received in Next Month | – | 35,000 | 52,500 | 87,500 | E = 25% of C of previous month |
| 40% of Credit Sales Received in Second Month | – | – | 56,000 | 56,000 | F = 40% of previous to previous month |
| Less: Sales Discount | (840) | (1,260) | (1,680) | (3,780) | G = D x 4% |
| Estimated Cash Receipts | $20,160 | $65,240 | $148,820 | $234,220 | H |
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