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CTEB2203 Management Accounting

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Gavin Eng Sherng Fong

on 3 October 2012

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Transcript of CTEB2203 Management Accounting

CTEB 2203 Management Accounting

Prepared by: Gavin Fong Eng Sherng (CEB 110011) THANK YOU [1](a) Compute total prime costs

Total Prime Costs = Direct Material + Direct Labor

Direct material 2, 100, 000
Direct labor: wages 485, 000
Direct labor: fringe benefits 95, 000
TOTAL 2, 680, 000 2-42Problem (pg104) Question 1
Compute each of the following costs for the year just ended:
(a) total prime costs
(b) total manufacturing overhead costs
(c) total conversion costs
(d) total product costs
(e) total period costs

Question 2
One of the costs listed above is an opportunity cost. Identify this cost, and explain why is it an opportunity cost. (b) Compute total manufacturing overhead costs

Total Manufacturing Overhead Costs
= Indirect Material + Indirect Labor + Other Costs

Depreciation on factory building 115, 000
Indirect labor: wages 140, 000
Production supervisor's salary 45, 000
Service department costs 100, 000
Indirect labor: fringe benefits 30, 000
Fringe benefits for production supervisor 9, 000
Total overtime premiums paid 55, 000
Cost of idle time: production employees 40, 000
TOTAL 534, 000 (c) Compute total conversion

Total Conversion = Direct Labor + Total Manufacturing
Overhead Costs

Direct labor: wages 485, 000
Direct labor: fringe benefits 95, 000
Total manufacturing overhead costs 534, 000
TOTAL 1, 114, 000 (d) Compute total product costs

Total Product Costs = Total Prime Costs + Total
Manufacturing
Overhead
Costs

Total prime costs 2, 680, 000
Total manufacturing overhead costs 534, 000
TOTAL 3, 214, 000 (e) Compute total period costs

Total Period Costs = Expenses during the time period in
which they are incurred

Advertising expense 99, 000
Administrative costs 150, 000
Rental of office space for sales personnel 15, 000
Sales commissions 5, 000
Product promotion costs 10, 000
TOTAL 279, 000 [2] One of the costs listed is an opportunity cost. Identify this cost, and explain why it is an opportunity cost.

Rental of office space for sales personnel is an opportunity cost. Sentiments, Inc. has to sacrificed the previous office space for sales personnel so that the office space can be used to store raw material. Problem 2-49 (pg107) For each of the following costs, indicate whether the amount is a direct or indirect cost of the equipment maintenance department. Also indicate whether each cost is at least partially controllable by the department supervisor [1] Cost of plant manager's salary, which is allocated to the maintenance department
Answer: Indirect cost and uncontrollable

[2] Cost of property taxes allocated to the maintenance department
Answer: Indirect cost and uncontrollable

[3] Cost of electricity used in the maintenance department
Answer: Direct cost and partially controllable

[4] Depreciation on the building space occupied by the maintenance department
Answer: Indirect cost and uncontrollable

[5] Idle time of maintenance department employees
Answer: Indirect cost and partially controllable
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