Summary
Summary - Management Accounting (HBA17)
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A summary of all the cases filled out during class and the extra ones. With the formulas.
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Cases chapter 2CASE 1
1. Calculate the full cost
A) Direct material cost (raw materials)
Beginning inventory
+ purchase
-ending inventory
B) Direct labour cost
C) Production overhead
Depreciation
+ Supervisor
+ Various production costs
+ Electricity
+ Indirect labour production
D) Work in progress
Beginning inventory
-Ending inventory
FULL COST
2. Calculate the costs of goods sold
Beginning inventory finished products
+ full production cost =COGM (full cost previous Q)
-ending inventory finished products
3. Make a simplified income statement
Revenues
-COGS
=gross margin/ gross profit
-operating (period) costs
=profit/loss
Case 2
4. Determine the value of the closing stock of finished goods at the end of the fiscal
year + Calculate the cost of goods sold
Value of closing stock= number of units in closing stock * full cost/unit
COGS= number of units sold * full cost/unit
5. If the production were to increase to 23000 units next fiscal year and the general
cost pattern remains unchanged, what will be the effect on:
A) DMC/ unit of 35 EUR?
DMC= variable cost
Variable cost/unit doesn’t change when production volume changes
TOTAL DMC increases!
B) Fixed production overhead of 400000 EUR? $
Production overhead= fixed cost
, Total fixed cost doesn’t change when production volume changes within
existing capacity level
Fixed overhead/ unit decreases
Case 3
6. Calculate the value of the closing stock of direct materials on December 31, 20x7
A) #DM/unit (given); 2kg
DMC (given); 140 000 EUR
How many kg used in production, calculate price per kg
Closing stock direct materials (given); 2000 kg * DMC/kg= value of closing stock
7. Calculate the closing tock of finished products expressed in units
B) “closing stock of finished products is valued at the average production costs of
20x7”
Value closing stock finished products (given); 20970 EUR/ production cost/unit=
# units in closing stock
8. Calculate the USP
C) Sales (given); 436 800 EUR/ #units sold= USP
9. Calculate the operating income of 20x7 according to full costing
D) Revenues (given)
-COGS
=gross margin/ gross profit
-operating (period) costs
=profit/ loss
Cases chapter 3
Case 1
1. Calculate the contribution margin-ratio for the type SUN
UCM
A) CM%=
USP
2. If the company is aiming for a net profit after tax of EUR 33 120, how many pairs of
SUN skis have to be sold?
FC +TNI /(1−t)
B) BEQT=
UCM
3. Suppose that the variable cost per unit of SUN skis decreases by 10% and the fixed
costs of SUN skis increase by 10%. Calculate the new break-even point (in units sold)
FC
C) Q=
UCM
EXAM
4. You are a cost accountant at IKS. The marketing manager asks you which type of ski
the company should sell: SKY or SUN. what is your suggestion? Show your
calculations.
Even though SKY is more profitable/ unit sold, SUN will be more profitable in
total bcs there is insufficient demand for SKY. Demand is lower than the
, break-even quantity. However, even when producing and selling SUN profit
will be low
Case 2
1. How many drones does DRONE NV have to sell in order to break-even?
FC
A) Q=
UCM
2. How many units would have to be sold for the company to make a profit of EUR 2
500 000 (before taxes)?
FC +TOI
B) Q T=
UCM
3. What profit would the company make if it succeeded in reducing variable costs by 5
% while sales remained constant and fixed costs decreased to EUR 2 800 000?
C) sales (USP*Q) – variable costs (UVC*Q)- fixed costs= profit
4. Suppose that DRONE wants to make a profit of EUR 2 500 000 (before tax), but the
market is so saturated that sales cannot be increased. As a result, the company will
have to adjust its sales price, assuming that this is possible without loss of sales. How
much should the sales price be for the company to realize a profit of EUR 2 500 000
on sales of 15 000 units?
D) Q= (FC+TP)/ (USP- UVC)
Or sales (Q*X) – variable costs (UVC*Q)- fixed costs= profit
5. Management is considering expanding the production capacity, which would entail
additional fixed costs of EUR 600 000 on an annual basis. How many extra drones (on
top of the 15 000 it currently sells does the company have to sell in order to maintain
the current profit?
E) Q=(FC+TP) /UCM
Case 3
1. What is the break-even point of RIEDU in number of units sold?
A) Q=FC/ weighted average UCM
1) UCM= USP – UVC
2) Sales mix (in %): expected demand/ total expected demand
UCM*sales mix
3) Weighted average UCM= sum of UCM* sales mix
4) Q (combined)= FC/ weighted average UCM
5) Q (for each type)= Q (combined) * sales mix
2. What is the break-even point of RIEDU in turnover?
A) Turnover= Q (for each type) * USP
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