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# AYB225 Management Accounting

## Questions:

1.What is benchmarking? Briefly describe the difference between in-house benchmarking, competitive benchmarking, industry benchmarking and best-in-class (or process) benchmarking, giving an example for each

2.Hi-Sierra P/L manufactures a competition-rated mountain bike for competitive mountain bike racers. This machine is the only product that the company produces and sells. Cost and revenue data, based on sales of 960 units, is given below:

Total \$

Sales 3,960,000

Cost of goods sold 2,220,000

Gross margin 1,740,000

Net profit before taxes 1,400,000

The cost of goods sold consists of \$1,680,000 variable and \$540,000 fixed. Selling and administrative expenses consist of \$168,000 variable and \$156,000 fixed.

Required

1. Calculate the break-even point in units.
2. Calculate the margin of safety at the present sales level in dollars.
3. Hi-Sierra P/L received an order for 15 units at a price of \$3,380.00. There will be no increase in fixed costs and variable costs will be reduced by \$20 per unit in packaging costs. The company has excess capacity to produce the order.

Determine the projected increase or decrease in profit from the order, showing workings. The company also received an order for 12 units at \$3,730.00 per unit. They will not save any money in packaging costs for the new order. If only one order (3 or 4) can be accepted, which one is the more attractive?

3.Gold Coast Surfing P/L sells surfboards. For purposes of a CVP analysis the shop owner has divided sales into two categories as follows:Product type Sales price (\$) Invoice cost (\$) Sales commission (\$) Grommit (advanced) 1,250 890 60 Kermie (learner) 720 510 40 60% of the shop’s sales are Kermies. The shop’s annual fixed expenses are \$37,500. (In the following requirements, ignore income taxes.)

Required

1.Calculate the unit contribution margin for each product type.b. Calculate the weighted average unit contribution margin, assuming a constant sales mix.

2.What is the shop’s break-even sales volume in dollars (round off to nearest full \$)?

Assume a constant sales mix.

4.The Outback Camping Company manufactures two types of tents for the Defence Force.

_ The “Desert Storm” (DS), a high-volume product with sales totalling 6,400 per annum

_ The “Alpine Country” (HC), a low-volume product with sales of 2,100 per annum.

Each product requires 26 hours of direct labour (DLH)

Total annual DHL is 131,250 (6,650 + 2,100)

DL cost is \$28.00 per hour

Estimated annual manufacturing overhead (MO) is \$340,000

Direct material (DM) costs are as follows;

Desert Storm (DS): \$665.00 per unit

Alpine Country (HC): \$420.00 per unit

The following costs have been identified for purposes of applying ABC (Activity-Based

Costing)

Setting up machines \$ 60,000             No. of set-ups 50

Construction of machines \$200,000    Machines hours 40,000

Inspections \$ 20,000                           No. of inspections 140

Cost drivers                                                   Desert Storm             Alpine               Country

Setting up machines                    No. set ups                    35                   15

Construction of machines            Machine hours        26,000               14,000

Inspections                                   No of inspections        90                      50

Required

Calculate the actual costs for both products using the traditional and ABC methods, identifying

the amount for each product that is overstated or understated (8 marks).You should show your

calculations. What are the benefits of an ABC method?

5.BB Bottling Company P/L manufactures bottles for wine. A unit of production is a case of 12 bottles. The following standards have been set by the production engineering staff and the management accountant:

Direct material \$1.70

Quantity 2.5 kg

Price \$0.68 per kg

Direct labour \$5.60

Quantity 0.20 hour

Rate \$28 per hour

Actual costs incurred in the production of 80,000 units were as follows:

Direct material \$143,500 for 205,000 kg

Direct labour \$464,475 for 16,500 hours

All materials were purchased during this time period.

Required

Use the variance formulas to calculate the direct material price and quantity variances and the direct labour rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

6.Maxie Pty Ltd makes and sells two types of shoes, Plain and Fancy. Product data is as follow:

Product type Sales price Variable Cost

Plain \$20 \$12

Fancy \$35 \$24.50

Sixty per cent of the sales in units are Plain and annual fixed expenses are \$45 000 and the sale mix remains constant.

Required:

1) Calculate the unit contribution margin for each product type.

2) What is Maxie Pty Ltd sale mix?

3) Calculate the weighted average unit contribution margin.

4) What is Maxie Pty Ltd break-even sales volume in dollars?

5) How many units of Fancy must Maxie Pty Ltd sell to earn target profit of \$31,500?

7.Neo Solar Ltd installs heater system in new homes. Jobs are priced using the time and materials method. The managing director of Neo Solar Ltd is pricing a job involving the heater systems for 10 houses to be built by a local developer.  His estimates follow:

Labour Hours 400

Material Cost \$60 000

The following predictions relate to the company’s operations:

Labour rate, including on costs \$16 per hour

Annual labour hours 12 000 hours

Annual O/H costs:

Material handling and storage \$25 000

Other O/H cost 108 000

Annual cost of material used 250 000

Required:

Neo Solar Ltd adds a mark-up of \$4 per hour on its time charge, but there is no mark

up on material costs.

1. Calculate the price for the job described above (3 marks)
2. What would be the price of the job if Neo Solar also added a mark up of 10% on all material charges (including material handling and storage costs)?

### Cite This Work

My Assignment Help (2021) AYB225 Management Accounting [Online]. Available from: https://myassignmenthelp.com/free-samples/ayb225-management-accounting/types-of-benchmarks.html
[Accessed 28 May 2023].

My Assignment Help. 'AYB225 Management Accounting' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/ayb225-management-accounting/types-of-benchmarks.html> accessed 28 May 2023.

My Assignment Help. AYB225 Management Accounting [Internet]. My Assignment Help. 2021 [cited 28 May 2023]. Available from: https://myassignmenthelp.com/free-samples/ayb225-management-accounting/types-of-benchmarks.html.

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