Assignment1Due date:12 October2015Weighting:50%ofthe continuous assessmentportion ofthe courseCovera

Assignment1Due date:12 October2015Weighting:50%ofthe continuous assessmentportion ofthe courseCoverage:Units1–2Important noteYoumust usewordprocessingsoftware(suchasMicrosoft Word) topreparetheTMAs, andsubmit theTMAsviatheOnlineLearningEnvironment (OLE). Allassignmentsmust be uploadedtotheOLE by theduedate.FailuretouploadaTMA intherequired format totheOLE mayresult inthescoreof the TMA beingadjusted tozero..gif”>Question 1(mini-case) (38marks)WonderfulCorporation has the following accountbalances (in millions):ForSpecific Date in 20x5ForYear20x5Directmaterials inventory,1 Jan$30Purchases ofdirectmaterials$650Work-in-process inventory, 1 Jan20Directmanufacturinglabor200Finished goods inventory, 1 Jan140Depreciation:plant and equipment160Directmaterials inventory,31 Dec40Plantsupervisorysalaries10Work-in-process inventory, 13 Dec10Miscellaneous plantoverhead70Finished goods inventory, 31 Dec110Revenues1,900Marketing, distribution, and customer-service costs480Plantsupplies used20Plantutilities60Indirectmanufacturinglabour120Ronald Tong, the managementaccountantofWonderful, collected thefollowinginformation:i Both the direct materials used and the plantand equipmentdepreciation are related to the manufacture of1 million units ofproductforthe yearended 31 December20x5.ii Directmaterialcosts behave as variable cost, and plantandequipment depreciation behaves as a fixed cost.iii Plantsupervisorysalaries are regarded as manufacturingoverheadcosts.Required:a Prepare an income statementand a supportingschedule ofcostofgoods manufactured forthe yearended 31 December20x5.(12 marks)b Howwould the answerto (a)be modified ifyou were asked foraschedule ofcostofgoods manufactured and sold instead ofaschedule ofcostofgoods manufactured? Be specific. (6 marks)c Plantsupervisorysalaries are usuallyregarded as manufacturingoverhead costs. When mightsome of these costs be regarded as directmanufacturingcosts? Give an example. (5 marks)d Evaluate the unitcostforthe directmaterials assigned to those unitsand the unitcostforplantand equipmentdepreciation. Assume thatyearlyplantand equipmentdepreciation is computed on a straight-line basis. (5 marks)e Assume thatthe implied cost-behaviourpatterns persist. Repeatthecomputations in requirement(d), assumingthatthe costs are beingpredicted forthe manufacture of1.2 million units ofproduct. Explainhowthe totalcosts would be affected. (5 marks)f As a management accountant, explain conciselyto the presidentwhythe unit costs differed in requirements (d)and (e). (5 marks)Question 2(22marks)AdvancedCorporation produces an electronic part, EL20, formobilephones. Summarydata fromits 20×5 income statement are as follows:Revenues$5,000,000Variable costs3,000,000Fixed costs2,160,000Operatingincome$ (160,000)AmyWong, Advanced’s president, is veryconcerned aboutAdvancedCorporation’s poorprofitability. She asks Mark Lui, production manager, and Leslie Tsui, controller, to see if there are ways to reduce costs.Aftertwo weeks, Markreturns with a proposalto reduce variable costs to52%ofrevenues byreducingthe costs Advancedcurrentlyincurs for safedisposalofwasted metal. Leslie is concerned thatthis would expose the company to potentialenvironmentalliabilities. He tells Mark, ‘We would need to estimate some of these potentialenvironmentcosts andinclude themin ouranalysis.’ ‘You can’tdo that,’Markreplies. ‘We’renotviolatinganylaws. There’s some possibilitythatwe mayhave toincurenvironmentcosts in the future, butifwe bring itup now, thisproposalwillnotgo through because ourseniormanagement alwaysassumes these costs to be largerthan theyturn outto be. The marketisverytough, and we’re in dangerofshutting down the company andcostingallofus ourjobs. The onlyreason ourcompetitors are makingmoneyis that they’re doingexactly whatI’mproposing.’Required:a Calculate Advanced Corporation’s breakeven pointfor20x5 (i)inunits, and (ii)in amount. (5 marks)b Calculate Advanced Corporation’s breakeven point(i)in units, and(ii)in amountifvariable costs are 52%ofrevenues. (5 marks)c Calculate Advanced Corporation’s operatingincome for20x5 ifvariable costs had been 52%ofrevenues. (6 marks)d Given MarkLui’s comments, whatshould Leslie Tsuido? (6 marks)Question 3(22marks)ePrintLimited prints customletterhead papers, envelopes and memopads forcorporations. The business was started January1, 20×4. Thecompany uses a normal-costingsystem. It has two directcostpools, materials and labour, and one indirectcostpool, overhead. Overhead ischarged to printingjobs on the basis ofdirectlabourcost. The followinginformation is available for20x4.Budgeted directlabourcosts$150,000Budgeted overhead costs$180,000Costs ofactual materialused$126,500Actualdirect labourcosts$148,750Actualoverhead costs$176,000There were two jobs in process on 31 December 20×4:Job P13 and JobP14. Costs added to each job as of31 Decemberare as follows:DirectmaterialsDirectlaborJob P13$3,620$4,500Job P14$6,830$7,250ePrintLimited has no finished goods inventories because allprintingjobsare transferred to costofgoods sold when completed.Required:a Compute the overhead allocation rate. (3 marks)b Calculate the balance in endingworkin process and costofgoodssold before anyadjustmentforunder-orover-allocated overhead.(5 marks)c Calculate the endingbalances in workin process and costofgoodssold ifthe under-orover-allocated overhead amountis as follows:i Written offto costofgoods soldii Prorated usingthe endingbalance (before proration)in cost ofgoods sold and work-in-process controlaccounts(10 marks)d Advise ePrintLimited which ofthe methods in requirement(b)should be selected.Explain. (4 marks)Question 4(18marks)MayLau is examiningcustomer-service costs in the Shatin branch ofUnique Products. Unique Products has more than 200 separate electricalproducts thatare sold with a six-month guarantee offullrepairorreplacementwith a newproduct. When a productis returned byacustomer, a service reportis prepared. This service reportincludes detailsofthe problemand the time and costofresolving the problem. Weekly data forthe mostrecent8-weekperiod are as follows:WeekCustomer-ServiceDepartmentCostsNumberofService Reports1$27,400190241,800275326,000115437,600395528,000265643,000455733,800340842,000305Required:a Use the high-low method to compute the costfunction, relatingcustomer-service costs to the numberofservice reports. (10 marks)b Suggestthe variables, in addition to numberofservice reports, mightbe the costdrivers ofweeklycustomer-service costs ofUniqueProducts. (8 marks)Source:Allquestionsare adaptedfrom2-34(p.83),2-35(pp.83–84), 3-48(p.126),4-39(p.169),10-23(p.433),Horngren,CT,Datar,SMandRajan, M(2015)CostAccounting:AManagerialEmphasis,15thedn,UpperSaddle River,NJ:Pearson.