Module 1. Management Accounting Information and costs in Decision making
Assignment* (MO 1, 2, & 3) – Use Excel to answer this Assignment
(20 points)
Exercises 1-10 – Page 7 (3 points)
Consider the descriptions of management accounting provided in the textbook (chapter 1).
Discuss why the associated responsibilities are viewed as “accounting" and how people handling
those responsibilities interface with other functional areas in fulfilling the stated responsibilities.
What skills and knowledge does one need to fulfill the responsibilities?
Management accounting is considered “accounting” because it is deeply involved in finance,
such as pricing and budgeting. Using relevant information, management accounting helps
business leaders make decisions and effectively manage operations. Some examples of
management accounting information are the reported expense of an operating department and the
cost of producing a product.
There are several essential skills for management accounting. First of all, a management
accountant needs financial analysis and cost accounting skills. He/she needs to be an expert in
making financial reports and statements. Secondly, A management accountant needs to have
extensive knowledge of the business. He/she must be fully aware of the current state of the
company and anticipate future changes. Lastly, management accounting provides useful
information to managers and employees for decision-making, devising planning, allocating
resources, and so on. Therefore, outstanding communication skills are also critical for this role.
Exercises 2-21 – Page 25 (question a and b) (4 points)
This production data was recorded during the last quarter of operations at Metal Company.
Week
1
2
3
4
5
6
7
*
Unit
Produced
1,692
1,330
1,559
1,633
1.432
1,572
1,372
Machine
Hours
4,153
2,529
3,184
3,531
2.893
2,282
2,955
Provide you Answer in an Excel file that you create and Upload to Canvas
8
9
10
11
12
1.433
1,795
1,464
1,723
1,278
3,016
4,200
2,772
2,166
2,507
Required
a) Plot machine hours versus units produced.
b) Estimate the number of machine hours per unit of production using the high-low method.
Exercises 2-24 – Page 26 (3 points)
Group Company produces a single product with the following per-unit attributes: price. $10;
variable material cost. $2; variable direct labor cost. $3; variable manufacturing overhead, $1.50;
and fixed manufacturing overhead, $1.50. Total fixed costs at Group Company are $5,000,000.
How many units must Group Company sell to break even?
Exercises 2-25 – Page 26 (4 points)
Event Company produces a single product with the following characteristics: price per unit,
$25.00; variable material cost per unit, $8.60; variable labor cost per unit, $3.60; variable
overhead cost per unit, $1.80; and fixed overhead cost per unit, $2.00. Event Company's
manufacturing fixed costs are $5 million, and selling, general, and administration fixed costs are
$2.5 million. What dollar sales are required for Event Company to earn a target profit of
$500,000?
Exercises 2-51 – Page 32 (6 points)
The following information pertains to Torasic Company’s budgeted income statement for the
month of June:
Sales (1,200 units at $250)
Variable cost
Contribution margin
Fixed cost
Net loss
$300,000
150,000
150,000
200,000
$(50,000)
Required
a) Determine the company’s breakeven point in both units and dollars.
b) The sales manager believes that a $22,500 increase in the monthly advertising expenses
will result in a considerable increase in sales. How much of an increase in sales must
result from increased advertising in order to break even on the additional monthly
expenditure?
c) The sales manager believes that an advertising expenditure increase of $22,500 coupled
with a 10% reduction in the selling price will double the sales quantity. Determine the net
income (or loss) if the company adopts these proposed changes.