ISTANBUL UNIVERSITY
Faculty of Economics
December 29, 2009
11.30 – 13.00
MANAGERIAL ACCOUNTING
Q.1. BJK Company produces and sells three products (B, J and K). Unit selling price is 8 TL for B, 5
TL for J and 4 TL for K.. Variable costing income statements for the three products follow:
B
J
K
Sales
160.000
120.000
120.000
Less: Variable expenses
112.000
84.000
96.000
Contribution margin
48.000
36.000
24.000
Less: Fixed costs*
25.600
21.200
25.200
Profit Before Tax
22.400
14.800
-1.200
* This includes common fixed costs totaling 24.000 TL, allocated to each product in proportion to its
revenue.
The owner of the company is concerned about the profit performance of Product K and is considering
dropping it. If the product is dropped, sales of Product B will remain same, but sales of Product J will
increase by 10 percent.
REQUIRED: a. Prepare segmented income statements for the three products using a better format.
b. Should Product K be dropped?
c. Calculate break even point.
Q.2.
BJK Company has the following standard unit cost data for one of its product:
Direct materials
Direct labors
Variable overhead
Fixed overhead
Standard Quantity
2 kg
0,5 hrs
0,5 hrs
0,5 hrs
Following information is available:
Actual fixed overhead: 8.000 TL
Direct material price variance: ?
Fixed overhead volume variance : 1.500 F
Variable overhead efficiency variance: ?
Variable overhead spending variance: 300 U
Fixed overhead spending variance: ?
Fixed overhead total variance: 0 (zero)
Direct labor rate variance: ?
Direct material actual price: 5,20 TL
Direct labor efficiency variance: ?
Direct material usage variance 1.250 F
Actual direct labor ( 3.000 hours): 28.500 TL
REQUIRED: Find the missing data.
Standard Price (Rate)
5 TL
10 TL
4 TL
2,5 TL
Q.3. Black Eagle Company produces and sells one product. The following information pertains to the
company:
Unit selling price
:
60 TL
Total fixed overhead
: 27.000 TL
Variable selling and administrative expenses
: % 5 of sales revenue
Direct labor cost
: 10.800 TL
Fixed selling and administrative expenses
:
6.960 TL
Beginning inventory
:
120 units
Variable overhead
: 14.400 TL
Production
:
1.800 units
Direct material cost
: 25.200 TL
Ending inventory
:
20 units
There were no beginning and ending work in process inventories. The company uses FIFO method for
finished goods inventory. The value of cost of goods sold is calculated 81.340 TL under absorption
costing.
REQUIRED: Assume that unit cost of beginning inventory is same for both variable and absorption
costing. Prepare variable income statement using weighted average method for the company.
Q.4.
Black &White Company produces and sells two products (Product A and Product B). In the fall
of 2008 the controller of the company, compiled the following data:
a. Use of direct material
Materials
X
Y
Z
Product A
4 kg
2m
-
Product B
5 kg
3m
1 unit
Expected
Inventories
January 01, 2009
32.000 kg
29.000 m
6.000 units
Desired
Inventories
December 31, 2009
36.000 kg
32.000 m
7.000 units
Hours per Unit
2 hrs
3 hrs
Rate per Hour
15 TL
20 TL
Expected
Inventories
January 01, 2009
20.000
8.000
Desired
Inventories
December 31, 2009
25.000
9.000
Units
60.000
40.000
Price
70 TL
100 TL
b. Direct material prices and inventory levels:
Materials
X
Y
Z
Anticipated
Purchase Price
8 TL
5 TL
3 TL
c. Direct labor requirements and rates:
Products
A
B
d. Finished good inventories (in units):
Products
A
B
e. Sales forecast for 2009:
Products
A
B
REQUIRED: Prepared the following budgets for 2009.
1. Direct material purchase budget.
2. Budgeted finished goods inventory on December 31, 2009 (in TL)