(b) Assume that three jobs are worked on during 2013 in company X. Machine - hours recorded by jobs are: job23, 21,000 hours; job 29, 16,000 hours; job 31,11,000 hours. How much overhead will the company apply to work in the process? If actual overhead costs total $149,000 for 2012, will overhead be over ? or under ? applied? By how much? (1.5 marks)

Acc000146 - Management Accounting Assignment 1 (20 marks) Question 1 (5 marks) (a) How do fixed costs in a business create a problem for Job costing? (b) Provide examples of wages that might be deemed to be (1) a direct cost and (2) an indirect costs Question 2 (5 marks) Estimated or budgeted cost and operating data for three companies for 2013 are given below: Company X Units to be produced Machine - hours Direct labour - hours Direct labour cost Factory overhead cost 10,000 50,000 12,000 $48,000 150,000 Company Y 8,000 10,000 16,000 $64,000 40,000 Company Z 12,000 6,000 36,000 $150,000 60,000 Predetermined overhead rates are calculated on the following bases in the three companies Company X Company Y Company Z Overhead rate based on Machine - hours Direct labour - hours Direct labour cost Required: (a) Calculate the predetermined overhead rate to be used in each company during 2013. (1.5marks) (b) Assume that three jobs are worked on during 2013 in company X. Machine - hours recorded by jobs are: job23, 21,000 hours; job 29, 16,000 hours; job 31,11,000 hours. How much overhead will the company apply to work in the process? If actual overhead costs total $149,000 for 2012, will overhead be over - or under - applied? By how much? (1.5 marks) (c) Of what value is the schedule of cost of goods manufactured and how does it tie into the profit and loss statement. Discuss. (2marks) Question 3 (5 marks) Tony's Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follow. Selling price Variable cost Fixed costs are $38,400. Men's $28.80 $20.40 Selling price Variable cost Boys $24.00 $16.80 Required: (a) What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of means shirts? (1.5 marks) (b) What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts? (1.5 marks) (c) What is meant by a products contribution margin ratio and how is this ratio useful in the planning of business operation? (2 marks) Question 4: (5marks) Byron Sports is a manufacture of sportswear. It produces all of its products in one department using a process costing system? The information for the current month as follows Beginning work in process (30%completed as to conversion cost) Unit started Units completed and transferred out Ending work in process (70% complete as to conversion) Costs: Beginning work- in - process direct materials Beginning work - in - process conversion Direct materials added during month Conversion costs incurred during the month 12,000 units 90,000 units ? 8,000 units $28,800 $5,040 $216,000 $139,200 Direct materials are added at the beginning of the process. Conversion cost are incurred uniformly throughout the production process. Costing is handled on a FIFO basis. Required: (a) Prepare a production cost worksheet using 5 steps approach. (3marks) (b) Under what conditions would a process costing system be more appropriate than a job order costing system? Explain. (2 marks) THE END