Management Accounting

    Management Accounting       Instructions: 1. Students are required to cover all stated requirements.2. Your answer must be both uploaded to Moodle in word file and handed over a printed copy.3. You need to support your answers with appropriate Harvard style references where necessary.4. Only include information in your appendixes that has been directly referred to in the body of your document.5. Include a title/cover page containing the subject title and code and the name, student id numbers.6. Please save the document as ACC203_B1_T1_first name_Surename_Student NumberEg: ACC203AT2_John_Smith_20160000 You are required to finish each of these questions, total 40 marks. Please give the solutions in detail, show calculations and submit the solutions to Moodle using a single file, it can be Excel format, Word format or PDF format, no requirement on word limits, if use any references, please refer to Harvard style.Question 1: Support department cost allocation; plantwide versus departmental overhead rates; product costing; cost drivers: manufacturer (15 marks)Rising Fast Pty Ltd manufactures a complete line of fibreglass attaché cases and suitcases. The firm has three manufacturing departments: Moulding, Component and Assembly. There are also two support departments: Power and Maintenance. The sides of the cases are manufactured in the Moulding Department. The frames, hinges and locks are manufactured in the Component Department. The cases are completed in the Assembly Department. Varying amounts of materials and time are required to manufacture each type of case.Rising Fast has always used a plantwide overhead rate. Direct labour hours are used to assign overhead to products. The predetermined overhead rate is calculated by dividing the company's total estimated overhead by the total estimated direct labour hours to be worked in the three manufacturing departments.Liam Bolt, manager of cost accounting, has recommended that Rising Fast use departmental overhead rates. The planned operating costs and expected levels of activity for the coming year have been developed by Bolt and are presented by department in the following schedules. (All numbers are in thousands.)  Manufacturing departments Moulding Component AssemblyDepartmental activity measures: Direct labour hours 500 2 000 1 500Machine hours 875 125 0Departmental costs: Direct material $12 400 $30 000 $ 1 250Direct labour 3 500 20 000 12 000Manufacturing overhead 21 000 16 200 22 600Total departmental costs $36 900 $66 200 $35 850 Use of support departments Moulding Component AssemblyMaintenance: Estimated usage in labour hours for the coming year 90 25 10Power (in kilowatt hours): Estimated usage for the coming year 360 320 120 Support departments Power MaintenanceDepartmental activity measures: Estimated usage for the coming year 800 kWh 125 labour hoursDepartmental costs: Materials and supplies (variable) $ 5 000 $1 500Variable labour 1 400 2 250Fixed overhead 12000 250Total support department costs $18 400 $4 000Required:1 (a) Calculate the plantwide overhead rate for Rising Fast for the coming year using the same method as used in the past.(b) Estimate the overhead cost of an Elite attaché case that requires 4 direct labour hours and 5 machine hours in the Moulding Department, 3 direct labour hours in the Component Department and 2 direct labour hours in the Assembly Department. 2 Liam Bolt has been asked to develop departmental overhead rates for comparison with the plantwide rate. The following steps are to be followed in developing the departmental rates:(a) Allocate the total Maintenance Department costs to the three manufacturing departments, using the direct method.(b) Allocate the Power Department costs to the three manufacturing departments, using the direct method.(c) Calculate departmental overhead rates for the three manufacturing departments, using a machine hour cost driver for the Moulding Department and a direct labour hour cost driver for the Component and Assembly departments. 3 Estimate the overhead cost of the Elite attaché case using the departmental overhead rates.4 Should Rising Fast use a plantwide rate or departmental rates to assign overhead to products? Explain your answer. Question 2: Product cost classification: manufacturer (10 Marks) The following cost data for the current year relate to Heartstrings Pty Ltd, a greetings card manufacturer:Service department costs1 $ 50 000Direct labour: wages 242 500Direct labour: on-costs  47 500Indirect labour: on-costs  15 000On-costs for production supervisor    4 500Administrative costs                 75 000Rental of office space for sales personnel2    7 500Sales commissions    2 500Product promotion costs    5 000Direct material            1 050 000Advertising expense   49 500Depreciation on factory building     57 500Cost of finished goods inventory at year end   57 500Indirect labour: wages   70 000Production supervisor's salary   22 500Total overtime premiums paid   27 500Cost of idle time: production employees3   20 000Required:Calculate each of the following costs for the year:1 Total prime costs.2 Total manufacturing overhead costs.3 Total conversion costs.4 Total product costs (for external reporting purposes).5 Total period costs.   Question 3: Cost flows in a job costing system; schedule of cost of goods manufactured; automation: manufacturer (15 marks) Vision Pty Ltd, a manufacturer of fibre-optic communications equipment, uses a job costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hours using a predetermined overhead rate. The current annual rate of $45 per machine hour is based on estimated manufacturing overhead costs of $3 600 000 and an estimated cost driver level of 80 000 machine hours.Operations for the current year have been completed, and all the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of costs from work in process to finished goods for the jobs completed in December, and the transfer of costs from finished goods to cost of goods sold for the jobs that have been sold during December.Summarised data as at 30 November, and for December, are presented in the following table. Job numbers T11-007, N11-013 and N11-015 were completed during December. All completed jobs except Job number N11-013 had been turned over to customers by the close of business on 31 December. Work in Process: December activityJob numbers Balance 30 November Direct material Direct labour Machine hoursT11-007 $261 000   $ 4 500  $13 500  300N11-013  165 000   12 000   36 000 1 000N11-015        0   76 800   80 100 1 400D12-002        0  113 700   60 000 2 500D12-003      0  78 000  50 400  800Totals $426 000 $285 000 $240 000 6 000Operating activity Activity to 30 November December activityActual manufacturing overhead incurred: Indirect material $375 000 $27 000Indirect labour 1 035 000 90 000Utilities 735 000 66 000Depreciation 1 155 000 105 000Total overhead $3 300 000 $288 000Other items: Raw material purchases* $2 895 000 $294 000Direct labour cost $2 535 000 $240 000Machine hours 73 000 6 000Account balances at beginning 1 January: Raw material inventory* $315 000 Work in process inventory 180 000 Finished goods inventory 375 000 Raw material purchases and raw material inventory consist of both direct and indirect materials. The balance of the raw material inventory account as at 31 December is $255 000. Required:1 How much manufacturing overhead would Vision have applied to jobs to 30 November?2 How much manufacturing overhead would be applied to jobs by Vision during December?3 Determine the amount by which the manufacturing overhead is overapplied or underapplied as at 31 December.4 Determine the balance in Vision's finished goods inventory account on 31 December.5 Prepare a schedule of cost of goods manufactured for Vision Pty Ltd for the year. (Hint: In calculating the cost of direct material used, remember that Vision includes both direct and indirect material in its raw material inventory account.)