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Assessment2 Acct6004 Anushakc 00292574t
Assessment2 Acct6004 Anushakc 00292574t
Legal hours 2 3 37 20 62
Workings:
Legal Department Cost
Laptop = 9055/ ((37+20) *37) = 5878
Workstation = 9055/ ((37+20) *20) = 3177
Legal hours 2 3 37 20 62
Workings:
Support Department:
Legal Department Cost
Personnel = 9055 / ((3+37+20) *3) = 453
Personnel Department cost
Personnel = -4000 – 453 = -4453
Manufacturing Department
Legal Department Cost:
Laptop = 9055 / (3+37+20) * 37 = 5584
Workstation = 9055 / (3+37+20) * 20 = 3018
Legal hours 2 3 37 20 62
Support Department:
Legal Department Cost: Personnel = 9502/ ((3+37+20) *3) = 475
Personnel Department Cost: Legal = 4475/ ((200+160+40) *40) = 448
Manufacturing Department:
Legal Department Cost:
Laptop = 9502/ ((3+37+20) *37) = 5860
Workstation = 9502/ ((3+37+20) *20) = 3167
Step 2:
Calculation of cost of Job MT27
Particular Machining Assembly Total
Direct Material 36000 6710 42710
Direct Labor 1550 1650 3200
9450 14000
Overhead (210*45) (200*70) 23450
Part B.
For deciding which method of allocation will be beneficial for the Machining Department
we have to calculate per hour rate of all from all three methods.
Calculate Per Hour Rate of all the three methods.
Particulars Direct Method Step Down Reciprocal Method
Overhead(A) 8650000 8500000 9000000
Basis of Rate Machine Hour Machine Hour Machine Hour
Machine Hours(B) 200000 200000 200000
Per hour Rate(A/B) 43.25 42.5 45
Here, the manager of Machining Department would prefer the step-down method. The direct
method results in a lower amount of support departments’ costs being allocated to the Machining
Department than the step-down method. This is clear from a comparison of the overhead rate,
per direct manufacturing labor-hour, for the Machining Department under the two methods. The
Step-down method shows the minimum manufacturing overhead rate per machining hour which
is beneficial. Although direct method is the easiest to calculate but the lack of focus on issue due
to the computer programs is a drawback of direct method and reciprocal method is accurate but
complicated to perform. [CITATION Eld16 \l 1033 ]
Physical
unit % complete Equivalent units
wrt wrt conversio
Analysis of physical flows material conversion DM n
Workings
Physical Units:
Total Units to Account for = 70000+460000 = 530000
Work in process 30 June = 530000-450000 = 80000
Total Equivalent units = 450000 + 80000 = 530000
Conversion
Total Cost to account for = $13500 + $287300 = $300800
Cost per equivalent unit = 300000/470000 = $0.64
i. FIFO METHOD
Less: Units in opening Work in process 70,000 70% 40% 49,000 28,000
Conversion
Total cost to account for = 13500 + 287300 = 300800
Cost equivalent unit for work done this month = 391850/461000 = $0.85
Part B
Weighted Average
Cost of units completed and transferred out to Packaging
Department $666,000
Cost in Work in process
DM $50,400
Conversion $12,800
Total cost in Work in process 30 June $63,200
Workings
Cost of units completed and transferred out to Packaging Department = 450000 * (0.84+0.64) =
$666000
Direct Material = Work process in June * cost per equivalent unit = 60000*0.84 = $50400
Conversion = work process in June * cost per equivalent unit = 20000*0.64 = $12800
Total cost in work in process 30 June = 50400 + 12800 = $63200
FIFO
Direct Conversio
Material n Total
Cost in Work in process 30 June $51,000 $13,000 $64,000
Cost of units completed and transferred out to Packaging $665,20
Department $377,400 $287,800 0
$729,20
Total costs accounted for $428,400 $300,800 0
Workings
Direct Material
Cost in work in process 30 June: =60000 * 0.85 = $51000
Cost of units completed and transferred out to Packaging Department = Total cost accounted for
– cost work in process 30 June
= 428400 – 51000 = 377400
Conversion
Cost of work in process in 30 June =20000 * 0.65 = $13000
Cost of units completed and transferred out to Packaging Department = Total cost accounted for
– cost work in process 30 June
= 300800 – 13000 = 287800
TPU
Particulars PC case S case case Total
Workings
As shown above to clear the workings, we assume
a = selling price per unit
b= Variable cost per unit
c= Contribution margin per unit
TPU Total
Particulars PC case S case case units
TPU
Particulars PC case S case case Total
Workings:
Units sold = a
Selling price per unit = b
Total sales = c
Variable cost per unit = d
Total variable cost = e
Contribution margin = f
Calculation
Total units sold = 2500+10000+5000= 17500
Total selling price per unit = 50+65+90 = 205
Sales (c)
TPU
Particulars PC case S case case Total
Workings:
(d) = sales mix
Total units = 17500
Sales mix (d) = units/total units*100%
Weighted average contribution margin(e)= c*d
TPU
Particulars PC case S case case Total
Workings:
Units sold = a
Selling price per unit = b
Total sales = c
Variable cost per unit = d
Total variable cost = e
Contribution margin = f
Calculation
Sales (c)
PART D:
No, it is not always better to choose the sales mix with the lowest breakeven point because this
calculation ignores the demand for the various products.
The company should look to and sell as much of each of the 3 products as it can to maximize
operating income even if this means that this sales mix results in a higher breakeven point.
No, sales mixes with the lowest breakthrough point are not necessarily preferable because
calculation lacks demand for the different goods. The organization can see to sell and optimize
operating income for each of the three goods, even though this sales combination leads to a
higher departure. [ CITATION Eld161 \l 1033 ]
PART B
John unethically behavior could lead to disruption in business. In order to satisfy the demand of
the consumers, businesses would not be able to order the quantity of goods. As a consequence of
the product's not available, there would be a risk of market failure. This will negatively affect the
company's image, profitability and profits. In the case of COVID, the loss of revenue due to the
shortage of stock would not be a positive indication of the firm of any business enterprise facing
several challenges. In addition to impacting the viability of the business, the cash inflow, which
is very critical in the present case, would also be affected. The consumer faces the unavailability
and thus loses the confidence in the business of the good it needs. They could choose another
alternative. Unethical behavior often has a big impact on the business, particularly in the global
pandemic where any possibility of cash inflow will change the company's lives. [ CITATION Eld162
\l 1033 ]
References
Eldenburg, L. (2016). A costing framework and cost allocation. In Management accounting (3 ed., pp. 84-
93). Wiley. Retrieved from https://ebookcentral-proquest-com.ezproxy.laureate.net.au
Eldenburg, L. (2016). Cost Volume Profit analysis. In Management Accounting (3 ed., pp. 125-130).
Wiley. Retrieved from https://ebookcentral-proquest-
com.ezproxy.laureate.net.au/lib/think/reader.action?docID=4748111
Eldenburg, L. (2016). Operational Budgets. In Management Accounting (3 ed., pp. 208-218). Wiley.
Retrieved from https://ebookcentral-proquest-
com.ezproxy.laureate.net.au/lib/think/reader.action?docID=4748111