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Set A UNIVERSITY OF GUJRAT
SEMESTER SPRING 2024
Course Code: MGT-308 Course Title: Managerial Accounting
Time Allowed: 2 Hrs. 30 Minutes Marks: 50
Roll #: -----------------------------------------
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Question No 1: ABC Manufacturing uses the FIFO method for process costing. Here is the data
for the month of May in one of the company's processing departments:
Beginning Work in Process Inventory: 300 units, 70% complete for materials and 40% complete
for conversion.
Beginning Inventory Costs: $9,500 for materials, $7,500 for conversion, totaling $17,000.
Units started into production during the period: 5,200 units.
Units completed and transferred out: 5,000 units.
Costs added during the period: $370,000 for materials, $345,000 for conversion, totaling
$715,000.
Ending Work in Process Inventory: 500 units, 50% complete for materials and 35% complete for
conversion. (10 marks)
Question No 2: The administrator of Oak Valley Hospital wants to establish a cost formula that
links the administrative costs of admitting patients to the number of patients admitted each
month. The Admitting department’s costs and the number of patients admitted over the past eight
months are listed in the table:
Month Number of Patients Admitted Admitting Department
Costs
January 1,800 $14,000
February 2,000 $15,500
March 1,700 $13,800
April 1,600 $13,500
May 1,400 $12,900
June 1,200 $12,500
July 1,000 $11,900
August 1,300 $13,200
Required:
1. Use the high-low method to estimate the fixed and variable components of admitting
costs.
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2. Express the fixed and variable components of admitting costs as a formula in the form Y
= a + bx.
(10 marks)
Question No 3: Phoenix Tech Inc. manufactures and sells a specialized cordless phone designed
for high electromagnetic radiation environments. The company's contribution format Income
statement for the most recent year is as follows:
Total Per Unit
Sales (20,000 units) $1,200,000 $60
Variable expenses $800,000 $40
Contribution margin $400,000 $20
Fixed Expenses $250,000
Net Operating Income$150,000
Management is anxious to increase the company’s profit and has asked for an analysis of a
number of items.
Required:
a) Calculate the company’s breakeven point.
b) Refer to the original data. Assume that management wants the company to earn a profit of at
least $100,000 next year. How many units need to be sold to achieve this target profit?(10
marks)
Question No 4: The following account balances for the year ending December 31 are provided
for Alpha Tech:
Account Amount
Selling and Administrative Salaries $130,000
Purchases of Raw Materials $350,000
Direct Labor ?
Advertising Expenses $90,000
Manufacturing Overhead $300,000
Sales Commission $60,000
Inventory Beginning of the Year End of the Year
Raw Materials $50,000 $20,000
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Work in Process ? $45,000
Finished Goods $60,000 ?
The total manufacturing costs for the year were $800,000; the goods available for sale totaled
$860,000; and the cost of goods sold totaled $760,000.
Required:
a) Prepare a schedule of cost of goods manufactured and the cost of goods sold section of
the company’s income statement for the year.
b) Compute the average cost per unit for direct materials used and the average cost per unit
for manufacturing overhead.
c) Assume that in the following year the company expects to produce 55,000 units and
manufacturing overhead is fixed. What average cost per unit and total cost would you
expect to be incurred for direct materials? For manufacturing overhead? (Assume that
direct material is a variable cost).
d) As a manager in charge of production costs, explain to the president the reason for any
difference in average cost per unit between (2) and (3) above. (10 marks)
Question No 5: How do job order costing and process costing differ from each other?
Additionally, what distinguishes a traditional income statement from a contribution margin
income statement? (10 marks)
Teacher/ Teachers Signature Vetted by Chairperson
