EXAMINATION (online)

Big Assignment
Lecturer’s Signature& full
name
Program: VNU
Course Code: INS2109
Course Title: Managerial Accounting
Level: Undergraduate

Trần Thị Thủy Anh

Time allowed: 24 hours
Due date: 11 January 2022, 3:30-5h30 PM Date:
………………………………
Department’s Signature & full
name

Date:
………………………………

Instructions to students:
1. Closed/Opened book examination: Opened book
2. Submitted your project as a PDF file
3. Late submission will result in a 30% deduction of your total point
4. The file name is as follows: Student name_Student number_Course code
(Example: Nguyễn Văn A_19071122_INE1050.01)
Group name_Course code
(Example: GroupA_19071122_INE1050.01)
This exam paper contains 08 pages, including the cover page.

1
Part I. Compulsory Problems (5 points)
IMPORTANT NOTES: please use your STT (your student’s number in the list) to do
the following problems.

Problem 1. (2.5 points)

MINH TIEN Company produces delivery trucks, TT-14 and TT-13. The company is
currently using an absorption costing system that applies overhead based on direct- labor
hours. The budget for the current year ending December 31, 20x1, is as follows:

MINH TIEN COMPANY

Budgeted Statement of Gross Margin for 20x1

TT 14 TT 13 Total

Sales in units 5000 5000 10,000

Sales revenue ($) 2,100,000 2,500,000 4,600,000

Cost of goods manufactured and sold ($)

Beginning finished- goods inventory 240,000 300,000 540,000

add: Direct material 1,500,000 1,750,000 3,250,000
Direct labour 185,185 92,593 277,778
Applid MOH* 544,025 272,013 816,038
Cost of goods available for sale ($) 2,469,210 2,414,606 4,883,816
less: Ending finshed goods inventory 240,000 300,000 540,000
Cost of goods sold ($) 2,229,210 2,114,606 4,343,816
Gross margin ($) -129,210 385,394 256,184

* Total manufacturing overhead applied on the basis of direct labour hours:

Maching $ 424,528 +STT*100
Assembly 216,981 +STT*100
Material handling 56,604 +STT*100
Inspection 117,925 +STT*100
Total 816,038 +STT*100

The accountant has been reading about a product-costing method called activity-based
costing. He is convinced that activity-based costing will cast a new light on future profits. As
a result, the director of cost management, has accumulated cost pool information for this year
shown on the following chart. This information is based on a product mix of 5,000 units of
TT-14 and 5,000 units of TT-13.

Cost pool information for 20x1

2
Cost pool Activity TT 14 TT 13
Direct labor DL hour 10,000 5,000
Machining Mahcine hours 15,000 30,000
Assembly Assembly hours 6,000 5,500
Material handling Number of parts 25,000 50,000
Inspection Inspection hours 5,000 7,500

In addition, the following information is projected for the next calendar year, 20x2
TT 14 TT 13
Beginning inventory, finished goods (in units) 800 600
Ending inventory, finished goods (in units) 700 700
Sales (in units) 5,100 4,900

On January 1, 20x2, MINH TIEN is planning to increase the prices of TT-14 to $435 and
TT-13 to $515. Material costs are not expected to increase in 20x2, but direct labor will
increase by 9 percent, and all manufacturing overhead costs will increase by 5 percent. Due
to the nature of the manufacturing process, the company does not have any beginning or
ending work-in-process inventories.

Required:

1. Explain how activity- based costing differs from traditional product costing methods
(0.5 points)
2. Using activity- based costing, calculate the pool rate per unit of the appropriate cost
driver for each four activities (0.25 points)
Using activity- based costing, calculate the total cost for the activity cost pools:
machining, assembly, material handling, inspection (Round to nearest dollar) (0.25
points)
3. Calculate expected full product cost for product TT14 and TT13 using ABC method
for year of 20x2. (1 points)
4. Prepare budget statement showing the gross margin for the year 20x2, using ABC
method. The statement should show each product and a total for the company,
including detailed calculations for the cost of goods manufactured and sold (Round to
nearest dollar). (0.5 points)

Problem 2. (2.5 points)

Truong Hai Corporation manufactures mainly two different types of furniture product: chair
and table. In the fall of the current year, the controller, showed the following data.

3
- Sale budget for 2001 (all units to be shipped in this year and on account)

Product Units Price ($)

Chair 80,000 120 +STT
Table 40,000 190 +STT

- Raw material prices and inventory levels:

Expected Desired. Anticipated

inventories, inventories, purchase
Raw material 1/1/2001 (kg) 31/12/2001 (kg) price ($)
Wood 42,000 36,000 8 + STT
Sheet metal 29,000 32,000 5 + STT
Plastic 6,000 7,000 3 + STT

- Use of raw material

Amount Used in unit
Raw material Chair Table
Wood (kg) 5 7
Sheet metal (kg) 5 6
Plastic (kg) 2

- Direct labor requirements and rates

Product Hours per unit rate per hour ($)

Chair 3 20
Table 5 25

- Finished goods inventories (in units)

Expected Desired.
inventories, inventories,
Product 1/1/2001 31/12/2001
Chair 20000+ (STT*10) 25,000
Table 8,000 9,000 +(STT*10)

- Production overhead

Overhead cost activity: Activity- based budget rate

Purchasing and material handling $ 0.25 per kg of wood and metal purchased
Depreciation, utilities, and inspection $4 per chair and table produced
Shipping $1 per chair and table shipped
general production overhead $3 per Direct labor hour

4
Required: Prepare the following budgets for the year of 2001

1. Sales budget (in dollar) (0.25 points)

2. Production budget (in units) (0.5 points)
3. Raw material purchases budget (in quantities) (0.5 points)
4. Raw material purchases budget (in dollar) (0.5 points)
5. Direct labor budget (in dollar) (0.25 points)
6. Production overhead budget (in dollar) (0.5 points)

Part II. Optional Problems (3 points) (Please choose and do 2 problems among the
following 3 problems)
IMPORTANT NOTES: please use your STT (your student’s number in the list) to do
the following problems.

Problem 3. (1.5 points)

MINH DAT Shop sells bicycles. For purposes of a cost-volume-profit analysis, the shop
owner has divided sales into two categories, as follows:

Product Type Sales price ($) Invoice Cost ($) Sales Commision Fee ($)
Professional product 500+ STT 300 25
Normal product 330+ STT 150 10

Three-quarters of the shop’s sales are medium-quality bikes. The shop’s annual fixed
expenses are $65,000 +(STT* 100). (In the following requirements, ignore income taxes.)

Required:

1. Compute the unit contribution margin for each product type. (0.25 points)
2. What is the shop’s sales mix? (0.25 point)
3. Compute the weighted-average unit contribution margin, assuming a constant sales
mix. (0.25 points)
4. What is the shop’s break-even sales volume in dollars? Assume a constant sales mix.
(round up the number). (0.25 points)
5. How many bicycles of each type must be sold to earn a target net income of
$150,750? Assume a constant sales mix. (round up the number) (0.5 points)

5
Problem 4. (1.5 points)

ABC Company uses a standard-costing system. The firm estimates that it will operate its
manufacturing facilities at 800,000 machine hours for the year. The estimate for total
budgeted overhead is $2,000,000 +(STT*10). The standard variable-overhead rate is
estimated to be $2 per machine hour or $6 per unit. The actual data for the year are presented
below.

Actual finished units 250,000

Actual machine hours 764,000
Actual variable overhead ($) 1,705,000
Actual fixed overhead ($) 402,000

Required:

1. Compute the following variances. Indicate whether each is favorable or unfavorable,

where appropriate.
a. Variable-overhead spending variance. (0.25 points)
b. Variable-overhead efficiency variance. (0.25 points)
c. Fixed-overhead budget variance. (0.25 points)
d. Fixed-overhead volume variance. (0.25 points)
2. Prepare journal entries to
a. Record the incurrence of actual variable overhead and actual fixed overhead.
(0.25 points)
b. Add variable and fixed overhead to Work-in-Process Inventory. (0.25 points)

6
Problem 5. (1.5 points)

ABC Company manufactures a highly specialized plastic that is used extensively in the
automobile industry. The following data have been compiled for the month of June.
Conversion activity occurs uniformly throughout the production process.

WIP, June 1- 50,000 units

Direct material: 100% complete 150,000 $
Conversion: 40% complete, 34,400 $
Balance in Work in process, 1 June 184,400 $

Units started during June 200,000

Units completed during June and transferred out
to finished goods inventory 190,000

Work in process, June 30

Direct material: 100% complete
Conversion cost: 60% complete
Cost incurred during June
Direct material 495500 +STT $
Conversion cost:
Direct labor 87,450 $
Applied Manufacturing overhead 262,350 $
Total Conversion cost 349,800 $

Required: Prepare schedules to accomplish each of the following process-costing steps for
the month of June. Use the weighted-average method of process costing.

1. Analysis of physical flow of units and calculation of equivalent units (0.5 points)
2. Computation of unit costs. (0.5 points)
3. Analysis of total cost (0.5 points)

7
Part III. Literature question (2.0 points)

1. List and explain the similarities and important differences between job order and
process costing (1 point)
2. Describe how an operation costing system accumulates and assigns the costs of
direct- material and conversion activity in a batch manufacturing process. (1
point)

END.