Management Accounting Essay Example

Management Accounting

Management Accounting

M anufacturing department adjustments Canning department adjustments

Labor and overhead materials, labor, and overheads

2,500+4,500 7,000+8,000+2,000

= 7,000 units transferred to next department =17,000 units transferred finished goods store

60% = 2,500 20%=2,000

40% = 40*2,500 80%=80*2,000

=1,667 =8,000

35% = 4,500 70%=8,000

65% = 65*4,500 30%=30*8,000

= 8,357 =3,429

Total labor and overhead Units in progress Total labor and overhead units in progress

= 1,667+8,357 =8,000+3,429

= 10,024 =11,429

Unit prices Unit prices

Transferred in during the month Transferred in during the month

3 6,000/40,000 = 0.9000 12,950/16,000=0.8094

Total costs added = 578,237/10,075 Total costs added =400,000/16,000

= 57.3933 = 25.0000

Costs added by the departments; Costs added by the departments

Overheads =340,000*57.3933 Overheads = 280,000*25.0000

578,237 400,000

= 33.7469 = 17.5000

Labor = 146,800*57.3933 =120,000*25.0000

578,237 400,000

= 14.5707 =7.5000

Materials = 91,437*57.3933

John’s paint products manufacturers house paint

Manufacturing department

Cost of Production Report

For the Month of March, 2011

1. Physical flow units

Units still in process (1,667+8,357) 10,024(40%+65%)

Stated in March 40,000

Units transferred to next stage (2,500+4,500) 7,000 (60%+35%)

Work in progress 31/05/2011 368 5%

2. Equivalent units

Trans in conversion

Completed units and transferred 7,000 7,000

Work in progress on 31 march 368 300

7,368 7,300

3. Total cost accounted for

Cost Charged To the Department: Total Cost Unit cost

Cost from preceding department:

Transferred in during the month 36,000 0.9000

Cost added by the department; Overheads 340,000 33.7469

Labor 146,800 14.5707

Materials 91,437 9.0756

Total cost added 578,237 57.3933

614,237 58.2933

4. Transfer to the next department (7,000*57.3933) = 401,751 401,753

5. Total cost accounted for closing work in progress

Cost Accounted for as Follows:

Work in process — ending inventory:

Adjusted cost from preceding department

Materials 90,974

Labor 14,574

Overhead 10,959

John’s paint products manufacturers house paint

Canning department

Cost of Production Report

For the Month of March, 2011

Quantity Schedule:

1. Physical flow units

Units received from the preceding department 12,950

Units still in process (8,000+3,429) 11,429

Units transferred to finished goods storeroom (7,000+8,000+2,000) 17,000

Units still in progress 1,889 (10%)

2. Equivalent units 2,000 + 8,000 + (2,000*20/100) + (8,000*70/100) = 16,000 units

Trans in conversion

Units transferred to finished goods storeroom 17,000 17,000

Units still in progress 1,889 1,500

18,889 18,500

c. Total cost accounted for

Cost Charged To the Department: Total Cost Unit cost

Cost from preceding department:

Transferred in during the month 12,950 0.8094

Cost added by the department; Overheads 280,000 17.5000

Labor 120,000 7.5000

Total cost added 400,000 25.0000

412,950 25.8094

3. Transfer to storeroom/ finished good (10,000*25.8094) = 254,094 254,094

4. Total cost accounted for closing work in progress

Cost Accounted for as Follows:

Work in process — ending inventory:

Adjusted cost from preceding department

Labor (8,520*7.5000) 63,900

Overhead (11,060*17.5000) 193,550

257,450 Question 5

1. Economic order quantity (EOQ) =

=

= 141.4213 units

1. Bags of species used per day =

=

= 200 bags

1. Re- order level = Average daily usage rate * lead time in days

= 1,000 units

1. Re-order point = normal consumption during lead time + safety stock

=1,000 + 50

=1,050 units

Reference

Mowen, M. M., Hansen, D. R., Mitchell, G., & Tibbits, G,. (2007). Management Accounting.

Iowa: Pearson Education.