201-Wk16b-Final Rev-F'10 (STUD)

201-Wk16b-Final Rev-F'10 (STUD) - Mgmt. 201 Managerial...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Mgmt. 201 – Managerial Accounting - Week #16b Review for Final Prof. Thoman Major Topics: 1. Product Costing Traditional costing, ABC costing Actual, normal and standard – Dealing with over- or under-applied overhead. Variable versus absorption versus throughput costing 2. CVP analysis Understand all 3 models Understand CM/unit, CM ratio, weighted average CM 3. Decision making - Differentiating between accounting costs and cash costs Identifying incremental costs and benefits for an activity 4. Budgeting and standard costing 5. Variances Other topics
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A. PRODUCT COSTING A1. MANHATTAN COMPANY ) Manhattan Company produces two products (F56 and F57), applying manufacturing overhead on the basis of direct labor hours. Each product requires 2 DLH/unit. Anticipated/estimated unit production costs (material, labor, and overhead) per unit and manufacturing volumes are as follows: Product Budgeted production volume Estimated cost per unit* F56 2,000 units $186.00 F57 20,000 units $175.00 *Includes all material, labor and overhead costs per unit. Manhattan’s overhead arises because of various activities. One major activity is purchase order processing; the budgeted cost for this activity is $70,000. The firm believes that the number of purchase orders processed is a key cost driver and expects the following activity for its products: Product Number of purchase orders for the product line F56 10 purchase orders F57 40 purchase orders Required: A1a. If the purchase order activity is allocated using number of purchase orders, what is the purchase order cost per unit for each product? A1b. It is often claimed that traditional costing systems over-cost high volume products and under- cost low volume products. ABC systems are claimed to correct this mistake. a. What is the reasoning behind this claim? b. Using a traditional system is Manhattan over-costing its high volume product (F57) and under-costing its low volume product (F56)? If so, explain. If not, explain. A good answer requires supporting calculations.
Background image of page 2
A2. SMELLY PERFUME ) Smelly Perfume Company manufactures and distributes several different products. They currently use an actual costing system and a plant-wide allocation method for allocating total overhead at a rate of $7 per direct labor hour. The product costs (per case of 24 bottles) and other information are as follows: Products Per unit costs J P X Direct materials $100.00 $ 72.00 $ 48.00 Direct labor 42.00 31.50 12.00 Overhead 28.00 21.00 14.00 TOTAL COST PER UNIT $ 170.00 $ 124.50 $ 74.00 Other information Machine hours per unit 4 MH 2 MH 3 MH Total number of cases 300 cases 500 cases
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/27/2012 for the course MGMT 201 taught by Professor Rowe during the Fall '08 term at Purdue University-West Lafayette.

Page1 / 7

201-Wk16b-Final Rev-F'10 (STUD) - Mgmt. 201 Managerial...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online