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Question - Mid Term Parallel Quiz 2324

1. This document contains 4 problems related to management accounting concepts. Problem 1 involves variable costing and absorption costing calculations. Problem 2 is about cost-volume-profit analysis and break-even points. Problem 3 requires preparing an operating budget for production, materials, labor, and overhead. Problem 4 involves calculating variances from a flexible budget for direct materials and direct labor.

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20 views4 pages

Question - Mid Term Parallel Quiz 2324

1. This document contains 4 problems related to management accounting concepts. Problem 1 involves variable costing and absorption costing calculations. Problem 2 is about cost-volume-profit analysis and break-even points. Problem 3 requires preparing an operating budget for production, materials, labor, and overhead. Problem 4 involves calculating variances from a flexible budget for direct materials and direct labor.

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haikal.abiyu.w41
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Mid Term Parallel Quiz 2023/2024

Management Accounting
Teaching Assistant Team

Problem 1 – Variable Costing


Es Krim Enak uses FIFO actual costing system. The value of fixed manufacturing cost rate
calculated at the end of the year through dividing the actual fixed manufacturing cost by the actual
production units. Es Krim Enak sold only 1 product type called Banana Chocolate which has a
selling price $3/unit.

Es Krim Enak prepares income statement using absorption costing as below:


2023 (in $) 2024 (in $)
Revenues (Price @ $3) 6000 7200
Cost of goods sold:
Beginning inventory 0 800
Variable manufacturing costs 1400 1000
Fixed manufacturing costs 1400 1400
Cost of goods available for sale 2800 3200
Deduct ending inventory (800) (480)
Cost of goods sold 2000 2720
Gross margin 4000 4480
Operating costs:
Variable operating costs 2000 2400
Fixed operating costs 800 800
Total operating costs 2800 3200
Operating income 1200 1280
Additional information
2023 2024
Production 2800 unit 2000 unit

Required:
1. Determine the inventoriable cost for Variable costing and Absorption Costing!
2. Determine the unit of ending inventory each year (2023 and 2024)!
3. Determine the unit sales for each year!
4. What is the impact for value of beginning inventory if we use FIFO? Explain briefly!
5. Prepare income statement based on variable costing for 2023 and 2024
6. Explain briefly the difference between variable costing and absorption costing! Determine
which costing that could be riskier for fraud potential!
7. Prepare a numerical reconciliation and explanation of the difference between operating
income under absorption costing and variable costing.

Problem 2 – Cost Volume Profit Analysis


Lacks Stationary is the biggest stationary chain in Indonesia, which has over 500 branches around
Indonesia. Due to high demand for School’s new semester, for every 1 Pen sold, 3 Pencil are sold.
Below is the information about the price, variable cost, and fixed cost of each Stationaries:

Selling Price Variable Cost Fixed Cost


Pen $2.00 $1.80
$15,000
Pencil $3.00 $1.30

Required:
1. How many Pens and Pencil that must be sold so that Lacks can break-even? How much is
the break-even revenue for Lacks?
2. If Lacks wants an operating income of $ 45,000. How much Pen and Pencil must be sold?
What is the margin of safety?
3. If Lacks wants a net income of $ 50,000. How many Pens and Pencil must be sold? What
is the margin of safety? (Assuming a 20% tax rate)
4. Lacks is considering automating the payment process. If a machine replaces the payment
process, there will be an additional fixed cost of $60.000, but the variable cost for each
stationaries drops by 20%. With the given previous sales mix, how many Pen and Pencil
must be sold so that Lacks can break-even? How much is the break-even revenue?
5. Another option that is being considered by Lacks is opening a new branch. The addition of
this branch will increase the fixed cost by $54.000 and change the sales mix so that every
1 Pen sold, 1 Pencil will be sold as well. How many Pen and Pencil does Lacks have to sell
to break-even? How much is the break- even revenue?
Problem 3 – Operating budget
Jupiter Ltd had just launched one model of granite-top coffee tables: Deluxe. There are two types
of direct materials: red oak and granite slabs. The following data are available for April 2024:

Expected sales in units:


March : 15,000
April : 20,000
May : 18,000
June : 23,000
Selling Price : $ 900
Direct Materials:
Standard Red Oak per Table : 15 board feet
Red Oak Price : $ 5 per board foot
Standard Granite per Table : 7 square feet
Granite Slabs Price : $ 10 per square foot
Direct Manufacturing Labor:
Standard labor per table : 6 hours
Direct labor cost per hour : $ 20 per hour
Manufacturing Overhead:
Manufacturing operations : $ 15 per direct labor hour
Purchasing materials : $ 4 per board feet of red oak purchased
Following are the policies related to the operation:
a. Jupiter Ltd wants to maintain finished goods inventory equal to 10% of the following
month’s sales.
b. Jupiter Ltd requires that the ending inventory of direct materials be equal to 20% of the
following month’s production needs.

Required:
Prepare the following budget for April 2024.
1) Revenue Budget
2) Production Budget
3) Direct Materials Usage & Purchase Budget
4) Direct Labor budget
5) Manufacturing Overhead Budget

Problem 4 – Flexible Budget


Bulletproof Boyscouts Co. is a company that manufactures protective equipment related to
sports. Jungkook, the newly assigned general manager, would like to know whether the company
is doing well or not. He talked with the previous manager, Seokjin, who reassured him that “the
company was doing just fine” and that “the cost is all under control”. To verify whether this was
true or not, he is determined to review the company’s income statement and the relevant
information provided within.
Bulletproof Boyscouts Co. Operates under a standard costing system. Each completed unit of
protective equipment requires 2 kg of direct materials at $8 per kilogram and 3 direct labor hours
with the rate of $9.50 per hour.
During 2022, Bulletproof Boyscouts Co produced 15,000 and incurred the following costs:
a) Purchased 60,000 kilograms of materials at a cost of $6 per kilogram.
b) Used 49,200 kilograms of materials in production. (Finished goods and work in process
inventories are insignificant and can be ignored.)
c) The factory workers worked 50,000 direct labor hours at $10.00 per hour.

Required:
1. Compute the direct material price and usage variances for 2022!
2. Compute the direct labor price and usage variances for 2022!
3. Verify whether the previous manager was telling the truth or not: is the company really
doing well and the cost is kept under control? (Hint: Summarize the variances that you
computed above by showing the net overall favorable or unfavorable flexible-budget
variance for the month)

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