HA2011 Management Accounting Assignment Help
Week 7 (Topic 6) – Activity-based costing
|
Activity |
Cost (C) |
Driver (D) |
Cost to be allocated to |
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|
Cheap |
Econo |
Deluxe |
Total |
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|
|
|
|
Z = C x D / ΣD |
|
|
|
|
Material handling |
225,000 |
Number of parts |
100,000 |
75,000 |
50,000 |
225,000 |
|
Material insertion |
2,475,000 |
Number of parts |
1,100,000 |
825,000 |
550,000 |
2,475,000 |
|
Automated machinery |
840,000 |
Machine hours |
240,000 |
360,000 |
240,000 |
840,000 |
|
Finishing |
170,000 |
Labour hours |
100,000 |
50,000 |
20,000 |
170,000 |
|
Packaging |
170,000 |
Orders shipped |
100,000 |
50,000 |
20,000 |
170,000 |
|
Total manufacturing cost |
3,880,000 |
|
1,640,000 |
1,360,000 |
880,000 |
3,880,000 |
|
Units manufactured |
|
|
10,000 |
5,000 |
2,000 |
|
|
Cost per unit |
|
|
164 |
272 |
440 |
|
Hence the cost per unit of cheap is $164.
Information relating to cost drivers of each product is as follows:
|
|
Cheap |
Econo |
Deluxe |
Total |
|
Units to be produced [P] |
10,000 |
5,000 |
2,000 |
17,000 |
|
Orders to be shipped |
1,000 |
500 |
200 |
1,700 |
|
Number of parts per unit [a] |
10 |
15 |
25 |
50 |
|
Total number of parts [a x P] |
100,000 |
75,000 |
50,000 |
225,000 |
|
Machine hours per unit [b] |
1 |
3 |
5 |
9 |
|
Total machine hours [b x P] |
10,000 |
15,000 |
10,000 |
35,000 |
|
Labour hours per unit [c] |
2 |
2 |
2 |
6 |
|
Total labour hours [c x P] |
20,000 |
10,000 |
4,000 |
34,000 |
Week 8 (Topic 7) – Budgeting
The budgeted requirements for each month are as follows:
|
|
July |
August |
|
Budgeted production (units) |
180,000 |
200,000 |
|
Direct material required @ 0.5kg per unit (kg) |
90,000 |
100,000 |
|
Direct material required for next month production @ 10% of the budget |
N/A |
10,000 |
Hence the purchases required can be computed as follows:
|
Purchases required to meet current month production (July) [units in kgs] |
90,000 |
|
|
Purchases required to meet 10% budgeted requirements of next month (August) i.e. closing stock required |
10,000 |
|
|
Total materials required |
100,000 |
|
|
Less: Opening stock of materials |
(5,000) |
|
|
Purchases required during July |
95,000 |
|
Hence, 95,000 kg of material needs to be purchased during the month of July.
Week 9 (Topic 8) – Variance Analysis
The total material variance is the sum of material price variance and material usage variance. This is computed as follows:
|
|
|
Standard |
Actual |
Variance |
|
Production (units) |
A |
3,000 |
3,000 |
|
|
Material usage per unit of product (kg) |
B |
2.50 |
2.67 |
($1,500) |
|
Purchase price of material (per kg) |
C |
$3 |
$3.1 |
($800) |
|
Standard price of material per unit of product |
D = B x C |
$7.50 |
$8.27 |
|
|
Total material purchased and used (kg) |
E = A x B |
7,500 |
8,000 |
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|
|
|
|
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Total material cost |
F = C x E |
$22,500.0 |
$24,800.0 |
($2,300.0) |
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Adverse |
As a result, an adverse total material variance of $2,300 is computed, which is the sum of two adverse variances as shown above.
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