HI5017 Tik Tok Company Analysis Assignment Sample

• Subject Code : HI5017
• University : Holmes Institute My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Accounting and Finance

Managerial Accounting - Question 2 - Week 3

Solution –

Direct materials = $22800

Direct labour hours = 600

Direct labour rate per hour = $16

Direct labour cost = 600 * $16 = $9600

Machine hours used = 400

Applied factory overhead rate per machine hour = $30

Total factory overhead = 400 * $30 = $12000

1. Total manufacturing cost for Job No. X10 = Direct labour cost + Direct materials cost + factory overhead

Total manufacturing cost = $22800 + $9600 + $12000 = $44400

1. An order for total 150 coffee tables

Cost per coffee table for Job No. X10 = $44400 / 150 = $296

1. Two uses of information regarding unit cost to the management of the company are as follows –
2. The information about the per unit cost of the product helps in undertaking effective operational analysis of the firm as it helps in specifying fixed and variable cost that are included in the product cost.
3. Price mechanism can be improved after determining the actual cost of the product as the firm cannot charge very high price or very low price. This may affect the overall profitability of the firm.

Managerial Accounting - Question 2 - Week 5

Solution –

1. Activity rates for every overhead items using four cost drivers

1. Calculation of unit cost using the activity rates

1. Calculation of gross profit

It is highly recommended that the firm must adopt activity based pricing as it will help the firm in earning profit of more than $600 per model. This model is effective in determining the accurate cost of the product after identifying the major activities concerned with the product. Under traditional costing, the product cost has been found as $1048 but using ABC method of costing, cost has been determined as $975.19. ABC method of costing is effective method to find out the cost of the product.

Managerial Accounting - Question 2 - Week 6

1. Cash receipts budget schedule

1. Material purchases budget schedule

1. Cash budget for the month of July

The payment for the materials has been made in the following month. Therefore, the payment for the material used in July has been paid in August.

Managerial Accounting - Question 2 - Week 8

1. Calculation of minimum transfer price

Variable cost per unit = $3

Shipping cost = $0.20

External selling price = $4

Contribution from external market = $4 - $3 - $0.20 = $0.80

Transfer price will be estimated on the basis of variable cost only as the Bottle Division has sufficient capacity to meet demand of units raised by Perfume Division as well as from external market.

Transfer price = Variable cost per unit incurred as goods are transferred

Transfer price = $3

Here, it would be considered beneficial for Perfume Division to initiate transfer of bottles as it can buy these bottles at the rate of $3.50 from external market.

1. If it is being assumed that Bottle Division has limited capacity and can sell off the entire produce in the external market, then transfer price would change as both variable cost and opportunity will be included in its computation.

New transfer price = Variable cost per unit + Opportunity cost foregone

New transfer price = $3 + $0.80 = $3.80

3. The maximum amount for the bottles that can be paid by the Perfume Division is $3.50 as this is the price at which it can buy them from external market.
4. Transfer price is considered as the key component of control system exercised by the management of the firm helping the firm in grabbing major objectives of minimisation of cost and maximization of profits. Easiness and transparency in operations can be better accomplished using the market based transfer pricing. Economic capability of the firm can be easily evaluated using such pricing. When the market price of any particular product is missing then cost based transfer prices can be used.

Managerial Accounting - Question 2 - Week 10

Solution –

1. Calculation of weighted average unit contribution margin

Weighted average unit contribution margin = $4640000 / 20000 = $232

1. Calculation of break even point

Annual fixed cost = $5000000

Break even point = $5000000/ $232 = 21552 units

Break even units of Alpha printer = 21552 * (12000/20000) = 12931 units

Break even units of Beta printer = 21552 * (6000/20000) = 6466 units

Break even units of Gamma printer = 21552 * (2000/20000) = 2155 units

i) Margin of safety indicates the units of sales that are beyond the break even point. This shows the amount by which the sales of the company might reduce before the firm will have no profits.

ii) Calculation of margin of safety

Given projected sales as 25000 units

Break even units = 21552 units

Margin of safety = 25000 – 21552 units = 3448 units

Managerial Accounting - Question 2 - Week 11

Solution –

1. Calculation of minimum acceptable unit price

Minimum acceptable price would be $426 per unit as lower than this price would fetch losses to the firm.

1. While setting the minimum price, variable selling and administrative charges and fixed selling and administrative costs are considered as relevant as company wants to sell the units through regular sales channels.
2. Not all future costs can be considered as relevant in decision making. Future costs alone cannot be taken as single consideration. Only those future costs that differ among the alternatives taken into consideration are regarded as relevant. Decision making process can be significantly affected by the relevant costs. The future costs that alters as per the particular alternative are considered as relevant in the decision making process.

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