FACULTY OF ECONOMICS AND BUSINESS

SATYA WACANA CHRISTIAN UNIVERSITY

ICMAP CLASS

QUESTION SHEET – MID TERM EXAMINATION

COURSE CODE : IA 204

COURSE NAME : MANAGEMENT ACCOUNTING
LECTURER : RON
TIME : TUESDAY, MARCH 2 , 2021 (10.00 – 15.00) :

Question 1

In January 2021, PT BOBOHO showed the following standard cost record for their product :
Standard cost per unit:
Direct material (5 kg @ $5) $25
Direct labor (4 hours, @$10) $40
Fixed Overhead ( 2hours, @$ 8 /hours) $16
Variable Overhead (3hours,@$6) $18

In 2016 the company produced 100,000 units. The actual costs were as followed:
Direct material (510.000 kg purchased and used) $ 4.8/kg
Direct labor $ 9.9/hour
Fixed Overhead $ 1,700,000
Variable Overhead $ 1,800,000
The company had no beginning and ending direct material inventory. In producing
100,000 units, the company used actual direct labor hours of 5% more than standard
hours.
You are required to prepare:
a) Direct material variance computation
b) Direct labor hour variance computation
c) Variable FOH variance computation
d) Fixed FOH variance computation
e) Brief explanation about all of your variance computation to the production director and
CEO who have little accounting/ finance background (in concise and good English).
f) Offer suggestions to both senior officers based on the variance calculations.

Question 2
PT TUESDAY is a leading agricultural equipment producer. The company’s predicted sales for
the first four months of 2021 are as follow:
Januari 40.000
Februari 50.000
Maret 60.000
April 60.000

The following data pertain to production policies of the company:

A. Finished goods inventory on January 1 2021 is 32,000 units with cost per unit of Rp
150,000.00. The company’s policy stipulates that ending finished goods inventory for
each month is equal to 80% of next month sales.
B. Data on direct materials are as follow:

Direct Materials Per unit usage Cost per unit

Metal 10 kg Rp 8,000.00
Component 6 units Rp 2,000.00

The company dictates that the beginning direct materials inventory for each month is
sufficient to produce 50% of predicted sales. This is exactly the amount of direct material
inventory on hand on January 1 2021.
C. Each unit of final products requires 4 units of direct labor hour. The average direct labor
cost is Rp 9,250.00 per hour.
D. The company estimate monthly overhead using a flexible budget formula (activities are
measured using direct labor hours). The fixed cost component is estimated to remain the
same for the whole months.

Fixed Cost Compnent Variable Cost Component

Supplies - Rp 1,000.00
Electricity - Rp 500.00
Maintenance Rp 30,000,000.00 Rp 400.00
Supervision Rp 16,000,000.00 -
Depreciation Rp 200,000,00.00 -
Tax Rp 12,000,000.00 -
Others Rp 80,000,000.00 Rp 1,500.00

E. The company also estimate monthly selling, general, and administrative (SG&A)
expenses using a flexible budget formula (activities are measured using units sold).
Similar to fixed overhead, fixed SG&A is assumed to remain the same during the months.

Fixed-Cost Component Variable-Cost Component

Salaries Rp 50,000,000.00 -
Commission - Rp 2,000.00
 Depreciation Rp 40,000,000.00 -
Shipping - Rp 1,000.00
Other Rp 20,000,000.00 Rp 600.00

F. The selling price of the product is Rp 250,000.00 per unit.

G. All sales and purchases are in cash. The cash balance on January 1 is Rp 378,000,000.00.
If the company suffers cash shortage by the end of the month, they borrow cash to cover
the shortage. Any cash borrowed will be repaid at the end of the quarter as is the interest
due (cash borrowed at the end of quarter will be repaid at the end of the following
quarter). The interest rate is 6% per year. The company do not borrow cash at the
beginning of the year
You are required to prepare the following operational and financial budget at the
beginning quarter of the year:
1. Sales budget
2. Production budget
3. Direct material purchases budget
4. Direct labor budget
5. Overhead budget
6. Selling, general, and administrative budget
7. Ending finished goods inventory budget
8. Cost of goods sold budget
9. Cash budget
10. Budgeted income statement (ignore income tax)
Answer:

Question 3

PT SATURDAY has developed standards for their seven activities: order, material handling,
machine and equipment setup, production, finishing, rework, and redelivery. Below are 2016
related to these activities:

Activities SQ AQ SP
Material order 500 600 20
Material handling 200 180 15
Setup 100 110 20
Production 1500 1400 30
Finishing 1500 1600 25
Rework 0 100 18
Redelivery 0 80 10

You are required to:

a. Prepare a cost statement that includes a list of value-added cost, non-value-added
cost, and actual cost of each activity!
 b. Determine value-added activities. Please explain your answer.
c. Why may value-added activities exhibit non-value-added costs?

Question 4
PT SUNDAY implement activity based costing (ABC) in determining their production
cost while previously they use traditional costing. The company identify three activities
and budgeted costs for these two activities:
Equipment and machine setup 240.000.000
Material handling 120.000.000
Other factory overhead (FOH) 420.000.000
The company allocate cost of setup activity based on setup hours, cost of material
handling based on number of moves and cost of other FOH based on machine hours. PT
SUNDAY produce two products (A and B). Presented below are information on costs
related to these two products:

A B
Units to be produced 2,000 10,000
Setup hours 1,600 400
Number of moves 5,000 1,000
Machine hours 400 2,000

You are required to:

a. Calculate activity rate for these two activities.
b. Calculate total FOH for product A if the company use ABC.
c. Calculate total FOH for product B if the company use ABC.
d. Calculate total FOH for both products A and B if the company use traditional costing
(assumption: traditional costing method allocate all FOH costs based on machine
hours)
e. Why does ABC method produce different product cost information from traditional
costing?

ANSWER:

Question 5
“I was informed by my acquaintance who works at our competitor that they only need
2,000 units of activity A to produce 15,000 units of product. Besides, they do not need to
perform activity B in their production process. Meanwhile, we need 2,100 units of activity
A to produce the same level of production units and we also need to perform 100 units of
activity B. The information ensure me that relative to our competitor our company is more
inefficient in the production process.”
Do you agree with this statement? Does performing more activities or more unit of
activities for the same level of outputs always imply inefficiency? Why? Please answer
these questions in concise and good English.
 Answer:
1. PT. Boboho
a). Total Variance: (510.000*4.8) - (500.000*5) = 52.000
Price Variance: (4.8-5) * 510.000 = -102.00
Materials usage variance: (510.000-500.000) *5 = 50.000
b). Labor Rate variance: (9,9-10) * (105%*400.000*) = -42.000
Labor efficiency variance: (105%*400.000-100%*400.000) *10 = 200.000
c). variable FOH variance: 1.800.000/420.000 = 4,2
Expenses variance: (4,2-6) * 420.000 = -756.000
Overhead variable efficiency variance: (420.000-400.000) * 6 = 120.000
d). Fixed FOH variance:
Budgeted overhead: 6*420.000 = 2.520.000
Applied overhead: 6*400.000 = 2.400.000
Actual Overhead: 1.700.000
Expenses variance: 1.700.000 – 2.520.000 = - 820.000
Efficiency variance: 1.700.000 – 2.400.000 = -700.000
e). -. For the quantity price is favorable because its still below the standard, but for the
materials usage is not due to its more than its standard.
-. For the labor rate its favorable but for the efficiency is not favorable because it’s
above the standard.
-. For the variable overhead is favorable for the expense variance but not for the
efficiency variable variance.
-. For fixed overheads are favorable due to all of it actual cost is below the standard
2. PT Tuesday

PT. Tuesday
Sales Budget
January February March
Units selling price 40.000 50.000 60.000
Units selling price 250.000 250.000 250.000
Budgeted Sales 10.000.000.000 12.500.000.000 15.000.000.000

PT. Tuesday
Production Budget
January February March
Units 40.000 50.000 60.000
Desired Ending Balance 40.000 48.000 48.000
Total needs 80.000 98.000 108.000
Beginning Inventory 32.000 40.000 48.000
Units to be produced 48.000 58.000 60.000

PT. Tuesday
Direct Materials Purchase Budget
 Column1 January February March
Metal
units to be produced 48.000 58.000 60.000
Direct material per unit 10 10 10
Production need 480.000 580.000 600.000
desired ending balance 250.000 300.000 300.000
total needs 730.000 880.000 900.000
Beginning inventory 200.000 250.000 300.000
direct material to be 530.000 630.000 600.000
purchased
cost per unit 8.000 8.000 8.000
total purchase per units 4.240.000.000 5.040.000.000 4.800.000.000
Components
units to be produced 48.000 58.000 60.000
Direct material per unit 6 6 6
Production need 288.000 348.000 360.000
desired ending balance 150.000 180.000 180.000
total needs 438.000 528.000 540.000
Beginning inventory 120.000 150.000 180.000
direct material to be 318.000 378.000 360.000
purchased
cost per units 2.000 2.000 2.000
total purchase units 636.000.000 756.000.000 720.000.000
5.440.000.000 5.280.000.000 4.800.000.000
Total DM purchased cost 6.076.000.000 6.036.000.000 5.520.000.000

PT. Tuesday
Direct Labour Budget
Name January February March
Units to be produced 48.000 58.000 60.000
Direct labor hour per unit 4 4 4
Total hours needed 192.000 232.000 240.000
average wage per hour 9.250 9.250 9.250
total direct labor cost 1.776.000.000 2.146.000.000 2.220.000.000

PT. Tuesday
Overhead Budget
Name Column2 Column3 Column4
Budgeted DL hours 192.000 232.000 240.000
Variable overhead rate 3.400 3.400 3.400
Budgeted variable overhead 652.800.000 788.800.000 816.000.000
Budgeted fixed overhead 338.000.000 338.000.000 338.000.000
 total overhead 990.800.000 1.126.800.000 1.154.000.000

PT. Tuesday
Selling and Administrative Budget
Name January Febuary March
Planned Saless In units 40.000 50.000 60.000
Variable 3.600 3.600 3.600
Total variable 144.000.000 180.000.000 216.000.000
Fixed 110.000.000 110.000.000 110.000.000
Total 254.000.000 290.000.000 326.000.000

PT.Tuesday
Ending Finished Goods Inventory Budget
Name Amount
cost measurement per unit
Direct material 92.000
Direct Labor 37.000
Overhead
Variable Overhead 3.400
Fixed Overhead 1.527
Total Coat per unit 133.927
Units produced march 60.000
Total ending inventory March 8.035.626.506

PT. Tuesday
Cost of goods sold budget
Name Amount
Direct Material Used 15.272.000.000
Direct Labor Used 6.142.000.000
Overhead 3.271.600.000
Budgeted manufacturing cost 24.685.600.000
Beginning inventory 4.800.000.000
COGS avaiable for sale 29.485.600.000
ending finished goods 6.428.501.205
Budgeted cost of goods sold 23.057.098.795

3. PT Saturday
Activities Value Added Nonvalue added Actual costs
10000 2000 12000
 Material 3000 -300 2700
handling
Setup 2000 200 2200
Production 45000 -3000 42000
Finishing 37500 2500 40000
Rework 0 1800 1800
Redelivery 0 800 800
Total 97500 4000 101500
b. Value added activities: all of the activities are value added activities except the Rework
and redelivery.
c. Because if those activities are not done, it will not affect the production process.
4. PT Sunday
a. Activity rate
Equipment and machine setup 240.000.000/2000 120.000
Material Handling 120.000.000/6.000 20.000
Other FOH 420.000.000/2.400 175.000

b. Total FOH A
Activities Product A
Equipment and machine setup 120.000 x 1.600 = 192.000.000
Material Handling 20.000 x 5.000   = 100.000.000
Other FOH 175.000 x 400    = 70.000.0000
Total Overhead cost 362.000.000

c.  Total FOH B
Activities Product B
Equipment and machine setup 120.000 x 400 = 48.000.000
Material Handling 20.000   x 1.000 = 20.000.000
Other FOH 175.000 x 400 =  350.000.000
Total Overhead cost 418.000.000
d. Use traditional costing which means all FOH are based on machine hours.
Total FOH = total expected cost / machine hours
= (240.000.000 + 120.000.000 + 420.000.000) / (2000+400)
= 325.000
e. Because ABC costing is that ABC methods expand the number of indirect cost pools that
can be allocated to specific products. The traditional method takes one pool of a
company's total overhead costs to allocate universally to all products.
5. Essay
I think that if doing more activities will result in better quality, then it will better
than if it has lower quality but in the same quantity. But if it does not increae the
quality, then it is pointless. So we should find the highest efficiency availlable. With
the highest ratio of activity to production quality.