Act333 Final Presentation (Managerial Accounting)

Pioneer Inc.

Group Name: PIONEER Name

ID

Jobayer Bin Hasnat

122 0494 030

Tonmoy Michael Rozario

131 1139 630

Sazia Monihar

132 0471 030

Anonya Islam Chowdhury

141 1187 630

  

Manufacturing Process  Materials used: Colored papers, art papers, glue, paper hardboards, poster paper, lace and colored stone.  Tools: Needle, bookbinding awl, anti-cutter, scissors, ruler and thread.  Step 1: Cutting and making signatures  Step 2: Cutting hard covers

 Step 3: Pierce  Step 4: Sewing.  Step 5: Decorate.

Work Details

Calculations

Number of workers

Maximum Production Capacity

Hours

No. of Diaries Produced

4

Labor Hours/Day

Labor hour/week

Labor

8

8 hours * 6 Days

48

Labor 8 hours * 24 hours/month Days

192

Total labor Hours available

8 Hours * 24 Days * 4 Labors

768

No. od Diaries Produced/H our

1/4

Total number 768 Hours* of Diaries 0.25 Produced/M onth

0.25

192

Details

Input/Unit

Per Unit cost (TK)

Total Cost

2 pieces of paper 1 piece=8.27” * boards 5.85”

5

10

Art paper

4 pieces

20

80

Printed Color Paper

1 piece

20

20

Poster Paper

1 piece

10

10

Lace

1 piece

30

30

Total Direct Material Cost of 1 unit

150

Total Direct Material Cost of 192 units

28800

Direct Labor

No. of Labor

Hours/Unit

Labor

4

4

Cost/ DLH(Tk) Total Cost/Unit 20 80

Total Direct Labor Cost

MOH Rent Water Bill Electricity Bill Needle Thread Color Stone Glue Ruler Total MOH

15360

COST(TK)

5000 300 600 10 30 20 30 20 6010

Support and Selling cost

Prime and Conversion Cost Prime Cost=Direct Material Cost + Direct Labor Cost =28800+15360 =44160

Conversion Cost = Direct labor cost + Manufacturing overhead cost = 15360+6010

=21370

Determination of Full Cost Variable cost Direct material Direct labor Packaging Telecommunication Thread Color Stone Glue Total Variable Cost Fixed cost Rent Water Bill Electricity Bill Needle Ruler Administrative cost Distribution cost Total fixed cost Total full cost

Amount (Tk) 28800 15360 200 350 30 20 30

Total Amount (Tk)

44790 5000 300 600 10 20 1000 1200 8130 52920

Simple Costing System

Amount (Tk)

Direct cost Paper boards (192*10) Art paper (192*80) Printed Paper (192*20) Poster Paper (192*10) Lace (192*30) Direct material cost Direct labor (768hrs*20tk/DLH) Total direct cost Indirect cost Rent Water Bill Electricity Bill Needle Thread Color Stone Glue Ruler Administrative Cost Telecommunication Packaging Distribution Cost

Amount (Tk)

1920 15360 3840 1920 5760 28800 15360 44160 5000 300 600 10 30 20 30 20 1000 350 200 1200

Simple Costing System (Contd.)  Total indirect cost=8760 TK  Total labor hours=768 hrs  Indirect cost rate=8760/768 =11.40 TK per labor hr.

Product Cost Under Simple Cost  Total unit of production=192 units

Total (Tk)

Per unit (Tk)

Direct materials

28800

150

Direct labor

15360

80

Total direct cost

44160

230

Indirect cost allocated 8760

45.63

Total cost

275.63

52920

Cost Allocation of Multiple Support Dept. Support Departments Administrative Cost

Operating departments

Telecommunication cost

Distribution

Manufac total turing cost

Budgeted 1000 Cost incurred before any interdepartment allocation

350

1200

50170

52720

Support Work supplied by administration

20%

40%

40%

100%

30%

60%

100%

Support Work 10% supplied by Telecommuni cation

Support Departments Administrati ve Cost Cost incurred

Telecommunicati on cost

Distribution

Manufacturing Total cost

1200

50170

500

500

(350)

116.67

116.67

0

1816.67

50786.67

1000

350

Allocation of (1000) administrati on(40/80; 40/80)

Allocation of Telecommu nication Cost(30/90; 60/90) 0

Operating departments

52720

52720

Details

Taka

Total(taka)

Direct Cost Direct Material(150*192)

28800

Direct Labor(80*192)

15360

Activity Based Costing

Indirect Cost Rent (11.11*450)

5000

Water Bill(35*4)

300

Electricity Bill(1.33*450)

600

Needle(.055*192)

10

Thread (.156*192)

30

Color Stone(.10*192)

20

Glue(.16*192)

30

Ruler(.10*192)

20

Administrative

1000

Cost(5.21*192) Telecommunication(1.82 350 *192) Distribution (6.25*192)

1200

44160

Product Line Profitability Report under Simple Costing  We assumed that 75% of our total product will be sold based on market demand.

Revenue

43200

Direct cost COGS

(33120)

Indirect Cost Thread

(30)

Rent

(5000)

Water Bill

(300)

Electricity Bill

(600)

Tele communication

(350)

Distribution

(1200)

Packaging

(200)

Profit

1310

Change of Operating Revenue  Activity based costing: Profit margin ratio=(1310/43200)*100 =3.03 %  Simple costing: Profit margin ratio =(285.12/43200)*100 = 0.66 %  ABC results in more precise calculation.

  





Master Budget Schedule: 1 Revenue Budget

diary

units

Selling price per Total revenues unit

144

300

43200

Schedule: 2 Production Budget Diary Unit to be sold Add: target inventory

144 ending

14

Total needs Less: beginning inventory

158 0

Units to be produced

158 units

Schedule 3A : Direct Material Usage Budget

Schedule 3A : Direct Material Usage Budget

Schedule 3B: Material Purchase Budget Paper Art paper board s

Physical units Materials to purchased Add: Target inventory

Printed paper

Poster paper

lace

158 pieces

158 pieces

158 pieces

126.4

31.6

31.6

31.6

758.4 0

189.6 0

189.6 0

189.6 0

be 316 632pices pieces ending 63.2

Total needs 379.2 Less: beginning 0 inventory

Total

cost Paperboards(379.2*10) 3792 Art paper(758.4*80 Printed paper(189.6*20 Poster paper(189.6*10) Lace(189.6*30) Total cost of materials 3792 to be purchased

60672 3792 1896 60672

3792

1896

5688 5688

75840

Schedule 4 : Direct Manufacturing Labor Budget Details

Units

Hours/Unit

Total Hours

Wage/Hour

Total(tk)

Diary

158 Units

4

632

20

12640

Schedule: 5 Manufacturing Overhead Cost budget Total



MOH

6010

Total MOH

6010

MOH Rate = (Total Budgeted MOH/Total Labor Hours) = (6010/632)

=9.51 TK/per DLH  MOH Cost = (Total Budgeted MOH/Total Units) = (6010/158) =38.04 T K/Per Unit

Cost of Diary per Unit Details

Input

Cost(tk) /Input

Total

Paper boards

2 Pieces

5

10

Art paper

4 pieces

20

80

Printed Color Paper

1 piece

20

20

Poster Paper

1 piece

10

10

Lace

1 piece

30

30

Direct Labor

4 hours

20

80

MOH

4 hours

9.51

38.04

Direct Materials

Total Manufacturing Cost

268.04

Details

Units

Cost/Unit

Total(tk)

paper boards

63.2

5

316

Art paper

126.4

20

2528

Printed Color Paper

31.6

20

632

Poster Paper

32.6

10

326

Lace

32.6

30

978

Finished goods

14

268.04

3752.56

Direct Material

8532.56

Details

Taka

Beginning Finished Goods Inventory

Taka 0

(+) Cost of Good Manufactured Direct Material Used

23700

Direct Labor

12640

MOH

6010

Goods Available for sale

42350

(-) Ending Finished Goods Inventory

3752.56

Cost of Goods Sold

38597.44

) Per unit cost

Total

Sales revenue

300

43200

Less: Variable cost

(232.86)

(33531.84)

67.14

9668.16

(57.01)

(8210)

Contribution margin Fixed cost (8210/144)

Net income

10.13

1458.16

 Break- Even Break- Even Number of Unit=Fixed Cost/Contribution Margin Per Unit =8210/67.14 =122.28 units  Break-even Revenue= Fixed Cost/CM%  CM%=CM per unit/Selling Price =67.14/300 =22.38%  Therefore, Break-even Revenue= 8210/0.2238 =Tk. 36684.53

Margin of Safety  Margin of Safety= Budgeted Revenue-Breakeven Revenue =43200-36684.53 =Tk.6515.47  MOS%= MOS/Budgeted Revenue

=6515.47/43200 = 15.08%

Degree of Operating Leverage  Degree of Operating Leverage = Contribution Margin/ Operating Income = =

9668.16/ 1458.16 6.63 times

 Degree of operating leverage (DOL) measures the risk return trade in different cost structures. It shows the effect of fixed cost on operating income due to sales. Here DOL is 6.63 times means if sales increase (decrease) by 10% operating income will also increase (decrease) by 66.3% (10%*6.63).

Key Assumptions

Unit Sold

Selling Price

Increase/ Variable Fixed Budgeted Decrease cost per cost per Income in unit unit Demand

What If

Operating

TK

Change From Master Budget

Scenario 1 144 (12% increase in Demand)

300

161(12% 232.86 Increase)

57.01

1641.06

Increased by 10.69%

Scenario 2 144 (16% decrease in Demand

300

121(16% 232.86 Decrease )

57.01

1225.73

decreased by 15.93%