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    Assignment 1 Cost Accounting For Managers

    Uploaded by

    Renmar Baccay

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Assignment 1 Cost Accounting For Managers

    Uploaded by

    Renmar Baccay
    1 views3 pages

    Original Title

    Assignment 1 Cost Accounting for Managers

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    © © All Rights Reserved

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    1 views3 pages

    Assignment 1 Cost Accounting For Managers

    Uploaded by

    Renmar Baccay

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Scenario

    You are the manager in the produc2on department of a shoe manufacturing company. The Company produces rubber
    shoes and it caters to 3 types of market: students, working class and athletes. The company produce standard type of
    shoes for each market, Class C for students which is of average quality, Class B for working class which has higher quality
    than that of Class C and Class A for athletes which is of highest quality. Management policy is to set up selling price at
    20% above cost for Class C, 50% above cost for Class B and 70% above cost for Class A. Management projected a total
    demand for the products as follows:

    Class C 50,000units
    Class B 30,000 units
    Class A 20,000 units
    The President ask you to prepare cost sheets for each of the class of products as a basis in seLng the price.

    Required:

    a. Prepare cost sheets for each type of products.


    b. Calculate total cost and per unit cost for each type of product.
    c. Determine the selling price for each type of product.
    d. Classify the different the cost whether they are
    a. produc2on cost: material, labor, factory
    b. Variable or fixed
    c. Controllable or uncontrollable
    d. what is the importance of classifying such cost.

    Answers:

    A. Prepare cost sheets for each type of products.

    Total Demand (units) 20,000 30,000 50,000

    Class A Class B Class C


    Cost Particulars
    (Athletes) (Working Class) (Students)
    Direct Materials (Cost per unit)
    Rubber compounds 300.00 240.00 168.00
    Fabric/ Textiles 400.00 320.00 224.00
    Laces/Eyelets 150.00 120.00 84.00
    Rubber Soles 350.00 280.00 196.00
    Foam 400.00 320.00 224.00
    TOTAL DIRECT MATERIAL 1,600.00 1,280.00 896.00

    Direct Labor (Cost per unit)


    Cutter (50.00/hour) 100.00 100.00 100.00
    Assembler (80.00/hour) 160.00 120.00 80.00
    Machine Operator (60.00/hour) 60.00 48.00 42.00
    TOTAL DIRECT LABOR 320.00 268.00 222.00

    Manufacturing Overhead
    Indirect Materials (per unit)
    Adhesives 150.00 100.00 90.00
    Cleaning Supplies 100.00 100.00 100.00
    Packaging 300.00 240.00 192.00
    Assembler (80.00/hour) 160.00 120.00 80.00
    Machine Operator (60.00/hour) 60.00 48.00 42.00
    TOTAL DIRECT LABOR 320.00 268.00 222.00

    Manufacturing Overhead
    Indirect Materials (per unit)
    Adhesives 150.00 100.00 90.00
    Cleaning Supplies 100.00 100.00 100.00
    Packaging 300.00 240.00 192.00
    Indirect Labor (per unit)
    Supervisor's Salaries (40,000/month) 24.00 16.00 9.60
    Quality Control Inspector (30,000/month) 36.00 12.00 14.40
    Material Handlers (25,000/month) 15.00 10.00 6.00
    Maintenance (18,000/ month) 21.60 14.40 8.64
    Rent (125,000/ month) 15.00 15.00 15.00
    Ulities(Water and Light- ave. of 12,000/ month) 1.44 1.44 1.44
    Depreciation (20,000 /month) 2.40 2.40 2.40
    TOTAL MANUFACTURING OVERHEAD 665.44 511.24 439.48

    Selling and Other Administrattive Exoenses 10.00 10.00 10.00

    TOTAL COST PER UNIT: 2,595.44 2,069.24 1,567.48

    Basis of Indrect Labor:


    Indirect Labor Annual Cost Quantity Total Annual Cost Assumption:
    Supervisor's Salaries (40,000/month) 480,000.00 3 1,440,000.00 1 Supervisor/class
    2 Quality Control inspector for class A;
    Quality Control Inspector (30,000/month) 360,000.00 5 1,800,000.00 1 Quality Control inspector for class B;
    2 Quality Control inspector for class C
    Material Handlers (25,000/month) 300,000.00 3 900,000.00 1 Material Handler /class
    Maintenance (18,000/ month) 216,000.00 6 1,296,000.00 2 Mantenance/ class
    Rent (125,000/ month) 1,500,000.00 1 1,500,000.00 Total cost/Total Annual Demand
    Ulities(Water and Light) 144,000.00 144,000.00 Total cost/Total Annual Demand
    Depreciation 240,000.00 240,000.00 Total cost/Total Annual Demand
    Selling and Other Administrattive Exoenses 1,000,000.00 1,000,000.00 Total cost/Total Annual Demand

    B. Calculate total cost and per unit cost for each type of product.

    Total Demand (units) 20,000 30,000 50,000


    Class A Class B Class C
    Cost Particulars
    (Athletes) (Working Class) (Students)
    TOTAL DIRECT MATERIAL 1,600.00 1,280.00 896.00
    TOTAL DIRECT LABOR 320.00 268.00 222.00
    TOTAL MANUFACTURING OVERHEAD 665.44 511.24 439.48
    Selling and Other Administrattive Exoenses 10.00 10.00 10.00

    TOTAL COST PER UNIT: 2,595.44 2,069.24 1,567.48

    Total cost per Class: 51,908,800.00 62,077,200.00 78,374,000.00


    C. Determine the selling price for each type of product.

    Class A Class B Class C


    (Athletes) (Working Class) (Students)
    70 % Mark-up 50% Mark-up 20% Mark-up
    TOTAL COST PER UNIT: 2,595.44 2,069.24 1,567.48
    plus:Mark-up 1816.81 1034.62 313.50

    Selling Price 4,412.25 3,103.86 1,880.98

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