Beruflich Dokumente
Kultur Dokumente
JANUARY / 2018
BBAP2103
MANAGEMENT ACCOUNTING
MATRICULATION NO : 950221015409001
IDENTITY CARD NO. : 950221-01-5409
TELEPHONE NO. : 017-2635623
E-MAIL : kokjui01@oum.edu.my
LEARNING CENTRE : MELAKA LEARNINGCENTER
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
CONTENTS
Title Pages
1.0 Introduction of Management Accounting 3
2.0 Methodology 4-6
3.0 Question 1 7
4.0 Question 2 8-13
8.0 Summary 14
9.0 References 15
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
2.0 Methodology
i. Prime Cost = Raw Materials + Direct Labor
Prime cost means all the direct cost to the production of product.
ii. Manufacturing Overhead = All the indirect factory related cost when manufacture a
product. For example, electricity used for factory equipment, depreciation on factory
equipment and building and etc.
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
Gross Profit
(Less): Sales and administrative expenses:
Fixed
Variable
Net Income
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
Gross Profit
(Less): Sales and administrative expenses:
Fixed
Variable
Net Income
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
3.0 Question 1
i) a. Total Prime Cost
= Direct material + Wages of direct labor + Fringe benefit for direct labor
= RM 1,050,000 + RM 242,000 + RM 47,500
= RM 1,339,500
b. Total Manufacturing Overhead Cost
= Wages of indirect labor + Salary of production supervisor + Depreciation of factory
building + Fringe benefit for indirect labor + Fringe benefit for production supervisor
+ Total overtime premium paid + Cost of idle time for production employee
= RM 70,000 + RM 22,500 + RM 57,500 + RM 15,000 + RM 4,500 + RM 27,500 +
RM 20,000
= RM 217,000
c. Total Conversion Cost
= Direct labor + Manufacturing overhead
= RM 242,500 + RM 217,000
= RM 459,500
d. Total Product Cost
= Total direct labor + Total direct material + Total manufacturing overhead
= RM 242,500 + RM1,050,000 + RM 217,000
= RM 1,509,500
e. Total Period Cost
= Advertising expense + Finished goods inventory + Administrative cost + Rental of
office space for sales personnel + Sales Commission + Promotion cost
= RM 49,500 + RM 230,000 + RM 75,000 + RM 7,500 + RM 2,500 + RM 5,000
=RM 369,500
ii. Different cost for different purposes means the organization needs different
information and thus a different of cost. Organization must able to determine variable
cost which is relevant to the decision.
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
4.0 Question 2
i)
Calculation of Product Cost Per Unit For The First Two Years by
a. Absorption Costing
Year 1 (RM) Year 2 (RM)
Direct Raw Materials 15 15
Direct Labor 5 5
Variable Manufacturing Cost 12 12
Fixed Manufacturing Cost 10 10
42 42
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
The cost of goods sold can also be calculated directly by multiplying the sales units
with the product cost per unit (40, 000 x RM 42 = RM 1,680,000)/(30,000 x RM 42 =
RM 1,260,000). The net income for the absorption costing for Year 1 is RM 242,500
and RM 162, 500 for Year 2. The different is cause by the existence of 10,000 units
valued at RM 420,000 in ending inventory.
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
b) Marginal Costing
1,280,000
+ Variable sales and administrative cost
40,000 1,320,000
(40, 000 x RM 1 )
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
960,000
+ Variable sales and administrative cost
40,000 1,000,000
(40, 000 x RM 1 )
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
iii.
The net operating income under the absorption costing of year 1 is RM 242,500
and RM 162,500 in year 2. The different of net operating income is due to the ending
inventory in year 2. All the production cost and sales and administrative cost is the
same as the number of production unit is the same in this two years.
The net operating income under the marginal costing of year 1 is RM 242,500
and RM 62,500 in year 2. The different of net operating income is because of the
ending inventory in year 2. All the fixed cost are the same for two years.
iv. Both net income between absorption costing income and marginal costing will
Increase
v. The total operating income under absorption and marginal costing is depend on the
final inventory on hand in the end of year.
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
8.0 Summary
In conclusion, this assignment enable student to learn the way to calculate prime
cost, manufacturing overhead cost, conversion cost, total product cost and total period
cost. In fact, student may differentiate the related cost to each part of accounting.
Then, student able to understand and calculate the product cost per unit by using
absorption costing and marginal costing. Besides, student also able to prepare the
income statements for the operation by using absorption costing and marginal costing.
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BBAP2103 MANAGEMENT ACCOUNTING 950221015409
9.0 References
https://www.accountingtools.com/articles/what-is-a-period-cost.html
https://www.accountingtools.com/search?q=prime%20cost
https://www.accountingtools.com/search?q=manufacturing%20overhead
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