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Managerial Accounting_Questions

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Question;SectionA 40marks;AnswerQuestionNo. 1,thenattemptanyotherTHREEquestions.;1. Transactiondriverscount howoftenan;activityisperformed.;Durationdriversrepresenttheamountof timerequiredtoperforman activity.;Intensitydrivers;directlychargefortheresourcesused;eachtimean activityis performed. Also;aweighted indexapproachmightbeused;to simulateanintensitydriver.;a. Giveanexampleof eachof thefourtypesof;driversdescribedabove. b.;Explainwheneachofthefourtypesof driversshouldbeused.;c.For eachof;the first threetypesof;drivers,explaintheassumptionsabouttheactivityandthe objectof;the;activity.;d. For eachof the followingactivitiesidentifyatransactiondriver,adurationdriver, andan intensitydriver.;Machinemaintenance;MachinesetupQuality;controlMaterialorderingProductionschedulingWarehouseexpenseEngineeringdesign;AttemptanyTHREEquestionsof thefollowing;2. Describethestepsin;thePDCAcycle.;3. Describesomeof;thedrawbacksofusing theoperatingbudgetasa controldevice.;4. Whatrolehastheincreasinglycompetitivebusinessenvironmentplayed inthe developmentofmanagementaccounting?;5. Explain howtraditionalcost systems,using;only;unitlevelcost drivers,distortproductcosts.;SectionB 60marks;ReadthefollowingFOURcases,thenanswertherequiredquestionsafter;eachcase.;Case1;ProfitsharingKnightMedicalDevices;makesdevicesandequipmentthat;it;sellstohospitals.The;organizationhasaprofit-sharingplan;thatiswordedasfollows;The companywillmakeavailableaprofit-sharingpoolthatwill be;thelower;ofthefollowingtwo items;1.40%ofincomebeforetaxesin;excessof thetargetprofitlevel,whichis18%of;net;assets,or;2.$14million.;The individualemployeeis paid;ashareof;theprofit-sharingpoolequal totheratio of;that;employee'ssalarytothetotalsalarypaid;to;allemployees.;Required;(a) Ifthe companyearned$90millionof;earningsbeforetaxesandhadnetassetsof$200 million;whatwouldbetheamountavailablefordistributionfromtheprofit-sharingpool?;(b) Supposethat BobKnight'ssalarywas$136,000 andthattotalsalariespaidinthe company;were$50million. Whatwould Bob'sprofit;sharebe?;Sunshine,Inc.sellsasingle product.The company'smostrecentincomestatementisgivenbelow.;Sales (4,000units);$120,000;Lessvariableexpenses;(68,000);Contributionmargin;52,000;Less fixedexpenses;(40,000);Netincome;$ 12,000;Required;a. Contribution;marginper;unit;is;b. Ifsalesaredoubledto$240,000;totalvariablecostswillequal;c.Ifsalesaredoubled to$240,000;totalfixedcostswillequal;d. IfSunshineispast;thebreakevenpointand;10 moreunitsaresold,profitswillincreaseby;e.Computehowmanyunits must besold to;breakeven.;f. Computehow manyunits;mustbesold to;achieveaprofit;of$20,000.;The CrandonMillhastwodivisions.;The CuttingDivision;preparestimberat itssawmills.;The AssemblyDivision preparesthe cut;lumber intofinishedwoodforthefurnitureindustry.Duringthe;year,theCuttingDivision prepared60,000cords ofwoodatacost of$660,000.All thelumber;was transferredtotheAssemblyDivisionwhereadditionaloperatingcostsof $6per cord wereincurred.;The;600,000boardfeetoffinishedwood weresoldfor;$2,500,000.;Required;a. Determinetheoperatingincomeforeachdivisionif thetransferpricefromCuttingtoAssembly;isat cost,$11acord.;b. Determinetheoperatingincomeforeachdivisionif;the;transferpriceis$9;per cord.;c.Since theCuttingDivisionsellsallofits wood internallytotheAssemblyDivision,doesthe managercarewhat priceisselected?Why?ShouldtheCuttingDivision;be;acost centeroraprofit centerunderthe circumstances?;AbbotCorporationproduces200,000,000units ofproductXand80,000,000of productYwiththe;followingcosts andmachinehours.;ProductX ProductY Total;Directcosts;(materialplus;labor) $18,000,000 $8,000,000;Environmental;support 28,000,000;Nonenvironmental;support 44,000,000;58,000,000;Totalsupport $44,000,000 $86,000,000 $130,000,000;Totalmachinehours 20,000,000 12,000,000 32,000,000;Required;a. Determinetotalproductcostper unit for;each productusing;atraditionalcostingsystemwith;machinehoursasthe cost driver.;b. Determinetotalproductcost;per unit;for each productusing;an activitybasedcostingsystem. Usethe number;of unitsas the costdriverfor each;activity.;TheEnd

 

Paper#38303 | Written in 18-Jul-2015

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