Nama : Anisa Yuniarti

NIM : 41033403200012

Kelas : Akuntansi A

Mata Kuliah : Akuntansi Manajemen

Dosen : Hj. Sri Suharti, SE., Ak., MM., CA

TUGAS 1

Problem 1-1 Budgets in Managerial Accounting

Santiago's Salsa is in the process of preparing a production cost budget for May. Actual
costs in April were:
Santiago's Salsa
Production Costs
April 2008
20.000
Production Jars of salsa
Ingredient cost (variable) $16,000
Labor cost (variable) 9,000
Rent (fixed) 4,000
Depreciation (fixed) 6,000
Other (fixed) 1,000
Total $36,000
Required:
a. Using this information, prepare a budget for May. Assume that production will
increase to 22,000 jars of salsa, reflecting an anticipated sales increase related to
a new marketing campaign.
Answer :

Ingredients cost per unit : $16,000/20,000 = $0,80

Labor cost per unit : $9,000/20.000 = $0,45
 Santiago's Salsa
Production Costs
April 2008

Production Jars of salsa

Ingredient cost (variable) $17,600
Labor cost (variable) 9,900
Rent (fixed) 4,000
Depreciation (fixed) 6,000
Other (fixed) 1,000
Total $38,500

b. Does the budget suggest that additional workers are needed? Suppose the wage
rate is $20 per hour. How many additional labor hours are needed in May? What
would happen if management did not anticipate the need for additional labor in
May?
Answer :
Does the budget suggest that additional workers are needed?
Yes, it does suggest that additional workers are needed. Additional labor hours
reuired = (9,900 – 9,000)/20 = 45

Suppose the wage rate is $20 per hour. How many additional labor hours are
needed in May?
Labor hours used in April 450
Labor hours to be used in May 495
Additional labor hours needed 45

What would happen if management did not anticipate the need for additional
labor in May?
If management did not anticipate the additional labor requirement in May, one
of the consequences would be : “Loss of production and consequent loss of
profits.” Engaging the existing workers on overtime.
 c. Calculate the actual cost per unit in April and the budgeted cost per unit in May.
Explain why the cost per unit is expected to decrease.
Answer :
April Actual May Budgeted
Total cost $36,000 $38,500
Jars of salsa 20,000 22,000
Cost per jar of salsa $1,80 $1,75

The decrease in cost per unit is $0,05 which is due to the decrease in fixed cost
per unit due to increase in production. When total fixed costs remain the same,
increase in activity will reduce fixed costs per unit and hence total costs per unit.

PROBLEM 1-2. Incremental Analysis

Consider the production cost information for Santiago's Salsa in Problem 1. The
company is currently producing and selling 250,000 jars of sales annually. The jars sell
for $4.00 each. The company is considering lowering the price to $3.70. Suppose this
action will increase sales to 300,000 jars.

Required
(a) What is the incremental cost Assocaited with producing an extra 50,000 jars of
salsa?
(b) What is the Incremental revenue Associated with the price reduction of $0.30 per
jar:
(c) Should Santiago's lower the price of its Salsa?

Answer :

(a) Incremental cost for extra 50,000 units

= (total variable costs for April)/number of units for April * 50,000 units
= (16,000 + 9,000)/20,000 * 50,000
= $62.500
(b) Incremental revenue associated with price reduction
New revenue ($3.70 *300,000) 1.110.000
Less:exiting revenue ($4.00*250,000) (1.000.000)
Incremental revenue 110.000

(c) Since incremental revenue is higher than incremental cost, price of salsa can be
lowered, net benefit will be (110,000 – 62,500) = $47,500