HA2011 Management Accounting Assignment Help
Week 7 (Topic 6) – Activity-based costing
Activity | Cost (C) | Driver (D) | Cost to be allocated to | |||
Cheap | Econo | Deluxe | Total | |||
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| Z = C x D / ΣD |
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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 |
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| 10,000 | 5,000 | 2,000 |
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Cost per unit |
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| 164 | 272 | 440 |
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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:
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| Standard | Actual | Variance |
Production (units) | A | 3,000 | 3,000 |
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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 |
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Total material purchased and used (kg) | E = A x B | 7,500 | 8,000 |
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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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