Management Accounting Assignment On Connectta

Task: Management Accounting Problem: Connectta Ltd manufactures furniture for computer work stations. Connectta uses a job costing system. The work in process inventory on 30 November consisted of the following jobs. Job. No. Description Units Total cost CC723 Computer caddy 20 000 $ 900 000 CH291 Chair 15 000 431 000 PS812 Printer stand 25 000 250 000 Total $1 581 000 On 30 November, the company’s finished goods inventory consisted of four items. Item Quantity and unit cost Total cost Computer caddy 7 500 units @ $64 each $ 480 000 Chair 19 400 units @ $35 each 679 000 Printer stand 21 000 units @ $55 each 1 155 000 Desk 11 200 units @ $102 each 1 142 400 Total $3 456 400 At the end of November, the balance in Connectta’s materials inventory account, which includes both raw materials and purchased parts, was $668 000. Additions to and requisitions from the materials inventory during December included the following. Additions and requisitions Raw materials Purchased parts Additions $242 000 $396 000 Requisitions: Job CC723 51 000 104 000 Job CH291 3 000 10 800 Job PS812 124 000 87 000 Job DS444(5000 desks) 65 000 187 000 Connectta applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totalled $4 500 000. The company planned to use 900 000 machine hours during this period, which is the firm’s estimated practical capacity. Through the first 11 months of the year, a total of 830 000 machine hours were used, and actual manufacturing overhead amounted to $4 140 000. During December, machine hours and labour hours consisted of the following: Account Machine hours Labour hours Labour cost CC723 12 000 11 600 $122 400 CH291 4 400 3 600 43 200 PS812 19 500 14 300 200 500 DS444 14 000 12 500 138 000 Indirect labour - 3 000 29 400 Supervision - - 57 600 Total 49 900 45 000 $591 100 The jobs completed in December and the unit sales for that month are as follows: Job No. Production items Quantity completed items Quantity shipped CC723 Computer caddy 20 000 Computer caddy 17 500 CH291 Chair 15 000 Chair 21 000 DS444 Desk 5 000 Printer stand 18 000 Desk 6 000 Required: Describe when it is appropriate for a company to use a job costing system. Calculate the balance in Connectta’s work in process inventory account as at 31 December. Calculate the cost of the chairs in Connectta’s finished goods inventory as at 31 December. Actual manufacturing overhead incurred in December amounted to $252 000. Calculate Connectta’s overapplied or underapplied overhead for the year. Explain two alternative accounting treatments for overapplied or underapplied overhead balances when using job costing system. Explain how activity-based costing could overcome the deficiencies inherent in the existing costing system. Task details: Students are to analyse the given information, make calculations where relevant and draw relevant, supported conclusions and make justified recommendations. Responses are to be formatted into a professional report for each part of each question, as would be expected of someone working in a modern accountant’s office. The report should include: title page, executive summary, table of contents, introduction, body, conclusion and reference list.

Subject Name: Accounting

Level: Postgraduate

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