ACC 601 Managerial Accounting Group Case 1 051937

Acc 601 Managerial Accounting Group Case 1

Acc 601 Managerial Accounting Group Case 1 (100 points) Instructions: 1. As a group, complete the following activities in good form. Use excel or word only. Provide all supporting calculations to show how you arrived at your numbers 2. Add only the names of group members who participated in the completion of this assignment. 3. Submit only one copy of your completed work via Moodle. Do not send it to me by email. 4. Due: No later than the last day of Module 2. Please note that your professor has the right to change the due date of this assignment. Part A: Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement Nish Corporation has provided the following data for the month of April: Sales $220,000 Raw materials purchases $50,000 Direct labor cost $23,000 Manufacturing overhead cost $59,000 Selling expense $18,000 Administrative expense $43,000 Inventories: Beginning Ending Raw materials $26,000 $35,000 Work in process $18,000 $22,000 Finished goods $42,000 $29,000 Required: a. Prepare a Schedule of Cost of Goods Manufactured in good form for April. b. Prepare an Income Statement in good form for April. Part B: Application of Job Order Costing Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate for the most recent year: Machine-hours 95,000 Manufacturing overhead cost $1,710,000 During the most recent year, a severe recession in the company’s industry caused a buildup of inventory in the company’s warehouses. The company’s cost records revealed the following actual cost and operating data for the year: Machine-hours 75,000 Manufacturing overhead cost $1,687,500 Amount of applied overhead in inventories at year-end: Work in process $337,500 Finished goods $253,125 Amount of applied overhead in cost of goods sold $759,375 Required: a. Compute the company's predetermined overhead rate for the year and the amount of underapplied or overapplied overhead for the year. b. Determine the difference between net operating income for the year if the underapplied or overapplied overhead is allocated to the appropriate accounts rather than closed directly to Cost of Goods Sold. Part C: Process Costing using Weighted Average Timberline Associates uses the weighted-average method in its process costing system. The following data are for the first processing department for a recent month: Work in process, beginning Units in process 2,400 Percent complete with respect to materials 75% Percent complete with respect to conversion 50% Costs in the beginning inventory: Materials cost $8,400 Conversion cost $7,200 Units started into production during the month 20,800 Units completed and transferred out 22,200 Costs added to production during the month: Materials cost $97,400 Conversion cost $129,600 Work in process, ending Units in process 1,000 Percent complete with respect to materials 80% Percent complete with respect to conversion 60% Required: a. Determine the equivalent units of production. b. Determine the costs per equivalent unit. c. Determine the cost of ending work in process inventory. d. Determine the cost of the units transferred to the next department. Part D: Process Costing using First-in-First Out (FIFO) Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company's Assembly Department for the month of October. Cost in beginning work in process inventory $1,920 Units started and completed this month 3,130 Materials Conversion Cost per equivalent unit $9.50 $20.40 Equivalent units required to complete the units in beginning work in process inventory _____ Equivalent units in ending work in process inventory _____ Required: Determine the cost of ending work in process inventory and the cost of units transferred out of the department during October using the FIFO method. Part E: Activity-Based Costing Welk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data: H16Z P25P Direct materials per unit $10.20 $50.50 Direct labor per unit $8.40 $25.20 Direct labor-hours per unit 0.40 1.20 Annual production 30,000 10,000 The company’s estimated total manufacturing overhead for the year is $1,464,480 and the company’s estimated total direct labor-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (DLHs) $552,000 Setting up machines (setups) $132,480 Parts administration (part types) $780,000 Total $1,464,480 H16Z P25P Total Supporting direct labor 12,000 24,000 Setting up machines 104 Parts administration 560 Required: a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system. b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

Paper For Above instruction

Introduction

The comprehensive management accounting tasks presented in this assignment exemplify critical concepts and techniques utilized in managerial accounting to support decision-making, cost control, and strategic planning. The tasks include preparing schedules of cost of goods manufactured and income statements, applying job order costing, analyzing process costing methods, and evaluating activity-based costing systems. Each component requires meticulous calculations, interpretation of financial data, and application of accounting principles to derive meaningful insights into a company's operations and cost structure.

Part A: Schedule of Cost of Goods Manufactured and Income Statement

The first section involves calculating the cost of goods manufactured (COGM) and the income statement for Nish Corporation based on provided financial data. The COGM schedule begins with raw materials inventory, purchases, and direct labor costs, includes manufacturing overhead, and accounts for changes in raw materials, work in process, and finished goods inventories. The income statement consolidates sales revenue and deducts cost of goods sold, along with operating expenses, to determine net income.

The calculation of COGM involves summing direct materials used (beginning raw materials plus purchases minus ending raw materials), adding direct labor and manufacturing overhead, and adjusting for work-in-process inventories. For the income statement, the gross profit is computed by deducting COGS from sales, and operating expenses are subtracted to arrive at net income.

Part B: Application of Job Order Costing

The second segment addresses the application of job order costing and the calculation of overhead rates. The predetermined overhead rate is derived by dividing estimated overhead by estimated machine-hours. Actual data then reveals the level of overhead under- or over-applied. Determining the impact on net income involves allocating over- or under-applied overhead to COGS, which alters the gross profit and net income figures accordingly.

The analysis highlights the importance of accurate overhead application and its effects on financial statements. Overapplied overhead results in a reduction of COGS, increasing net income, whereas underapplied overhead does the opposite.

Part C: Process Costing Using Weighted Average Method

The third part explores process costing using the weighted-average approach. Calculations include determining equivalent units of production for materials and conversion costs, which are essential for assigning costs accurately. Costs per equivalent unit are then calculated by dividing total costs by equivalent units. The ending work-in-process inventory and units transferred are valued based on these per-unit costs, facilitating precise financial reporting and cost management.

This method emphasizes the blending of prior period costs with current period costs, providing an integrated view of production expenses.

Part D: Process Costing Using FIFO Method

The FIFO method allocates costs based solely on current-period production while considering prior work-in-process inventory separately. The analysis involves calculating the cost of ending inventory and units transferred out, reflecting the chronological order of production and ensuring accurate product costing in environments with continuous production flows.

This approach provides more precise control over inventory valuation, especially when production processes vary over time.

Part E: Activity-Based Costing Analysis

The final section compares traditional and activity-based costing (ABC) systems. Traditional costing applies overhead based on direct labor-hours and may distort product costs when products consume overhead resources differently. Conversely, ABC assigns overhead more accurately by considering activities such as setups and parts administration, which better reflect resource consumption.

Understanding these costing systems assists managers in pricing, product mix decisions, and identifying activities that contribute most to costs. The detailed computation of overhead rates under both systems demonstrates the potential for more accurate cost measurement through ABC.

Conclusion

This comprehensive analysis illustrates the essential role of various managerial accounting techniques in enhancing managerial decision-making and ensuring cost control. Accurate calculation of manufacturing costs, understanding overhead application, and employing appropriate costing methods enable companies to optimize operations, pricing strategies, and profitability. Proper implementation of these techniques supports strategic objectives and fosters financial transparency.

References

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