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Sunday, February 16, 2014

Management Accounting - Pre Test 1




Instruction: Answer ALL Questions.

Question 1

State three (3) differences between management accounting and financial accounting.

Item
Management Accounting
Financial Accounting



























(3 Marks)

Question 2
(Question 2 consists seven parts. Circle the correct answer).

Use the following information for Question 2 (part I until IV)

The information below taken from Freeze Company for the current year:

Standard Cost for One unit
Variable overhead rate
Fixed overhead rate

Two hours @ RM3 per machine hour
Two hour @ RM4 per machine hour
Budget Data
Budgeted output units
Budgeted machine hours
Budgeted variable manufacturing overhead
Budgeted fixed manufacturing overhead

30,000 units
60,000 hours
RM180,000
RM240,000
Actual Data
Actual output units produced
Actual machine hours
Actual variable manufacturing overhead
Actual fixed manufacturing

33,000 units
63,000 hours
RM188,000
RM231,000

Part I
What is the variable manufacturing overhead flexible budget variance?
A.    RM10,000 F
B.    RM8,000 U
C.   RM9,000 U
D.   RM8,000 F
Part II
What is the variable manufacturing overhead spending variance?
A.    RM8,000 U
B.    RM1,000 F
C.   RM7,000 U
D.   RM1,000 U
Part III
What is the fixed manufacturing overhead spending variance?
A.    RM33,000 F
B.    RM9,000 F
C.   RM9,000 U
D.   RM33,000 U
Part IV
What is the fixed manufacturing overhead production volume variance?
A.    RM12,000 F
B.    RM24,000 F
C.   RM18,000 F
D.   RM24,000 U
Use the following information for Question 2 (part V until VII)

The Glassware Company sells two types of insulated window panes to window installer: Tinted and Low Tint.  The company had the following budgeted and actual data for the month of April:


Budgeted
Actual

Tinted
Low Tint
Tinted
Low Tint
Selling price per pane
Variable cost per pane
RM25
RM15
RM20
RM10
RM26
RM14
RM19
RM10
Contribution margin per pane
RM10
RM10
RM12
RM9
Unit sales
2,400 units
2,000 units
2,300 unit
2,100 units
Fixed costs
RM8,000
RM6,000

Part V
What is the total sales volume variance based on contribution margin?
A.    RM300 U
B.    RM8,300 U
C.   RM0
D.   RM8,000 U
Part VI
What is the total sales mix variance based on contribution margin?
A.    RM301 U
B.    RM0
C.   RM602 U
D.   RM100 U
Part VII
What is the total sales quantity variance based on contribution margin?
A.    RM301 U
B.    RM301 F
C.   RM602 F
D.   RM0
(7 Marks)
Question 3

EMS manufactures lawn mowers for sale to large retailers.  It presently manufactures the carburetors for its lawn mowers in the company’s main plaint.  EMS estimates that it needs 26,000 carburetors per year.  A company has offered to sell EMS the part for RM65 each.  If EMS buys the part from outside the company instead of making it, it will not use the excess capacity for another manufacturing activity.  Since other manufacturing activities are in the plant, EMS estimates that 30% of the fixed overhead can be avoided.

The following list shows the cost if EMS manufactures the carburetors:

Raw material (per unit)………………….
Direct labor (per unit)……………………
Total fixed overhead…………………….
RM
30
20
500,000

Required to help EMS whether to make or buy the carburetors. Show(s) all the calculation details.

(11 Marks)


Question 4

The following information provided from AHH Company:

Financial Reports and Budgets for
levels of activity 74,000 units (Actual) and 80,000 units (Budget)

Actual
Budget
Production (unit)
74,000 units
80,000 units
Variable costs:
          Direct material
          Direct labor
          Overhead cost
          Administration cost

70,000
50,000
38,200
42,400

69,800
50,600
38,000
42,000
Total variable costs
200,600
200,400
Fixed costs:
40,000
40,000
Total costs
240,600
240,400


Required:
a)    Prepare a flexible budget for the activities 74,000 and 86,000 units.
b)    Prepare a performance report for the activity 74,000 units.
(22 Marks)