# Managerial Accounting

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```					                              Managerial Accounting

Problem 4 from Cost of goods manufactured and cost of goods sold

A company produces 250 grams loafs of bread. The costs registered for 1,000 kilos are
given below:
      raw materials expense: 6,000 mu;
      supplies: 500 mu, of which:
o              used in the production area: 400 mu;
o              used in the administrative area: 100 mu;
      heating expense: 1,500 mu. The building has a total surface of 100 m2, of which:
o              production area: 40 m2;
o              offices: 60 m2;
      light expenses: 500 mu. The production area has 20 lamps of 100W while the offices
have 15 lamps with a 200 W power/lamp;
      the wages expenses: 15,000 mu, of which:
o              direct labor: 5,000 mu;
o              salespersons wages: 2,000 mu;
      social security: 40% of the wages;
      depreciation expenses: 9,000 mu:
o equipment: 1,000 mu;
o buildings: 5,000 mu;
o cars: 3,000 mu:
 manager’s car: 1,000 mu;
 salesperson’s car: 2,000 mu;
Required:
1. Compute the production cost, the full cost and the minimum selling price that the
company should use for one bread in order to obtain profit;
2. Prepare the income statement knowing that the selling price for one bread is 10 mu
and that during the month the company has produced and sold 4,000 breads.
Number                         Element                                  Total
1                         Raw materials                            6,000 m.u.
2                         Direct labour                            5,000 m.u.
Social security (40% of wages)              40% x 5000 = 2,000 m.u.
3 (1+2)                    Direct Costs                    2000+5000+6000 = 13,000 m.u.
- Supplies in production area;                              400 m.u.
- Heating expenses (prod. area); OAR =
= 15                                             15 x 40 = 600 m.u.
- Light expenses (prod. area);
0.1 x 20 x 100 = 200 m.u.
OAR =                  = 0.1
- Depreciation expenses (equipment);                       1,000 m.u.
- Total                                         1000+200+600+400 = 2,200 m.u.
5 (4+3)            Cost of goods manufactured                 2200+13000 = 15,200 m.u.
- Supplies in administrative area;                          100 m.u.
- Heating expenses(offices);
OAR =          = 15                                    15x60 = 900 m.u.
-Light expenses(offices)
0.1x15x200 = 300 m.u.
OAR =                  = 0.1
- Wages expenses(admin. wages);                           8,000 m.u.
- Social security ( 40% of wages);                  40% x 8000 = 3,200 m.u.
- Depreciation expenses:
o Buildings                                          5,000 m.u.
o Manager’s car                                      1,000 m.u.
- Total                                     1000+5000+3200+8000+300+900+100 =
18,500 m.u.
- Wages expenses(salespersons wages);                          2,000 m.u.
- Social security (40% of wages);                        40% x 2000 = 800 m.u.
- Depreciation expenses(salespersons car);                     2,000 m.u.
- Total                                          3000+2000+800+2000 = 7,800 m.u.
8 (5+6+7)                 Cost of goods sold                   15200+18500+7800 = 41,500 m.u.
1. Production cost = 15,200 m.u.
Full cost = 41,500 m.u.
One bread has 250g, and the cost registered for 1,000 kilos is 41,500 m.u.
1 kg has 1,000 grams, so 1,000 kg have 1,000,000 grams
 1,000,000 grams .............. 41,500 m.u.
250 grams ...............   x
 x = 10.375 (total cost for one bread)
The minimum selling price in order to obtain profit should be over 10.375 m.u./loaf

2. The income statement : Total revenues = 10 m.u. x 4000 = 40,000 m.u.
Total costs = 41,500 m.u.
 So, we have a net loss of 1,500 m.u.

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 views: 46 posted: 7/30/2012 language: pages: 2