Managerial accounting 4 | Accounting homework help



Managerial Accounting focuses heavily on finding solutions to numerical problems.  With that in mind, most units will include a number of problems. For each problem, you will need to provide more than a simple numerical response. Your solutions should thoroughly address the issue and present the findings in a meaningful format similar to those developed within the chapters and as part of the review exercises solutions. Part value may be assigned for incorrect responses.

Question 1: (40 marks)

Stark and Company would like to evaluate one of the product lines that they sell to the defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month.

Selling price


Units in beginning inventory


Units produced


Units sold


Units in ending inventory


Variable costs per unit:

Direct materials


Direct labour


Variable manufacturing overhead


Variable selling and administrative


Fixed costs:

Fixed manufacturing overhead


Fixed selling and administrative



1)     Under variable costing, identify the unit product cost for the month.

2)     What is the unit product cost for the month under absorption costing?

3)     Prepare an income statement for the month using the contribution format and the variable costing method.

4)     Prepare an income statement for the month using the absorption costing method.

Question 2: (12 marks)

The following information pertains to Death Star Corporation for a period:

Selling price per unit


Standard fixed manufacturing costs per unit


Variable selling and administrative costs per unit


Fixed selling and administrative cost per unit


Beginning inventories:



     Standard fixed manufacturing cost


     Standard variable manufacturing cost


     Units produced


     Units sold



1)     Assume the unit standard costs data for the beginning and ending inventories remained constant during the period. What was the total standard cost of the ending inventory under absorption costing?

Question 3: (30 marks)

DC and Marvel would like to evaluate one of the product lines that they sell to defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month.

Selling price



Units in beginning inventory



Units produced



Units sold



Variable costs per unit:

     Direct materials



     Direct labour



     Variable manufacturing overhead



     Variable selling and administrative



Fixed costs:

     Fixed manufacturing overhead



     Fixed selling and administrative




1)     Compute the total Contribution Margin.

2)     Compute the Operating Income under Variable Costing.

3)     Prepare a reconciliation from your Variable Costing Operating Income to compute Operating Income under absorption costing. 

Question 4: (18 marks)

Stark and Company’s has following cost data:

Systems development


Final product testing and inspection

$1 2,000

Quality data gathering, analysis, and reporting

$ 9,000

Net cost of scrap


Returns arising from quality problems


Amortization of test equipment


Rework labour and overhead


Test and inspection of incoming materials


Product recalls



1)     Determine the prevention cost?

2)     Determine Total appraisal cost?

3)     Determine the total internal failure?

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