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MAD Seminar 1: Managerial Accounting For Decision-Making: Full Costing 1 - Elliot Guner
MAD Seminar 1: Managerial Accounting For Decision-Making: Full Costing 1 - Elliot Guner
I will put up 1 of the seminars each week, and archive other copies.
1.2 MAD Module Textbook
Management Accounting -
Core Essentials.
Edited by Lynsie Chew, Elliot
Guner & Alan Parkinson.
Published by Pearson, Harlow
978-1-78764-607-0.
▪ Online copies available.
▪ Physical copies only
available at Waterstones
Gower St.
1.3 Seminar 1 Agenda
1. Looking at your answer(s) to the Chargeit Corporation
question released immediately after Lecture 2.
(Remember, this work does not count as part of your
formal assessment – it is formative.)
2. A reminder about Issues in Full Costing.
3. Looking at answer to Athena Limited (Exercise 2.7 on
page 50 in book): full costing with more than one cost
centre. (Remember, this work does not count as part of
your formal assessment – it is formative.)
4. Review: What Have We Learnt About Full Costing?
1.4 ChargeIt Corporation
▪ This company manufactures two types of products. Each
unit of each type receives an overhead charge. Currently,
the company charges overheads using total forecast annual
direct manufacturing labour hours using the total forecast
manufacturing overheads for the year.
▪ The management accountant has recently suggested
dividing the total overheads into two categories: machining
overheads and general overheads. If overheads were to be
charged using the proposed two categories, machining
overheads would be charged in using machine hours per
unit, and general overheads would be charged using direct
manufacturing labour hours per unit.
1.5 ChargeIt Corporation
▪ Required: Using the data on the following slide:
II. Calculate the overhead charge per unit using each of the
machining overheads and general overheads.
1.6 ChargeIt Corporation
Type A Type B
Annual forecast production - Units 10,000 20,000
Direct manufacturing labour hours per unit 2 4
Machine hours per unit 8 8
Total Year
Forecast total manufacturing overheads next year $6.40 million
Comprising:
Total machining cost overheads $3.60 million
General manufacturing overheads $2.80 million
1.14 Your presentation
▪ From next seminar, 2 of you will present the exercise to
prepare in advance of the seminar.
▪ You will prepare a presentation – it can be in any form that
you wish on Zoom (ppt, excel, handwritten notes…).
▪ Treat this presentation as if this was in a business context.
▪ The audience (us) will rate your presentation on both:
— Numbers
— Presentation style
▪ Not graded towards your final grade.
▪ Constructive feedback + learn from each other.
1.15 Teams of 2 to present
▪ Randomise!
*Note that direct labour and direct materials are not included
in this schedule because they are not indirect costs.
1.19 Determining the Overheads
Machining Department
Machining overheads/Number of Machine Hours
The machine hour rate = £ / =£ per hour
Fitting Department
Fitting overheads/Number of Direct Labour Hours
The direct-labour hour rate = £ / =£ per hour
1.20 Determining the Overheads
Calculations £ Notes
Direct materials
Direct labour
- Machining
- Fitting
Overheads to the nearest £
to the nearest £