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Werkcolleges Management Accounting
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Alle werkcolleges van het vak Management Accounting, gegeven in het tweede jaar van de studie Bedrijfseconomie.
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Werkcolleges Management Accounting 2019Bevat de werkcolleges 2 t/m 9
324066-B-6-2018-SM2
,Management Accounting: Case 2
Company “VAN GENT BV” produces premium luxury yachts for wealthy private individuals. Although
a small-scale enterprise, VAN GENT is famous for manufacturing unique and custom-made yachts
spanning more than 40 meters in length. In other words, the competitive advantage of the company’s
business model is the uniqueness of its product which, in turn, allows the company to command much
steeper prices than its competitors can match. The manufacturing process starts in division
“FORMING” where wood is processed and formed into the yacht’s hull. Division “FINISHING” receives
the output from FORMING and processes the yacht hulls into custom yachts.
PROBLEM 1:
As of this year (2017) you are head of the FORMING division. In this stage of production, wood is
shaped into a yacht’s hull. As there is no uniqueness in the process of wood shaping, FORMING
applies the process costing approach to determine cost per hull.
The division is treated as a cost center and your compensation is linked to cost reduction. You receive
a $10,000 bonus if costs do not exceed $100,000 per unit of finished goods and an additional $10,000
bonus if costs are lower than $85,000 per unit of finished goods. The 2017 costs are as follows:
Questions:
a. Compute the total cost for FORMING and assign them to completed units and to WIP using
the weighted average method.
Weighted average method; calculates the equivalent unit costs of the work done to date
regardless of the period in which it was done
Step 1:
Opening WIP 5
Started this period 10+
To account 15
Step 2:
Direct material ($) Conversion costs ($)
Transferred out 14 14
WIP Closing 1+ 0.4 (40% x 1) +
Work done in equivalent units 15 14.4 (work done to date)
Step 3:
Direct material ($) Conversion costs ($)
Total incurred costs to date $550.000 $700.000
WD in units : 15 : 14.4
Equivalent unit costs $36.667 $48.611
,Berekening kosten voor Conversion costs:
Begin $500.000 met betrekking op? Eind
5 stuks 20% 5 stuks 80% gereed maken 14 stuks 100% gereed
gereed
$200.000 9 stuks 100% gereed maken 1 stuks 40% gereed
1 stuk 40% gereed maken
1 stuk gereed + 13,4 stuks gereed = 14.4 gereed
Step 4:
Total cost: $1.250.000
Step 5:
Direct material ($) Conversion costs ($)
Cost of completing units $513.333 (14 x $36.667) $680.556 (14 x $48.611)
Cost of ending WIP $36.667 $19.444 (40% x $48.611)
Cost of goods completed = $513.333 + $680.556 = $1.193.889
Cost of goods in WIP = $36.667 + $19.444 = $56.111
Total cost = $1.250.000
b. Calculate the costs per unit. How much bonus will you receive?
Equivalent unit costs = $36.667 + $48.611 = $85.278 → Bonus = $10.000
c. Were all costs incorporated in the cost per unit calculation (b) under your control?
Nee, voor alleen het eerste product is $200.000 (beginkosten voor Conversion Costs) nodig en dit
heeft de manager voor jou geregeld. Dit om voor zichzelf een betere uitgangspositie te hebben voor
zijn bonus. Je bent zelf verantwoordelijk voor $500.000 over meerdere units.
The “degree of completion”-assumptions for the work in progress at the beginning and end of the
year were communicated to you by your production manager.
d. Do you believe they were estimated reasonably at the beginning of the year?
Begin: Equivalent/Unit = $200. unit = $200.000 Eq/Unit
Eind: Equivalent/Unit = $500/.4 units = $37.313 Eq/Unit
➔ Nee!
e. You have the final decision over the “degree of completion”-assumption at the end of the
year. Can you change the assumption to influence your bonus for the year?
- Niet bij material
- CC: degree of completion verhogen
→ WIP degree verhogen tot 49%, hierdoor cost/unit < 85.000 → Extra bonus.
Material Conversion
Proof: $550. + $700.000 / X < 85.000 → X > 14.49 → 0.49 = 49%
, PROBLEM 2:
As you are on a job rotation program, suppose the next year (2018) you are heading to the FINISHING
division. At this stage of VAN GENT’s production process, each yacht is finished as desired by the
client. Therefore, unlike FORMING, the FINISHING division uses the job-costing approach. FINISHING is
divided into two departments: (1) assembly, in which the deckhouse, engine and interior is assembled,
and (2) decoration, in which the full yacht is furnished, painted and finished.
The operations budget of the FINISHING division for the upcoming period is as follows:
Direct material (DM) and direct labor (DL) costs are allocated to yacht output. Manufacturing
overheads (MNF OH) of the assembly department are allocated using actual direct labor hours, and
manufacturing overheads of the decoration department are allocated using the number of material
orders.
Questions:
a. Present an overview diagram of the FINISHING division’s job-costing system.
b. What is the budgeted overhead rate used in each of the two departments?
Manufacturing overhead costs of assembly department are allocated using actual direct labor hours,
and Manufacturing overhead costs of decorating are allocated by using number of material orders.
Assembly: $2000..000 hours = $40 per direct labor hour
Decorating: $2.400. orders= $800 per direct material order
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