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Leadstar College of Management and Leadership
Managerial Accounting (MBA-511)
Tutor Marked Project Assignment
Attempt each of the following questions according to their respective instructions and
provide detailed explanations and show all the necessary computations as needed.
The assignment should be only completed individually and copying from others
Assignment submission format: Assignment must be submitted in both hard copy and in
soft copy. The soft copy should be e-mailed to firstname.lastname@example.org.
Assignment due date: Final exam date
1. Gafat Engineering Ethio Plc manufactures two types of TV sets ? LCD and CRT ? both
having only one model. The LCD and CRT television sets sell for Br 9,000 and Br5,000,
respectively. The company sells its products through its own stores and other outlets. Total
fixed expenses are Br15,000,000 per month. Variable expenses and monthly sales data are
Monthly sales in units
Required: (unless stated figures should be computed for one month)
a) Determine breakeven total volume of sales and sales volume for each product.
b) Determine sales volume and sales revenue for the company to earn Br500,000 profit after
30% profit tax.
c) The company has planned to incur Br 200,000 monthly selling (promotional) expenses to
increase sales volume for its LCD TV sets to 4,000. If the plan materializes and other
things remain constant, determine breakeven sales volume and sales revenue for the
d) The company has planned to buy new and improved technology that reduces variable
production expenses for its LCD TV set to Br4,000 while increasing its monthly fixed
production costs by Br500,000. If the plan materializes and other things remain constant,
determine breakeven sales volume and sales revenue for the company.
e) If the company is guaranteed with total sales volume of 10,000 TV sets in a given month,
should it go for option ?c? or ?d? above given that sales mix remained constant as
provided in each of the two options? Why? What if the guaranteed total sales volume of
7,000 instead of 10,000? Why? What should be the guaranteed total sales volume for the
two options to provide equal profit to the company?
2. Sino-woodworks Ethiopia Ltd makes office furniture from fine hardwoods. The company
uses a job-order costing system and predetermined overhead rates to apply manufacturing
overhead cost to jobs. The predetermined overhead rate in the Preparation Department is
based on machine-hours, and the rate in the Fabrication Department is based on direct
materials cost. At the beginning of the year, the company?s management made the following
estimates for the year:
Job-C was started on April 1 and completed on May 12. The company?s cost records show
the following information concerning the job:
a) Compute the predetermined overhead rate used during the year in the Preparation and
b) Compute the total overhead cost applied to Job-C.
c) What would be the total cost recorded for Job-C? If the job contained 25 units, what
would be the unit product cost?
d) At the end of the year, the records of the company revealed the following actual cost and
operating data for all jobs worked on during the year:
What was the amount of under-applied or over-applied overhead in each department at
the end of the year?
3. Sino-electronics East-Africa Ltd manufactures electric meters for sale to its African and
Middle-East customers. The product goes through three departments. The following
information is available for the first department during June, 2014.
Required: Assume that the company uses the weighted-average process costing.
a) Determine the equivalent units for June for the first process.
b) Compute the costs per equivalent unit for June for the first process.
c) Determine the total cost of ending work in process inventory and the total cost of units
transferred to the second process in June.
d) Reconcile the total costs assigned to the ending work in process inventory and the units
transferred out with the costs in beginning inventory and costs added during the period.
4. Sino-Afro Electronics manufactures different optical switch for networking uses in different
industries. During 2013, the company completed an order for a special optical switch for a
new customer, Ethio-telecom. This customer did not order any other products during the
year. Data concerning that order follow:
Data related to Ethio-telecom order
Direct labor hours
Direct labor rate
$295 per unit
$264 per unit
0.50 hrs per unit
$25 per direct labor hr
Currently, the company is concerned whether to accept this special order, thus, contracts your
professional advice. The company traditionally uses direct labor hours to allocate
manufacturing overhead costs. Total direct labor hours was estimated to be 20,000 in 2013.
Other operating data for the year 2013 is provided in the following table. Note that 80% of
the overhead costs are related to production while the remaining 20% are selling and
a) Shall the company accept the special order if the traditional costing system is in use?
b) Shall the company accept the special order if activity-based costing system is in use?
c) Does the costing system affect your advice regarding acceptance of the special order?