Management Accounting

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School of Business
BTEC HND in Management/Marketing/Information Technology

Management Accounting
Mary Jay Angela Tinimbang
Mrs. Rosalinda A. Caoili

February 15, 2013
1st Year Business Management
Section A
Academic Year 2013-2014
Contents
Case 13
Classify the different types of costs (1.1)4
Case 26
Use different costing methods (1.2)7
Case 38
Calculate costs using appropriate techniques (1.3)9
Case 412
Analyse cost data using appropriate techniques. (1.4)13
Case 514
Prepare and analyse routine cost reports (2.1)15
Use performance indicators to identify potential improvements (2.2)16
Suggest improvements to reduce costs, enhance value and quality. (2.3)17

Case 1
RAINBOWEAR produces custom-designed dresses for retail sales. The shop sold 50 dresses last month. Costs incurred during last month’s operation include the following:
a. Cost of fabric used in dresses $60,000
b. Wages of dressmakers $5,000
c. Wages of dress designers $4,000
d. Wages of sales personnel $1,000
e. Wages of designers who experiment with new$3,000
fabrics and dress designs
f. Wages of the employee who repairs the shop’s$2,000
pattern and sewing machines
g. Salary of the owner’s assistant $1,200
h. Cost of the new sign displayed in front of the retail shop $400
i. Cost of electricity used in the pattern department $200
j. Depreciation on pattern machines and sewing machines $10,000
k. Cost of advertisements in local media $800
l. Cost of hiring a plane and a pilot to fly along the beach$1,400
pulling a banner advertising the shop
m. Cost of insurance for the production employees $2,000
Rent for the building $6,000
Apportion the rent based on the ff:
n. Half of the building’s first floor is used for administrative offices. $1,500
o. The other half of it is used for the retail sales shop $1,500
p. The second floor is used for making dresses and $3,000
storing raw materials.

Classify the different types of costs (1.1)

Direct Materials - these are the costs that can be identified in the unit of production.
Direct Labor - these are the costs of the personnel which is associated directly with the production of goods and services.
direct Manufacturing Costs - these are the costs that are related to manufacturing process but are not directly associated with the product.
Selling costs - these costs are associated with the marketing and distribution of the product.
Marketing costs - The total cost associated with delivering goods or services to customers.
Research and development costs - the costs that are incurred during the development and introduction of new products to market or during the improvement of existing products.
General and administrative costs - pertain to operation expenses rather that to expenses that can be directly related to the production of any goods or services.

| Direct Materials| Direct Labor| Indirect Manufacturing Costs| Selling Costs| Marketing Costs| Research and Development Costs| General and Administrative Costs| Total| Unit- Related| a. $60,000| b. $5,000c. $4,000| | | | | | $69,000| Batch Related| | | | d. $1,000| | | | $1,000| Product-sustaining| | | i. $200| | | e. $3,000| | $3,200| Business Sustaining| | | j. $10,000f. $2,000m. $2,000 p. $3,000| o. $1,500| k. $800l. $1,400h. $400| | g. $1,200n. $1,500| $23,800| Total| $60,000| $9,000| $17,200| $2,500| $2,600| $3,000| $2,700| |

Case 2
ZOOMCARE has grown from a one-man to a 9-men operation auto repair shop. It has developed a reputation for reliable repairs with one manager and eight-skilled (4 senior and 4 junior) auto mechanics in its payroll. Competition has eroded business...
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