lOMoARcPSD|40079253
Exam Version 1 man acc - esame sample
Management Accounting (Università Cattolica del Sacro Cuore)
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Scaricato da Maria Sole Dal Ferro (dalferromariasole@gmail.com)
lOMoARcPSD|40079253
Course of Management Accounting
Midterm exam (February 8th, 2023) - No. 1
Questi on 1 (6 poi nts)
Explain variable cost and fixed cost behavior (both total and unit costs) using graphs for your answer.
In your answer explain also why it is important to consider a relevant range for both variable and fixed
costs.
Questi on 2 (6 poi nts)
Explain what the step-down allocation method is and how it works in contrast to the direct method.
Questi on 3 (20 poi nts)
Mr. Pedrotti, CEO of Beretta Heating & Air Conditioning, was analyzing the budgeting data regarding
the Hot water Division where two main types of water heater are produced: the Comfort model (equipped
with a water tank) and the Fit-In-Anywhere model (tankless). All component parts are produced internally
except for the electronic board which is regularly provided by a subcontractor and then assembled by
the Beretta Company itself. Following the available information for a representative month:
Requi rements
1) Assuming that the sales mix remains constant, compute a) the break-even point in number of
units of each of the two products for a representative month; b) the monthly degree of operating
leverage of the Division, explaining its meaning. (6 points)
2) Mr. Pedrotti is considering dropping the Fit-In-Anywhere product line which is showing a
declining profit. In case the line is dropped, only 15,000 € included in the monthly Depreciation
and other fixed expenses could be avoided. Should Mr. Pedrotti drop? Discuss your answer. (4
points)
3) Mr. Pedrotti is also considering outsourcing the production of Fit-In-Anywhere model to improve
the production of the Comfort model by 13 units each month. Another Company offered Beretta
to sell the Fit-In-Anywhere model at a unit price of 2,000 €. In case the Fit-In-Anywhere is
outsourced: a) the assembly direct labor of the Fit-In-Anywhere will not be avoided as Beretta
will still take care of the assembly activity only; b) the electronic board will be provided by the
external Company and its cost is included in the selling price offered; c) 3,000 € of monthly
production supervisory costs could be avoided. Should Mr. Pedrotti decide to outsource?
Discuss your answer. (6 points)
4) Compute the total monthly and the per unit Cost of Goods Sold of the Fit-In-Anywhere product
line, knowing that the accounting system allocates the indirect manufacturing costs (Production
supervisors and Depreciation and other fixed expenses) using the assembly direct labor hours,
and the divisional general expenses, which are mainly administrative employee salaries, using
the sales revenues. (4 points)
Scaricato da Maria Sole Dal Ferro (dalferromariasole@gmail.com)