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Managerial Accounting

The document consists of accounting questions focused on product costs, period costs, and manufacturing overhead related to TeleTech Corporation's printer production. It includes calculations for determining costs, pricing strategies, and recommendations for using either a plantwide or departmental overhead rate. The questions require analysis of inventory, cost of goods sold, and pricing implications for competitive advantage.

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5 views2 pages

Managerial Accounting

The document consists of accounting questions focused on product costs, period costs, and manufacturing overhead related to TeleTech Corporation's printer production. It includes calculations for determining costs, pricing strategies, and recommendations for using either a plantwide or departmental overhead rate. The questions require analysis of inventory, cost of goods sold, and pricing implications for competitive advantage.

Uploaded by

rosiebui030499
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question 1: 4 marks

1.1. Distinguish between product costs and period costs? Why are product
costs also called inventoriable cost?
1.2. List the several product costs incurred in the production of a backpack?
1.3. For each case below, find the missing amount.
Case I Case II Case IIII
Beginning inventory of ? $12,000 $7,000
finished goods
Cost of goods $419,000 95,000 ?
manufactured during
period
Ending inventory of 98,000 8,000 21,000
finished goods
Cost of goods sold $405,000 ? $304,000

Question 2: 6 marks
TeleTech Corporation manufactures two different color printers for the
business mark. These types of color printers are suitable for unit
specialization in providing advertising printing service, allowing users to print
high-quality color. The company currently has a factory in Quannin 4 high-
tech industrial park. Suppose you are an accountant in charge of determining
costs and statement of production cost related to these product lines of the
company. Based on past production activities, cost estimates for the two
models for the current years are as the follows:
Basic system Advanced system
Direct material $400 $800
Direct labor (20 hours at $15 300 300
per hour)
Manufacturing Overhead 400 400
Total $1,100 $1,500
*The predetermined overhead rate is $20 per direct-labor hour

Each model of printer requires 20 hours of direct labor. The basic system
requires 5 hours in department A and 15 hours in department B. The
advanced system requires 15 hours in department A and 5 hours in
department B. The overhead costs budgeted in these two production
departments are as follows:
Department A Department B
Variable cost $16 per direct-labor $4 per direct-labor hour
hours
Fixed cost $200,000 $200,000
The firm’s management expects to operate at a level of 20,000 direct-labor
hours in each production department during the current year. (This estimate
is based on the practical capacity of each department)
Required:
2.1. Show how the company’s predetermined overhead rated was
determined. If the firm prices each model of color printer at 10 percent over
its cost, what will be the price of each model?
2.2. Suppose the company were to use departmental predetermined
overhead rates. Calculate the rate for each of the two production
departments.
2.3. Compute the product cost of each model using the departmental
overhead rates calculates in requirement (2).
2.4. Compute the price to be charged for each model, assuming the company
continues to price each product at 10 % above cost. Use the revised
production costs calculated in requirement (3).
2.5. Write a memo to president of TeleTech Corporation making a
recommendation as to whether the firm should use a plantwide overhead
rate or departmental rates. Consider the potential implications of the
overhead rates and the firm’s pricing policy. How might these considerations
affect the firm’s ability to compete in the marketplace?

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