Premium Essay

# Managerial Accounting 1 Chapter 4

Submitted By lonilonni
Words 938
Pages 4
Problem 5-37 (1)

Machine setups 5 setups x \$2,000 = \$10,000
Raw materials 10,000 pounds x \$2.00 = 20,000
Hazardous materials 2,000 pounds x \$5.00= 10,000
Inspections 10 inspections x \$75.00= 750
Machine hours 500 machine hours x \$10= 5,000
Total \$45,750

(2) Overhead cost per box \$45,750/1,000 = \$45.75

(3) Single predetermined rate \$625,000/20,000 = \$31.25

(4a) Raw material 10,000 pounds x \$2 = \$20,000 Machine hours 500 machine hours x \$10 = 5,000 Budgeted overhead 500 machine hours x \$31.25 = 15,625 \$40,625

(b) Per box of chemicals \$40,625/1,000 = \$40.63

(5) These two product costing systems result in such widely differing costs because of the inaccuracy of the traditional single volume based overhead rate. The use of machine hours in the pre-determined rate does not reflect the usage of other activities during production. I would recommend the activity based costing system because of the accuracy of costs for each product, and it results in much better control over overhead costs.

(6)

Problem 5-38 (1)

Machine setups 3 setups x \$2,000 = \$6,000
Raw material 900 pounds = 1,800
Hazardous material 300 pounds = 1,500
Inspections 3 inspections = 225
Machine hours 50 machine hours = 500
Total \$10,025

\$10,025/100 = \$100.25 + \$120 +\$40 = \$260.25

(2)

Problem 5-35 (1)

Type A predetermined overhead rate:
Direct material cost (8,000 x \$35) = \$280,000
Direct labor cost (8,000x \$20) = 160,000
Manufacturing overhead (16,000 x \$800) = 1,280,000 \$1,720,000
Total cost per unit (\$1,720,000/8,000) = \$215

Type B predetermined overhead rate:
Direct material cost (15,000 x \$60) = \$900,000
Direct labor cost (15,000 x \$120) = 300,000
Manufacturing overhead (22,500 x \$80)…...

### Similar Documents

Premium Essay

#### Managerial Accounting: Fifth Edition Chapter 1: Exercise 14 – Problems 2 & 4 Chapter 2: Exercises 9 & 12 – Problems 1 & 6

...CHAPTER 1: Exercise 14 If Ken stayed open on Saturdays, the added income would be \$130,000 per year (\$2,500 x 52), while the additional costs are shown to be \$1,000 (\$700 + \$500 + \$100 + \$200). Using these two figures, we can calculate the opportunity cost (the loss from an opportunity not taken), which would be \$1,500 (\$2,500 - \$1,000). To me, this says that Ken should keep his shop open on Saturday’s. Rent or depreciation of office equipment do not need to be calculated because these are fixed costs. They would not change regardless of how many days his shop is open nor his shops production. Also, rent of course would not change if his shop stays open on Saturday’s because rent covers the whole month. Problem 2 a.) If we reference 1-1 so we can see the production costs, we need to add the ingredient costs of \$20,000 + labor costs of \$12,000, totaling \$32,000. Then divide that by the number of jars that actually produced (25,000). This equals \$1.28/one jar of salsa. The incremental cost is calculated as follows: \$1.28 x 50,000 (extra jars of salsa) = \$64,000. b.) The revenue started out at \$1,625,000 (325,000 jars x \$5.00), while the new revenue would be \$1,725,000 (375,000 x \$4.60). After calculating the difference, we can see that the incremental revenue after the reduction of price would be \$100,000 (\$1,725,000 - \$1,625,000). c.) Yes, he should lower the price of its salsa. Problem 4 a.) On page 6 of our text book, we learn about the......

Words: 731 - Pages: 3

Premium Essay

#### Target Corp: Financial Analysis

...ADM 335 ACCOUNTING II: MANAGERIAL ACCOUNTING COURSE DESCRIPTION Managerial accounting involves the use of economic and financial information to plan and control many of the activities of the business entity and to support the management decision-making process. The main objective of this course is to explore the relevant issues of cost accounting. Hence, this course examines the acquisition, analysis, and reporting of accounting information from the perspective of effective management decision making, with special emphasis on the planning and control responsibilities of practicing managers. It also familiarizes the student with an electronic spreadsheet package found in today’s business world. TOPICS Topics to be covered in this course: • • • • • • • • • • • • • Managerial Accounting—Definition and Perspective Cost Terms, Concepts, and Classifications Job-Order Costing Process Costing Cost Behavior Analysis Cost-Volume-Profit Relationships Profit Planning and Budgeting Standard Costs and Variance Reporting Flexible Budgets Segment Reporting and Profitability Relevant Costs for Decision Making Statement of Cash Flows Financial Statement Analysis STUDENT—1 ACCOUNTING II: MANAGERIAL ACCOUNTING This syllabus has been developed by the faculty of the College of Business and Management at Cardinal Stritch University. © 2014 Cardinal Stritch University Syllabus Control Number: 061614 STUDENT—2 ACCOUNTING II: MANAGERIAL ACCOUNTING INTRODUCTION SYLLABUS FORMAT......

Words: 7312 - Pages: 30

Premium Essay

#### Accounting

...1 1. | Controlling involves the coordination of daily business functions within an organization.    True    False |   2. | Measuring the performance of managers and subunits is not an objective of managerial accounting.    True    False |   3. | Middle-level managers would likely be considered internal users of accounting information rather than external users.    True    False |   4. | A controller is normally involved with preparing financial statements.    True    False |   5. | The upper limit on the production of goods and services if everything works perfectly is known as practical capacity.    True    False |   6. | Which of the following statements about managerial accountants is false?    A.  | Managerial accountants more and more are considered "business partners." | B.  | Managerial accountants often are part of cross-functional teams. | C.  | An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments. | D.  | In a number of companies, managerial accountants make significant business decisions and resolve operating problems. | E.  | The role of managerial accountants has changed considerably over the past decade. | |   7. | The day-to-day work of management teams will typically comprise all of the following activities except:    A.  | decision making. | B.  | planning. | C.  | cost minimizing. | D.  | directing operational activities. | E.  |......

Words: 10780 - Pages: 44

Premium Essay

#### Acc 300 Entire Course

...php/product/acc-300-entire-course-2/   ACC 300 Week 1 – Individual Assignment – Chapter Two – Brief Exercises. ACC 300 Week 1 Individual Assignment Chapter 2: Brief Exercises BE2-8, BE2- 9, and BE2-10   ACC 300 Week 2 – Learning Team Assignment. In this excel file ACC 300 Week 2 Learning Team Assignment you will find overview of the following sheets: 1. Demonstration Case 2-1 2. Given Data DC2-1 3. Simplify with Spreadsheets 2-1 4. Given Data SS2-1 5. Coached Problem 2-1 6. Given Data CP2-1 7. Problem A 2-1 8. Given Data PA 2-1   ACC 300 week 2 dqs. What are the different bases of accounting? When would you use the cash basis? Accrual basis? Tax basis? Which one is better? Why? What are the financial statements? What does each one tell you? Which financial statement is more important? Why? How are the financial statements related? Why do these relationships exist? What is the impact of a miscalculation in the income statement on other financial statements? ACC 300 Week 3 – Individual Assignment Part I. In the work ACC 300 Week 3 Individual Assignment Part I you will find overview of the following parts: 1. Cash Basis – Income Statement 2. Accrual Basis – Income Statement ACC 300 Week 3 – Individual Assignment Part II. In this file ACC 300 Week 3 Individual Assignment Part II you will find overview of the following tables: 1. Income Statement 2. Statement of changes in Stockholders’ Equity 3. Expense recognition......

Words: 1163 - Pages: 5

Premium Essay

#### Acc 300 Entire Course

...php/product/acc-300-entire-course-2/ ACC 300 Week 1 – Individual Assignment – Chapter Two – Brief Exercises. ACC 300 Week 1 Individual Assignment Chapter 2: Brief Exercises BE2-8, BE2- 9, and BE2-10 ACC 300 Week 2 – Learning Team Assignment. In this excel file ACC 300 Week 2 Learning Team Assignment you will find overview of the following sheets: Demonstration Case 2-1 Given Data DC2-1 Simplify with Spreadsheets 2-1 Given Data SS2-1 Coached Problem 2-1 Given Data CP2-1 Problem A 2-1 Given Data PA 2-1 ACC 300 week 2 dqs. What are the different bases of accounting? When would you use the cash basis? Accrual basis? Tax basis? Which one is better? Why? What are the financial statements? What does each one tell you? Which financial statement is more important? Why? How are the financial statements related? Why do these relationships exist? What is the impact of a miscalculation in the income statement on other financial statements? ACC 300 Week 3 – Individual Assignment Part I. In the work ACC 300 Week 3 Individual Assignment Part I you will find overview of the following parts: Cash Basis – Income Statement Accrual Basis – Income Statement ACC 300 Week 3 – Individual Assignment Part II. In this file ACC 300 Week 3 Individual Assignment Part II you will find overview of the following tables: 1. Income Statement 2. Statement of changes in Stockholders’ Equity 3. Expense recognition principle 4. Balance Sheet......

Words: 1188 - Pages: 5

Premium Essay

#### Term Paper

...CHAPTER 1 MANAGERIAL ACCOUNTING IN THE INFORMATION AGE CHAPTER Introduction FINANCIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT RELATE TO PREPARING REPORTS FOR EXTERNAL USERS OF ACCOUNTING INFORMATION. IN COMPARISON, MANAGERIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT ARE RELEVANT TO PREPARING REPORTS FOR INTERNAL USERS OF ACCOUNTING INFORMATION. THIS CHAPTER PROVIDES AN OVERVIEW OF THE ROLE OF MANAGERIAL ACCOUNTING IN PLANNING, CONTROL, AND DECISION MAKING. IT ALSO DEFINES IMPORTANT COST CONCEPTS AND INTRODUCES KEY IDEAS THAT WILL BE EMPHASIZED THROUGHOUT THE TEXT. THE CHAPTER CONCLUDES WITH A DISCUSSION OF THE INFORMATION AGE AND THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS, A FRAMEWORK FOR ETHICAL DECISION-MAKING AND THE ROLE OF THE CONTROLLER AS THE TOP MANAGEMENT ACCOUNTANT. NOTE THAT YOU CAN ENHANCE AND TEST YOUR KNOWLEDGE OF THE CHAPTER USING WILEY’S ONLINE RESOURCES, THE SELF-ASSESSMENT QUIZ AND REVIEW PROBLEMS AT THE END OF THE CHAPTER. Objectives, Terms, and Discussions LO1 State the primary goal of managerial accounting. GOAL OF MANAGERIAL ACCOUNTING Managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information managers need for planning, control, and decision making. LO2 Describe how budgets are used in planning. Planning A plan communicates a company's goals to employees and specifies the resources needed...

Words: 7726 - Pages: 31

Premium Essay

#### The Changing Role of Managerial Accounting in a Dynamic Business Environment

...CHAPTER 1 THE CHANGING ROLE OF MANAGERIAL ACCOUNTING IN A DYNAMIC BUSINESS ENVIRONMENT Learning Objectives 1. Define managerial accounting and describe its role in the management process. 2. Explain four fundamental management processes that help organizations attain their goals. 3. List and describe five objectives of managerial accounting activity. 4. Explain the major differences between managerial and financial accounting. 5. Explain where managerial accountants are located in an organization, in terms of formal organization, deployment in cross-functional teams, and physical location. 6. Describe the roles of an organization's chief financial officer (CFO) or controller, treasurer, and internal auditor. 7. Briefly describe some of the major contemporary themes in managerial accounting. 8. Understand and explain the concepts of strategic cost management and the value chain. 9. Understand the ethical responsibilities of a managerial accountant. 10. Discuss the professional organizations, certification process, and ethical standards in the field of managerial accounting. Chapter Overview I. The Management Process in Organizations A. What is managerial accounting? B. Management activities 1. Decision making 2. Planning 3. Directing operational activities 4. Controlling II. How Managerial Accounting Adds Value to the Organization A. Provides......

Words: 2206 - Pages: 9

Premium Essay

#### Managerial Accounting

...wiL1084x_fm_i-xxiv_1.indd Page i 1/10/11 7:53:00 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 Managerial Accounting John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia 3 rd edition wiL1084x_fm_i-xxiv_1.indd Page ii 1/10/11 9:14:31 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 To my students and family, especially Kimberly, Jonathan, Stephanie, and Trevor. To my wife Linda and children, Erin, Emily, and Jacob. MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2012, 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811084-9 MHID 0-07-811084-X Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim...

Words: 10500 - Pages: 42

Premium Essay

#### Accounts

...Course Outline School: Department: Course Title: Course Code: Course Hours/Credits: Prerequisites: Co-requisites: Eligible for Prior Learning, Assessment and Recognition: Originated by: Creation Date: Revised by: Revision Date: Current Semester: Approved by: Business Graduate Studies Accounting for Managerial Decision Making ACCT 701 56 N/A N/A Yes Basil Chan, John Harris Summer 2013 Geoffrey Prince Summer 2014 Winter 2015 Chairperson/Dean Students are expected to review and understand all areas of the course outline. Retain this course outline for future transfer credit applications. A fee may be charged for additional copies. This course outline is available in alternative formats upon request. ACCT 701 CENTENNIAL COLLEGE Accounting for Managerial Decision Making Course Description This course will introduce the student to the principles of management accounting. Topics include costvolume-profit relationships, relevant costing, performance measurement, and the application of management accounting concepts and techniques to support business decision making. Program Outcomes Successful completion of this and other courses in the program culminates in the achievement of the Vocational Learning Outcomes (program outcomes) set by the Ministry of Training, Colleges and Universities in the Program Standard. The VLOs express the learning a student must reliably demonstrate before graduation. To ensure a meaningful learning experience and to better......

Words: 2727 - Pages: 11

Premium Essay

#### Ooo Giwe Bi Ihifwjn

...SCANNING THE ANNUAL REPORT ACCOUNTING INFORMATION SYSTEMS Try and find answers to the following questions from the annual report of Hindustan Unilever Ltd. 1. What is HUL’s business? Who are its major suppliers and customers? How many employees does HUL have? Why is this information important? 2. Read the “Contents” page. Mark the items that relate to financial statements as “FS” and the rest as “NFS”. 3. Who is responsible for preparing and presenting the financial statements? Where is this information available? 4. How does HUL define the reporting entity? Where is this information available? 5. List HUL’s asset, liability and equity items. 6. Verify that the financial statements satisfy the accounting equation. 7. Who audited the financial statements? Is it a part of any Big Four firm? If yes, which one? 8. Who appoints the auditors? Where is this information available? 9. To whom is the auditors’ report addressed? Why? 10. What are the matters on which the auditors report? 11. What is the auditors’ opinion on the financial statements? 12. Does the auditors’ report contain any recommendation to present and potential investors? 13. How much was the auditors’ remuneration? 14. Did the auditors provided any non-audit service to HUL? If yes, how much was the payment for these services? Where is this information available? Why is this information important? 15. What information does HUL provide in items that you have marked as...

Words: 2310 - Pages: 10

Free Essay

#### Managerial Accounting

...Chapter 1 Managerial Accounting and the Business Environment Solutions to Questions 1-1 Managerial accounting is concerned with providing information to managers for use within the organization. Financial accounting is concerned with providing information to stockholders, creditors, and others outside of the organization. 1-2 Essentially, managers carry out three major activities in an organization: planning, directing and motivating, and controlling. All three activities involve decision making. 1-3 The Planning and Control Cycle involves formulating plans, implementing plans, measuring performance, and evaluating differences between planned and actual performance. 1-4 A line position is directly related to the achievement of the basic objectives of the organization. A staff position is not directly related to the achievement of those objectives; rather, it is supportive, providing services and assistance to other parts of the organization. 1-5 In contrast to financial accounting, managerial accounting: (1) focuses on the needs of the manager; (2) places more emphasis on the future; (3) emphasizes relevance and flexibility, rather than precision; (4) emphasizes the segments of an organization; (5) is not governed by GAAP; and (6) is not mandatory. 1-6 A number of benefits accrue from reduced setup time. First, reduced setup time allows a company to produce in smaller batches, which in turn reduces the level of inventories. Second, reduced setup time allows a company to......

Words: 2462 - Pages: 10

Free Essay

#### Management Accounting

...GSU MBA 8115, Syllabus, Aderhold Room 204, 4:30-7pm, Wednesday, Spring, 2010 MANAGEMENT ACCOUNTING This course introduces you to a select set of topics on managerial decision-making and control, including basic cost concepts, inventory process systems, budgeting, performance measures, segments and transfer pricing. We will examine the current practices of these elements of managerial control in decentralized business organizations and conceptual issues related to designing effective managerial decision-making and control systems. The general aim of this course is to help you develop a basic but solid understanding of how management systems function, and to help you to develop a conceptual framework for critically analyzing managerial control systems. Students are expected to recognize and uphold standards of intellectual and academic integrity. The University Policy on Academic Honesty is explained in detail in the student handbook On Campus and is available online at www.gsu.edu/oncampus. The course syllabus and class schedule provides a general plan for the course; deviations may be necessary. Attendance – Each student is expected to attend all scheduled class meetings for the entire duration of the class. Most students will find MBA 8115 to be very demanding. Poor attendance will almost certainly result in poor course performance. Exams – There will be three exams, each covering specified chapters. Exams may contain any content contained in the reading......

Words: 1324 - Pages: 6

Premium Essay

#### Chapter1

...Goal of Managerial Accounting http://edugen.wileyplus.com/edugen/courses/crs4637/rc/jiambalvo3341c... GOAL OF MANAGERIAL ACCOUNTING LEARNING OBJECTIVE 1 State the primary goal of managerial accounting. Virtually all managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information they need for planning, control, and decision making. If your goal is to be an effective manager, a thorough understanding of managerial accounting is essential. Planning LEARNING OBJECTIVE 2 Describe how budgets are used in planning. Planning is a key activity for all companies. A plan communicates a company's goals to employees aiding coordination of various functions, such as sales and production.A plan also specifies the resources needed to achieve company goals. Budgets for Planning The financial plans prepared by managerial accountants are referred to as budgets. A wide variety of budgets may be prepared. For example, a profit budget indicates planned income, a cash-flow budget indicates planned cash inflows and outflows, and a production budget indicates the planned quantity of production and the expected costs. Consider the production budget for Surge Performance Beverage Company. In the coming year, the company plans to produce 5,000,000 12-ounce bottles. This amount is based on forecasted sales. To produce this volume, the company estimates it will spend \$1,500,000 on bottles,......

Words: 2063 - Pages: 9

Premium Essay

#### Wqeqewqe

...School of Business MANAGERIAL ACCOUNTING Course Syllabus Professor Yun Zhang Phone: 202-994-7532 Suite 601-C Funger Hall Email: yunzhang@gwu.edu 2201 G Street NW Washington DC 20052 Course Introduction Managerial accounting is concerned with the use of accounting data by managers to plan and control (evaluate) personnel and operations of the firm. The focus is on planning, decision-making, and control by the organization and on the accounting systems that managers have to assist them in their decisions about resource allocation and performance evaluation. The course is intended as an introduction for individuals who will make business decisions, evaluate business units, and evaluate others (or be evaluated) through the use of accounting systems. The course will be loosely divided into two topics: cost management systems and managerial control systems. Each topic is briefly described below. Cost Management Systems: The objective of the cost management system is to provide information about the costs of the goods and services sold by the firm. While financial accounting requires that product cost information be accumulated in particular ways for external reporting, the focus in the course will be on cost systems that aid managerial decision-making. We will......

Words: 1335 - Pages: 6

Premium Essay

#### Customer Behavior

...Chapter 1 Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded......

Words: 2506 - Pages: 11