Lancaster University Ghana Managerial Accounting Tutorial Set 1 PDF

**Lancaster University Ghana** **Managerial Accounting** **Tutorial Set 1** **Question 1** Explain the following terms as used in managerial accounting and give an example each. i\. Product cost ii. Period cost iii. Prime cost iv\. Conversion cost v. Direct cost vi. Indirect cost **Question 2...

**Lancaster University Ghana** **Managerial Accounting** **Tutorial Set 1** **Question 1** Explain the following terms as used in managerial accounting and give an example each. i\. Product cost ii. Period cost iii. Prime cost iv\. Conversion cost v. Direct cost vi. Indirect cost **Question 2** a\. Why is manufacturing overhead considered an indirect cost of a product? b\. For each of the following, indicate whether the cost would typically be direct or indirect. Cost Item Direct Indirect 1\. The direct labor factory costs for the manufacturing division. 2\. The factory supervisor's salary for the product produced. 3\. The factory supervisor's salary for the manufacturing division. 4\. The manufacturing overhead costs for the products produced. 5\. The manufacturing overhead costs for the manufacturing division. **Question 3** "A variable cost is a cost that varies per unit of product, while a fixed cost is constant per unit of product." Do you agree? Explain. **Question 4** The following data (in thousands of cedis) have been taken from the accounting records of Hajiashikishiki for the just completed year. Administrative expenses\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....300 Direct Labour\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....400 Finished goods inventory, beginning\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....240 Finished goods inventory, ending\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...320 Manufactured overhead\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....460 Purchases of raw materials\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...240 Raw materials inventory, beginning\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....80 Raw materials inventory, ending\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....140 Sales\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....1,980 Selling expenses\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...280 Work in process inventory, beginning\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....140 Work in process inventory, ending\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....100 **Required** a\. What is the cost of raw materials used in production during the year? b\. What is the cost of goods manufactured (finished) for the year? c\. What is the cost of goods sold for the year? d\. What was the net income for the year? **Question 5** For each of the following, indicate whether the cost would typically be variable or fixed. Cost Item Variable Fixed Rent on building Direct labor Supervisor salaries Direct materials Sales commissions based on units sold **Question 6** The following information has been taken from the accounting records of Naya Ltd for last year. Selling expenses\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\$140,000 Direct materials: Component A\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\... \$45,000 Component B\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\... \$ 60,000 Direct wages: Department X\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.... \$50,000 Department Y\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.... \$15,000 Factory utilities\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..... \$36,000 Factory depreciation\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..... \$5,000 Light and heating- Factory\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.... \$29,000 Factory rent\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\..... \$14,000 Administrative cost\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.... \$80,000 **Required:** Compute the following: a\. Prime cost b\. Conversion cost c\. Production Overhead d\. Non-production overhead e\. Production cost f\. Total cost **Question 7 High and Low** Alomo Gyata Company manufactures major appliance. The company just had its most successful year because of increased interest in its refrigerator line. While preparing the budget for next year, Kofi Brokeman, the financial controller came across the following data related to the utility costs: **Month Total Power Costs GH¢ Volume in Machine hours** January 30,000 3,000 February 26,500 2,500 March 24,750 2,250 April 23,000 2,000 May 21,250 1,750 June 19,500 1,500 **Required:** a\. Using the High-Low method, determine the: i\. variable cost per machine hour and the total variable cost for the six month period. ii\. monthly fixed power cost and the total fixed cost for the six month period. b\. Express the variable and fixed cost in the form y = a + bx c\. Using the mixed cost function in (b) above, what would be the cost of 3,600 machine hours on the assumption that fixed cost will not change at this level of activity.