Week 3 - Accy211 Management Accounting II Autumn Session...

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Accy211: Management Accounting II Autumn Session 2009 Tutorial solutions: Week 3 CHAPTER 2 Questions Q2-17 Q2-26 Q2-28 Q2-34 Q2-37 2-17: Direct, indirect, fixed and variable costs. 1. Clay – Direct, variable Paint- direct, variable Packaging materials –direct (or could be indirect if small and not traced to each unit), variable Depreciation on machinery and molds –indirect, fixed (unless “units of output” depreciation, which then would be variable) Rent on factory – indirect, fixed Insurance on factory –indirect, fixed Factory utilities – indirect, probably some variable and some fixed (e.g. electricity may be variable but heating costs may be fixed) Painters – direct, variable Painting Department manager –indirect, fixed Baking Department manager – indirect, fixed Materials handlers –depends on how they are paid. Most likely indirect fixed if salaried Custodian –indirect, fixed Night guard –indirect, fixed Machinist (running the baking machine) –depends on how they are paid. Most likely indirect fixed, if salaried Machine maintenance personnel – indirect, probably fixed, if salaried, but may be variable if paid only for time worked and maintenance increases with increased production Maintenance supplies – indirect, variable Cleaning supplies – indirect, most likely fixed since the custodians probably do the same amount of cleaning every night 2. If the cost object is Baking Department, then anything directly associated with the Baking Department will be a direct cost. This will include: depreciation on machinery and molds Baking Department manager Materials handlers (of the Baking Department) Machinist Machine Maintenance personnel (of the Baking Department) Maintenance supplies (of the Baking Department) Of course the clay will also be a direct cost of the Baking Department, but it is already a direct cost of each kind of figurine produced. Page 1 of 6
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2-26: Total costs and unit costs 1. Number of attendees 0 100 200 300 400 500 600 Variable cost per person ($9 caterer charge – $5 student door fee) $4 $4 $4 $4 $4 $4 $4 Fixed Costs $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 Variable costs (number of attendees × variable cost per person) 0 400 800 1,200 1,600 2,000 2,400 Total costs (fixed + variable) $1,600 $2,000 $2,400 $2,800 $3,200 $3,600 $4,000 Fixed, Variable and Total Cost of Graduation Party 0 1000 2000 3000 4000
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Week 3 - Accy211 Management Accounting II Autumn Session...

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