Management Accounting - Midterm
Management Accounting - Midterm
Management Accounting - Midterm
#5 How do cost flows using activity-based costing differ from cost flows using one plantwide rate?
Plantwide allocation is using a one cost pool accounts for all overhead cost which is only one predetermined rate will use
to apply on products. Activity based costing is different from plantwide because instead of one rate, ABC is using
different rates for each activity.
Facility Level or Cost- these are cost for the facility to operate efficient and effectively and it is included regardless of
how many product, batch or unit- level activities takes place. Includes rent, depreciation and insurances.
Product Level or Cost- these are costs in which needed for a specific or product line. These can be changed in shorter
time horizon than facility levels and included regardless of number of batches produced. Includes marketing and
advertising of product or developing a new product.
Batch Level- These are costs that activities based on number of batches and usually incur the same cost even if the batch
is 1000 or 10000 units. These can be change in shorter time horizon that facility or product level. Includes cost of setting
machines, processing purchase orders or cost for inspecting batch quality.
Unit Level- These are costs that requiring to produce individual units of product. Work will vary in volume which includes
direct materials and direct labor
#22 Describe the four categories related to the costs of quality. How might the allocation of quality costs to these four
categories help managers?
These four categories will help managers to achieve a reasonable price cost, standing of company’s quality products or
services and assessing problem and creating preventive action in order to maintain the company’s reputation and
reducing possible costs. Just like what happened in Jolibee. They had a lack of inspection quality before they gave it to
the customer. Although they may still correct it, they still be lose possible customers in the future which lead to more
costs in the long run.
#54
PREPAID RENT
$ 3,000.00 7 FINISHED GOODS INVENTORY
$ 90,000.00 $ 129,000.00 11 96,000.00 112,925.00
7,000.00 8 B eg
9 155,000.00
$ 10,000.00 16,925.00
$ 116,000.00
$ 112,075.00
SALES
$ 190,000.00 $ 10,000.00 $ 6,000.00
$ 10,000.00
Overapplied
RENT EXPENSE (SELLING)
127 $Manufacturing
3,000.00
Overhead 16,925.00
Cost of Goods Sold 16,925.00
$
To close manufacturing overhead
3,000.00
Income Statement
WAGES EXPENSE (SELLING)
7 $ 5,000.00
Custom Furniture Company
$ 5,000.00 Income Statement
For the month ended May 20XX
Sales $ 190,000.00
Less: Cost of Goods Sold 129,000.00
Gross Profit $ 61,000.00
Less: Operating Expense
Selling 18,000.00
General and Administrative 26,000.00
Operating Profit 17,000.00
Add: Overapplied Manufacturing Overhead 16,925.00
Net Profit $ 33,925.00
CHAPTER 4
#2 and 3
Describe the similarities and differences between a process costing system and a job costing system.
The similarities between process costing and job costing system are both of them have maintaining costs of
direct material, direct labor and manufacturing overhead which will be used determine the cost per unit and the
inventory values. Both of them also have same goal to determine the costs of products with the use of predetermined
rates
The differences between process cost system and job order cost system are in job order costing, cost of a
product are being traced in each job’s individual job cost sheet, which in unit cost are compared and in work in process
inventory account, it have one inventory account for each job. While in process costing, it accumulates costs by process
or department of a single product which can be in a continuous basis and in work in process inventory account, it has
one account for each process or department.
#242
Why is the president asking you to increase the percentage of completion estimates?
I think the president wants to change the estimated percentage of completion in order for the revenue increase
because when the ending work in process increase, it lowers the amount of finished goods which leads to lower cost of
goods sold and as a result of higher profit.
Units Accounted For Physical Units Direct Materials Direct Labor Overhead
Units Completed and transferred out 160,000.00 160,000.00 160,000.00 160,000.00
Units in ending WIP inventory 40,000.00 36,000.00 38,000.00 38,000.00
Total units accounted for $ 200,000.00 $ 196,000.00 $ 198,000.00 $ 198,000.00
As a controller and as an auditor, I must explain to the president on what will be that consequences if the
financial statements have anomalies or fraud. I know that it is really regretful that only 30,000 were deficient in order to
meet the target but it might be the motivation for the company to find more strategies to increase more sales in a
faithful way. Because if the president will push his wants, the company might have lost more potential investors in the
long run or company will not improve as it will be settled in their processes because they met the target profit.
#245
a. The CEO and CFO expect to increase profit by deciding to produce as many units as possible for the last half of
march even though sales will not expect anytime soon and by doing this, the production manager will push
through the employees in order to produce more products but since the products will take three weeks to
complete, it will be account to work in process, ending and just like I mentioned in last situation, the higher the
ending work in process inventory, the lower cost placed in production and it will lower the cost of goods sold
which leads to higher revenue.
Pacific Siding
Production Cost Report: Weighted Average Cost
For the period ended at March 31 20XX
Units Accounted For Physical Units Direct Materials Direct Labor Overhead
Units Completed and transferred out 250,000.00 250,000.00 250,000.00 250,000.00
Units in ending WIP inventory 225,000.00 180,000.00 191,250.00 202,500.00
Total units accounted for $ 475,000.00 $ 430,000.00 $ 441,250.00 $ 452,500.00