Assignment
On
Management Accounting
Submitted To: Mrs.Fahmida Ahmed
Assistant Professor
FBA, USTC
Submitted By
Name
ID
Semester
Batch
: Rabiul Karim
: 1600
: 7th Semester
: 43rd Batch
Faculty of Business Administration
University of Science and Technology Chittagong
Assignment Topics
1. “The variable cost per unit varies with output, whereas the fixed cost per unit is constant.” Do
you agree? Explain.
2. The PC Works assembles custom computers from components supplied by various
manufacturers. The company is very small and its assembly shop and retail sales store are
housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of
the costs that are incurred at the company.
Required:
For each cost, indicate whether it would most likely be classified as direct labor, direct materials,
manufacturing overhead, selling, or an administrative cost.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
. The cost of a hard drive installed in a computer.
The cost of advertising in the Puget Sound Computer User newspaper.
The wages of employees who assemble computers from components.
Sales commissions paid to the company’s salespeople.
The wages of the assembly shop’s supervisor.
The wages of the company’s accountant.
Depreciation on equipment used to test assembled computers before release to customers.
Rent on the facility in the industrial park.
3. Cost Behavior: Analysis and Use: Problem 5. 17 (Page 223), Requirements 2, 3. 4
4. CVP analysis : Problem : 6.19 (page 268) ), Requirements 1, 2, 3. 4, 5.
5. Variable and absorption costing : 7.17 (page 268)
“The variable cost per unit varies with output, whereas the fixed cost per
unit is constant.” Do you agree? Explain.
I am agree with the upper line that “The variable cost per unit varies with output, whereas the fixed
cost per unit is constant.”
Variable costs and Fixed costs, in economics, are the two main types of costs that a company incurs
when producing goods and services. Variable costs vary with the amount of output produced, and
fixed costs remain the same no matter how much a company produces. Variable costs are a
company's costs that are associated with the number of goods or services it produces. A company's
variable costs increase and decrease with its production volume. When production volume goes
up, the variable costs will increase. On the other hand, if the volume goes down, so too will the
variable costs.
Unlike variable costs, a company's fixed costs do not vary with the volume of production. Fixed
costs remain the same regardless of whether goods or services are produced or not. Thus, a
company cannot avoid fixed costs.
ABC produces ceramic mugs for a cost of $2 a mug. If the company produces 500 units, its variable
cost will be $1,000. However, if the company does not produce any units, it will not have any
variable costs for producing the mugs.
And the same company has a fixed cost of $10,000 per month to rent the machine it uses to produce
mugs. If the company does not produce any mugs for the month, it would still need to pay $10,000
for the cost of renting the machine. On the other hand, if it produces one million mugs, its fixed
cost remains the same.
From upper explanation we can say that the variable cost per unit varies with output,
whereas the fixed cost per unit is constant.
For each cost, indicate whether it would most likely be classified as direct labor, direct materials,
manufacturing overhead, selling, or an administrative cost.
1.
2.
3.
4.
5.
6.
7.
8.
The cost of a hard drive installed in a computer.
The cost of advertising in the Puget Sound Computer User newspaper.
The wages of employees who assemble computers from components.
Sales commissions paid to the company’s salespeople.
The wages of the assembly shop’s supervisor.
The wages of the company’s accountant.
Depreciation on equipment used to test assembled computers before release to customers.
Rent on the facility in the industrial park.
Answer :
1.
2.
3.
4.
5.
6.
7.
8.
Direct material cost
Selling cost
Direct Labor cost
Selling cost
Manufacturing overhead cost
Administrative cost
Manufacturing overhead cost
Selling cost, Manufacturing overhead cost
Cost Behavior: Analysis and Use: Problem 5. 17 (Page 223), Requirements
2, 3. 4
CVP analysis : Problem : 6.19 (page 268) ), Requirements 1, 2, 3. 4, 5.
Variable and absorption costing : 7.17