ACC 200 Introduction To Management Accounting

• Course Code: ACC 200
• University: University Of West London
• Country: United Kingdom

Question:

However, the owner of the business, Sam Moroney is a bit concerned as to the reason why the overseas buyer is not interested in buying the basic model and has appointed you to get to the bottom of this. He had been advised by fellow business buddies to implement Activity Based costing from the beginning but ignored it. He is thinking maybe it’s time.

The following information has been supplied to you regarding the business for the year 2017.

Basic Model

Units produced and sold: 1600

Direct material cost per unit: \$325

Direct Labour cost per unit: \$150

Units produced and sold: 1500

Direct material cost per unit: \$560

Direct labour cost per unit: \$260

The total indirect/overhead costs and activities are as follows:

Inspection: \$20 000

Assembly: \$90 000

Production Scheduling: \$105 000

Machine set-up: \$35 000

The models use the activities in the following ways:

Inspection                            200                                                     750    Inspections

Assembly                              4600                                                  3400  machine hours

Production scheduling      50                                                       500     Runs

Machine set-up                   100                                                     250     set up

Other operating expenses for the advance model are: selling and administration \$140 600, interest expense \$25 200 and office rent \$35 900.

Required: Calculations in two decimal places

• Calculate cost per unit of the two models of sewing machines under the current traditional costing system.
• Calculate cost per unit of the two models of sewing machines under Activity based Costing.
• Sewing easy sells the advance model at a price of cost (under the current costing system) plus 20% and is willing to give the same selling price to the overseas buyer. The overseas buyer wants to purchase only the advance model. Prepare December 2017 Profit and Loss Statement for the advance model where (a) traditional costing is used to calculate the product cost (b) Activity Based Costing is used to calculate the product cost. Analyse why the overseas buyer is interested to buy only the advance model. In your discussion you should highlight the importance of accurate product costing.
• Seldom will we see that the actual overhead and applied overhead is the same. Discuss why and state three ways to deal with under/over applied overhead costs.
• What are the main benefits and limitations of ABC system?

Cite This Work

My Assignment Help (2020) Introduction To Management Accounting [Online]. Available from: https://myassignmenthelp.com/free-samples/acc-200-introduction-to-management-accounting/cost-price-of-advance-model.html
[Accessed 04 December 2022].

My Assignment Help. 'Introduction To Management Accounting' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/acc-200-introduction-to-management-accounting/cost-price-of-advance-model.html> accessed 04 December 2022.

My Assignment Help. Introduction To Management Accounting [Internet]. My Assignment Help. 2020 [cited 04 December 2022]. Available from: https://myassignmenthelp.com/free-samples/acc-200-introduction-to-management-accounting/cost-price-of-advance-model.html.

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