Anoosha Lalani

260605495

ACCT 361 MANAGEMENT ACCOUNTING

FALL 2015
ASSIGNMENT 1
1) The controller is a critical component in regard to introducing a Balanced
Scorecard as this involves looking into all aspects of a companys
activities and seeking to integrate them into a cohesive manner that can
focus on corporate goals and thus examine how best to balance the
achievement of nonfinancial targets, such as customer service and
improved expertise. The controller is responsible for providing financial
information for internal reports to managers (as well as external reports to
investors) and overseeing the overall operation of the accounting system.
He or she will also interpret relevant data and thereby exert a force or
influence that impels management to making better informed decisions.
Therefore, the controller is an important member that should be present
when deciding to introduce a Balanced Scorecard.
2)

a) It is ethical to evaluate managers in the way described as the first

type of accounting would be considered financial accounting because
it focuses on reporting to external parties in a standardized format
(GAAP) while the second type of accounting is management
accounting, focusing on reporting to internal parties. The purpose of
this second type accounting is to help make decisions that fulfill
organizations goals in regard to quality control, safety and
environmental pollution. The primary users will also be managers and
since they will be compensated for good work through merit pay and
promotion, it is designed to influence their behavior.
b) One safeguard that the company can build into its system is that
when preparing financial reports or statements, to acquire sufficient
information to warrant an expression of opinion. A second safeguard
may be to report all misstatements or departure from generally
accepted accounting principles.

3)
Variable Costs
Variable Materials
Variable Labour (32 x 4.75)
Variable Manufacturing Overhead
((120/4)
x 4.75) and Administrative
Selling, General
Expenses
Fixed
Costs
Manufacturing Overhead

550
152
142.5
50
360

Anoosha Lalani
260605495

Selling, General and Administrative

Expenses
Total Cost per Laptop

150
1404.5

He still has labour hours left and can make normal computers. This is
shown with calculations below:
Total Labour Hour Available prior to order: 10,000 x 4 = 40,000
Total Labour Hours Available After Zucchini computer order: 40,000
2,000 x 4.75= 30,500
Total Normal Computers that can be made: 30,500/4= 7,625
Total Profit on Normal Computers: 7,625 x 192 = 1,464,000
Profit that should be charged on newly ordered computers: (1,920,000
1,464,000)/ 20000 = 228
a) To breakeven, Culpepper has to charge at least $1404.5 but to make
the same profit as he does when making 10,000 laptops, he should
charge Zucchini $1632.5(228 + 1404.5).
b) Culpepper needs to consider the fact that he has to forego a certain
number of normal computer sales when he completes the order for
Zucchini Computers. He needs to make sure he has materials
available. He has to be sure that the extra costs attached to this order
are not too high and that workers can be easily trained to create the
new computer.
4)
a) Breakeven Point Calculation
Total Revenues Total Variable Cost Fixed Costs = Operating Income
900,000 495,000 247,500 = 0perating Income
500Q 275Q 247,500 = 0
Where Q is quantity and Operating income is 0.
225Q 247500 = 0
Q = 1100 tonnes
b)
Sales (500 x 2100)
Variable Costs (275 x 2100)
Contribution Margin
Fixed Costs
Manufacturing
Selling

$1,050,0
00
577,500
472,500
90,000
112,500

Anoosha Lalani
260605495

Administration
Income Before Taxes
Income taxes @ 40%
Net Income

45,000
225,000
90,000
$135,00
0

c) 500Q 275Q 25Q 247,500 61,500 0.4(500Q 275Q 25Q

247,500 61,500)= 94,500
200Q 309,000 0.4(200Q 309,000) = 94,500
200Q 309,000 80Q + 123,600 = 94,500
120Q = 279,900
Q = 2,332.5
d) 500Q 250Q 247,500 = 0
Where Q is quantity and Operating income is 0.
250Q 247,500 = 0
Q = 990 tonnes
e) 450Q 315Q 247,500 0.4 (450Q 315Q 247,500) = 94,500
135Q 247,500 54Q + 99,000 = 94,500
81Q = 243,000
Q = 3,000
Sales Volume: 3,000 x 450 = 1,350,000
5)
a)
Sales Revenue( 3 x 2000)
Direct Costs Related to Buildings
Cleaning Solution(32 x 2.5 x 3)
Motel Expense (85 x 3 x 3)
Meals (75 x 3 x 3)
Wages (3 x 10 x 32 x 3)
Operating Income

$6,000
240
765
675
2,880
$1,440

He should complete these 3 jobs offered as they are creating operating

profit.
b) If he decides to expand operation into this new area, he must consider
the costs of transportation and worksite supervisor salary, which has
not been taken into account. Power for pressure washing equipment
may also not always be supplied by the owners. These aspects may
increase cost and as a result, he may no longer make a profit. For this
reason, a higher price should be charged.

Anoosha Lalani
260605495