Texas A&M University-Commerce

ACCT. 525 – Advanced Managerial Accounting

Project

General information

This individual project is designed for you to explore the implications of managerial accounting. The project will require organization, critical thinking, good written communication skills, and an understanding of advanced managerial accounting concepts.

The project is graded for completeness, professionalism, and accuracy (as well as the usual elements of grammar and style). Be sure to thoroughly address all of the requirements outlined and offer complete support for your discussions and responses. Total points for this project are 100.

This is an individual project and the final product is your individual responsibility.

To avoid plagiarism:

 Always make note of the source(s) used.

 Use quotations when text is directly excerpted from a source.

 When paraphrasing read the original passage several times. Get a complete understanding of the content and the context of the passage. Use your own words to reflect the idea of the passage (still cite the source).

 Ask a friend or family member to proofread your work and the sources used.

DUE DATE:

You have four weeks to complete this assignment. Plan your time accordingly. Having a plan will help to ensure that the assignment is completed on time with thoughtful professional quality. Your completed paper must be submitted on or before December 3 at 11:59p.m.

REQUIREMENTS

Read all of the following carefully.

This assignment consists of eight (8) independent questions. The questions presented address the various topics covered throughout this course. You are required to provide complete and thorough responses to these questions and demonstrate your comprehension of the course material and its applicability to business.

Each question contains multiple parts. Clearly label ALL of your responses to correspond with the questions andeach part. I will NOT try to match responses with questions if they are not appropriately labeled.

Turn It In, software used to assess plagiarism, will be used. Please make sure that your work is your own. Work that is deemed plagiarized, copied, not original, or not authentic will NOT be graded.

A title page is required. Include a reference page, where applicable.

Late assignments will not be accepted.

Note that this assignment cannot be successfully completed the night before it is due!

Question 1: (12 points)

What is managerial accounting? How is it different from other areas of accounting? Explain the usefulness of managerial accounting for the profession. [Use appropriate citations for outside resources that are used to respond to this question. You may use and are encouraged to use sources outside of our text. ]

Question 2: (16 points)

At the beginning of 2014, Ace Company estimated the following costs to produce one unit of product: 5 pounds of direct material costing $2 per pound; and, 1.5 hours of direct labor costing $12 per hour. Ace also estimated annual factory overhead totaling $400,000, and 10,000 direct labor hours to be worked during the year. Job lot #112, containing 400 identical units, was completed and sold during June of 2014. Job lot #112 required 2,050 pounds of direct material costing $4,050, and 620 hours of direct labor costing $7,800. At the end of 2014, Ace determined total factory overhead to have been $410,000, and direct labor hours worked to have been 9,800.

(a) What was the budgeted cost of job lot #112?

(b) What is the “normal” cost of job lot #112?

(c) What is the “prime” cost of job lot #112?

(d) What is the “actual” cost of job lot #112?

(e) Distinguish “normal” and “actual” cost?

(f) Prepare the adjusting entry needed to reconcile the difference between normal and actual cost related to job lot #112?

(g) Why was the adjusting entry needed?

Question 3: (15 points)

Ace Company produces a product that sells for $142 per unit. In June and July, the first two months of production, Ace produced and sold 6,000 and 7,000 units, respectively, with costs as follows:

June                             July

Production and sales volume (units)                           6,000                          7,000

Cost of Sales                                                   $          347,500                       405,300

Selling and administrative costs                     $          436,800                       458,500

a) Estimate the variable cost per unit.

b) Estimate the total fixed cost per month.

c) What is the contribution margin per unit made and sold?

d) Express a formula to estimate the total costs at other activity levels, defining your terms, and identify any facts assumed by your assumption.

e) Identify the method you used to make your estimate, and any other possible methods, and state the advantages of each.

Question 4: (12 points)

Acme Company uses the weighted-average method to estimate product costs, and reports the following costs for last month for the first department of a three stage production process:

Beginning work in process:

Units                                                                                       400

Material cost                                                                           $3,100

Conversion costs                                                                     $3,900

Percentage of completion as to materials                                55%

Percentage of completion as to conversion costs                    25%

Units started                                                                                                   7,200

Units transferred to the next department                                                       6,600

Material cost added                                                                            $         85,800

Conversion costs added                                                                      $          248,200

Ending work in process:

Units                                                                                       1,000

Percentage complete as to materials                                       85%

Percentage complete as to conversion costs                           70%

a) What is the cost of the ending work in process of the department?

b) What is the cost of the units transferred to the next department?

c) Identify the type of product costing system used by Acme, and an alternative method, and define and distinguish the two methods.

d) What does Acme’s choice of costing system tell you about the product Acme makes and sells?

Note: To reduce rounding error, please carry out all intermediate computations to at least four decimal places.

Question 5: (10 points)

Jo Company has the following budgeted sales:

April                May                 June                 July

Credit sales                 $                     320,000           300,000           350,000           400,000

Cash sales                    $                      70,000             80,000             90,000             70,000

The historical pattern of collection of credit sales is 30% in the month of sale, 60% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.

a) What is the amount of cash expected to be collected in July?

b) What is the amount of the budgeted accounts receivable balance on May 31?

Question 6: (12 points)

Ace Company reports the following for the first quarter of 2014:

Sales                                                                            $          700

Fixed Administrative Expenses                                              110

Fixed Cost of Goods Sold                                                      100

Fixed Selling Expenses                                                           50

Variable Administrative expenses                                          30

Variable Cost of Goods Sold                                                 220

Variable Selling Expenses                                                       170

(a) What was Ace’s gross profit?

(b) What was Ace’s contribution margin?

(c) What does contribution margin contribute towards?

(d) What assumption does contribution margin analysis make about fixed costs?

Question 7: (12 points)

Ace is a CMA working in a new assignment as an assistant to Sally, the head manager of a production department. Ace notices the department has over-applied factory overhead in each of the last ten years. Ace asks Sally about the pattern and is reminded that bonuses depend on meeting budgets and that Ace should not question estimates used by Sally.

(a) Why would the manager do this?

(b) What is the harm to the company?

(c) What should Ace do, and why?

(d) What actions should Ace avoid, and why?

Question 8: (11 points)

Historically, the traditional method of using a single or plant-wide Predetermined Overhead rate was used. The profession, however, has embraced the use of Activity Based Costing. Explain the difference between the traditional method and ABC. Include in your discussion the pros and cons of each method. Which method would you prefer? Explain why? [Use appropriate citations for outside resources that are used to respond to this question. You may use and are encouraged to use sources outside of our text.]

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file 1502347064-ACCT 525 Advanced Managerial Accounting Answer.docx preview (3027 words )

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file 1502347071-ACCT 525 Advanced Managerial Accounting.docx preview (3027 words )

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