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Accounting 4 Pages

Review Various Study Chapters Of ’cost Accounting’


About TMA:

The TMA covers the cost accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within chapters 1 to 5. This TMA requires you to apply the course concepts. The TMA is intended to:

  • Assess students’ understanding of key learning points within chapters 1 to 5.   
  • Increase the students’ knowledge about the reality of the cost and management accounting as a profession. 
  • Develop students’ communication skills, such as essay writing, analysis and presentation of material.
  • Develop the ability to understand and interact with the nature of the managerial accounting tools in reality.   

The TMA:

The TMA requires you to:

  1. Review various study chapters of ’Cost Accounting’ Book and apply some of the concepts within it.
  2. Conduct a simple information search using the internet.
  3. Present your findings in not more than 1,200 words (900 words for Part A and 300 words for Part B). The word count excludes headings, references, title page, and diagrams. 
  4. You should use a Microsoft Office Word and Times New Roman Font of 12 points.
  5. You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.

Criteria for Grade Distribution:

 Structure and Presentation of ideas
 Total marks
 Part A
 Part B
 Cost Accounting at Granite Enterprises 
 Job Costing for Axe Ltd. 

The TMA Questions

Part A

Cost Accounting at Granite Enterprises

Granite Enterprises has just begun manufacturing and distributing goods across GCC countries. The company has been struggling to find the cost of goods manufactured.  The company is manufacturing different stationery items using different materials.   

Product A & B of Granite Enterprises

Following are some of the details about material, labour and manufacturing costs of making per unit of Product A  & B 

(a) Cost details

 Product A
 Product B
 Cost per unit of materials
 Cost per unit of materials
 Material X
 2 pounds
 $ 3 per pound
 3 pounds
 $ 1.75 per pound
 Material Y
 4 pounds
 $ 2 per pound
 6 pounds
 $ 3.50 per pound




 3 hours
 $ 15 per hour
  5 hours
 $ 12 per hour
 Indirect Manufacturing Costs




 Indirect Materials

 $ 5 per unit of output
 (per unit of product A)

 $ 2 per unit of output 
(per unit of Product B)
 Indirect Labour
 1.5 hours
 $ 9
 1 hour
 $ 10
 Other overheads

 $ 1.8 per unit of output 
(per unit of product A)

 $ 3 per unit of output
(per unit of Product B)

The Company is also providing some cost and sales details about other three products R, S and T as below:


 Variable Cost 
 Fixed Costs (absorbed using a unit absorption rate)

Cost reduction strategies

The company has been hardly working to reduce the costs spent on their products. For reducing costs, they want to change the way their operational activities being carried out.  The company is being advised by experts to apply value chain and supply chain concepts within their operational activities.   The company CEO is very much interested in using supply chain management strategies in order to cut its costs. At the same time, he also wants to know the non-value adding activities upon which so much money is being spent by the company.  The CEO feels that constructing a viable value chain for their operational activities would minimize the costs spent on non-value adding items.  


(1). Granite Enterprises wants to implement supply chain management strategies and it wants to have a viable value chain for their business activities. . 

In this context, discuss value chain and supply chain concepts in detail highlighting how these strategies would help companies like Granite Enterprises in cutting costs.    (15 marks)   

 (2). Using the information given above for Product A & Product B, ascertain the total cost per unit.  Assume here the manufacturing overheads given above are allocated using some basis (note: no need to use traditional or ABC method for allocation here)      (15 marks)

 (3) Using sales and cost details given above for products R, S and T, 

(i) find contribution margin ratio (as a percentage)  (5 marks)

(ii) find the new contribution margin ratio (as a percentage) if the sales mix of                  products were to be changed to R – 20%, S – 50% and T - 30%.     (15 marks)

Part B

Job Costing at Axe Limited

Axe Ltd manufactures a single product A.   It has two cost centers namely molding department and painting department. 

 Molding Department
 Painting Department
 Total Manufacturing overheads
 $ 301,000

 $ 367,500
 Total Machine hours (estimated)


 Total Direct Labour Cost

 $ 210,000


Axe Ltd executes a job no. 205.   The cost and output details of Job No.205 are given below:

 Molding Department
 Painting Department
 Direct Materials
 $ 235
 $ 166
 Direct Labour
 $ 145
 $ 340
 Number of machine hours used in  job no. 205 
 55 hours

 Output (units)
(expected to be received from Job No. 205)
 25 units

Overheads allocation to Job No. 205 will be as follows:

(a) Molding department overheads will be allocated based on machine hours

(b) Painting Department overheads will be allocated using direct labour costs (as a percentage).


(1) Calculate overhead absorption rate for Molding Department and Painting Department based on allocation bases given above(10 marks)

(2) Calculate the overheads to be allocated (applied) for Job No. 205 based on overhead absorption rate calculated above in question no. 1(10 marks)

(3) Ascertain the total cost of Job No. 205 and the cost per unit(10 marks)

(4) If the overheads incurred on Molding department and Painting department are $ 285,000 and $ 375,000 respectively and the overheads are allocated based on pre-determined rates (as calculated in question 1) to products, assuming total the number of machine hours for Molding department is 32,500 hours and the direct labour cost for painting department will be $ 218,000, will there be any over –allocation of overheads or under-allocation of overheads? Show the calculations clearly here. (10 marks)

(5) Explain briefly why under or over absorption of overheads occur? (10 marks)


Title: Review Various Study Chapters Of ’cost Accounting’
Length: 4 pages (1100 Words)
Style: N/A




In his book, hedefines  (Porter, 2008). On the other hand, the supply chain is the movement of a service or product to the end customer by a system of people, resources, organizations, people, activities and information.It is evident that activities in the supply chain range from sourcing of raw materials to delivery of a finished commodity to the ultimate user (Nagumey, 2006). In this case, Granite Enterprises is striving to organize its affairs in a way that will cut their costs. A plethora of scholars has argued about the importance of the supply chain management and come up witha new concept in the supply chain management. Kim & Mauborgne, (2005) argue that for firms to stand out from the rest, they need to come up with value innovation. According to their book, they propose that value innovation is achieved only when the whole system of the company’s utility, price, and cost structure activity iscorrectly aligned(Kim & Mauborgne, 2005). It emphasizes how supply chain management is necessary to Granite Enterprises as a firm at this critical time when the CEO is interested in supply management strategies to cut its costs.


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