Management Accounting Assignment Questions And Criteria

LAKE SURF COMPANY

(a)
Calculation Of Equivalent Units Using Weighted Average Method:
Input	Particulars	Output	Materials	Conversion Costs
			%	Units	%	Units
3000	Opening WIP
12000	Units Introduced
	Units Completed and Transferred	9000	100	9000	100	9000
	Abnormal Loss	1000	100	1000	100	1000
	Closing WIP	5000	100	5000	60	3000
15000		15000		15000		13000

(b)
Statement Of Cost :
Elements Of Cost	($)	Cost ($)	Equivalent Units	Cost per Unit ($)
Direct Materials :
Opening WIP		2100
Cost Of Units Introduced		9000	11100	15000	0.74

Conversion Costs
Opening WIP		485
Cost Of Units Introduced		10045	10530	13000	0.81
Total Cost Per Unit :				1.55

( c )
Value Of Ending Inventory :
Particulars	Units	($)	Total
Direct Materials	5000	0.74	3700
Conversion Costs		3000	0.81	2430
			6130
(d)
Value Of Abnormal Loss :
Particulars	Units	($)	Total
Direct Materials	1000	0.74	740
Conversion Costs		1000	0.81	810
			1550
(e)
Value Of Goods Completed And Transferred :
Particulars	Units	($)	Total
Direct Materials	9000	0.74	6660
Conversion Costs		9000	0.81	7290
			13950

LULU COMPANY

(a)
Production Budget (In Units) :			Working Notes :
Particulars	January	February			Calculation Of Closing Stock :
Sales	48000	84000			Month	Jan	Feb
Less : Opening Stock	69000	99000			Unit Sales	48000	84000
Add : Closing Stock	99000	78000
	78000	63000			Inventory Needs : 100% Of Next Month Sales and 25% of
					Second Month Sales.
					Jan :	99000
					Feb :	78000
(b)
Materials Usage Budget (In Units & Kilogram) :
Particulars	January
Production (Units)	78000
	Units (kg)	Value ($)
Raw Materials (kg) [One Unit Needs 2Kg]	156000


Cost Of Raw Materials (One Kg Costs $20)		3120000



( c )
Materials Purchase Budget (In Units & Kilogram) :		Working Notes :
Particulars	January		1) Calculation Of Closing Raw Materials :
	Units (kg)	Value ($)
Required	156000	3120000		Inventory Needs : 40% Of Next Month Needs.
Add : Closing Raw Materials	50400	1008000			Opening RM :		62400
Less : Opening Raw Materials	62400	1123200			Closing RM :		50400
	144000	3004800		2) Since the raw materials are valued at FIFO,the opening raw materials are valued at $18/kg.


DRAGON COMPANY


(a)
Calculation Of Flexible Budget Variance :
Particulars	Standard Cost p.u.	10,000 Units	Variance
Standard Cost	Actual Cost
Direct Materials	20	200000	202500	(2500)
Direct Labour	25	250000	325000	(75000)
Variable Overhead	6	60000	100000	(40000)
Fixed Overhead	10	150000	150000	0
Total Cost	61	660000	777500	(117500)

(b)
Calculation Of Various Variance :
Particulars	Standard Cost ($)	Actual Cost ($)	Amount ($)	Status
Direct Materials Price Variance	225000	202500	22500	Favourable
[(Actual Qty * Std Rate)- Actual Cost ]

Direct Materials Effeciency Variance	200000	225000	(25000)	Adverse
[(Std Qty – Actual Qty)*Std Rate]

Direct Labour Price Variance	312500	325000	(12500)	Adverse
[(Actual Hours*Std Rate)-Actual Cost]

Direct Labour Effeciency Variance	250000	312500	(62500)	Adverse
[(Std Hours – Actual Hours)*Std Rate]

Variable Manufacturing Overhead Spending Variance	75000	100000	(25000)	Adverse
[(Actual Qty * Std Rate)- Actual Cost ]

Variable Manufacturing Overhead Effeciency Variance	60000	75000	(15000)	Adverse
[(Std Hours – Actual Hours)*Std Rate]

Fixed Manufacturing Overhead Spending Variance	150000	125000	25000	Favourable
[Std Cost-Actual Cost]

Fixed Manufacturing Overhead Effeciency Variance	100000	125000	(25000)	Adverse
[(Std Hours – Actual Hours)*Std Rate]

GORDON MANUFACTURING

(a)
Calculation Of Total Relevant Cost Of The Special Order :
(At Excess Operating Capacity)
Particulars	Amount ($)
Direct Materials	100
Direct Labour	50
Manufacturing Support	90
Total Relevant Cost	240

( c )
Calculation Of Total Relevant Cost Of The Special Order :
(At Full Operating Capacity)
Particulars	Amount ($)
Direct Materials	100
Direct Labour	50
Manufacturing Support	90
Contribution Loss	225
Total Relevant Cost	465

Working Notes :
1) Fixed Cost is irrelevant in case of special order, that is, it not a
relevant cost.

2)Marketing Costs, being selling costs are not considered relevant
for a special order.

2) Calculation Of Contribution Per Unit From Current Operations:
Particulars	Amount ($)
Sales	500
Less :
Direct Materials	100
Direct Labour	50
Manufacturing Support	90
Marketing Costs	35
Contribution	225

Note : This Contribution would be a loss in case the company is
opting special order.

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