Guidance: Data created by yourself associated with instruction.

Instruction

Make a business analysis of the production/manufacturing company which producing on a job order costing, with hypothetically created data. The reporting period is monthly. All data which hypothesized cannot be zero. Business analysis during the month through the stages of completion as follows :

1. Determine in the beginning period: raw materials, work in process and finished goods*)

2. Determine in the ending period: raw materials, work in process and finished goods *)

3. Determine the purchase of raw materials (only direct material) for a month *)

4. a. Determine actual direct labor hours *)

b. Determine direct labor wage rate per hour *)

c. Calculate total actual direct labor wage.

5. Determine actual manufacturing overhead*)

6. In the previous month, you calculated POHR for the month (the allocation base was a direct labor hours) :

a. Determine estimated total manufacturing overhead costs for the month*)

b. Determine estimated total allocation base for the month *)

d. Calculate POHR

7. a. Compute the amount of total manufacturing overhead applied for the month.

b. What is the underapplied or overapplied overhead cost for the month ?

8. Using absorption costing system :

a. Calculate COGM

b. Calculate unadjusted and adjusted COGS

c. Determine total sales *)

d. Determine selling expenses*)

e. Determine administrative expenses*)

f. Create an absorption format income statement for the month

9. Using variable costing system. The original data from number 7 and 8 :

a. Assume that variable manufacturing overhead applied : fixed manufacturing overhead applied = 60% : 40%.

Calculate variable manufacturing overhead applied and fixed manufacturing overhead applied

b. Calculate variable COGM

c. Calculate variable COGS unadjusted and adjusted (all underapplied or overapplied overhead cost in no. 7 b as you computed is adjusted to COGS here)

d. Assume that variable selling expenses: fixed selling expenses = 30% : 70%.

Calculate variable selling expenses and fixed selling expenses

e. Assume that variable administrative expenses : fixed administrative expenses = 50%: 50%.

Calculate variable administrative expenses and fixed administrative expenses

f. Create a contribution format income statement for the month (the total sales as same as no. 8 c.)

10. Calculate CM Ratio

11. Calculate the break even point (BEP) in rupiah or other currency.

12. Calculate the margin of safety (MOS) in rupiah or other currency and in %.

13. a. Calculate degree of operating leverage (DOL).

b. If sales increase by 10% next month, what percentage increase in net operating income?

14. The sales manager is convinced that a 10 % increase in advertising (fixed selling expense) and 5 % decrease in variable selling expense, would increase monthly sales by 20 % next month. Prepare two contribution format income statements, one showing the results of the months operations and one showing the next month. Would you recommend that the company do as the sales manager suggests?

Note : *) data created hypothetically by yourself.