Tutorial 2 questions and answers PDF

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Pre- Tutorial questions and answers for the tutorial 2 in week 3....

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ACCT20001 Cost Management - Tutorial 2 (Week 3) 1. Bhimani et al 6e: 2.15; 2.16 2. Refer to the article: How much did that zipper cost? https://www.nytimes.com/2017/06/07/business/smallbusiness/transparency-pricing-retailclothing.html

a. Construct a profile of the costs and gross profit of the Oliver Cabell overnight bag. The costs of the overnight bag are: $16.02 on canvas, $11.58 on leather, $5.68 on lining and 78 cents on webbing, Zipper costs $4.27. Hardware costs $3.7, Manufactoring and quality control costs $48.12, Transit costs: $5.84, Duties costs $7.4. The gross profit is 174.65 b. Provide some examples of indirect costs associated with the production and sale of the overnight bags. Indirect costs would be the supervisors of the manufacturing wearhouse’s wages. Hardware costs are unable to be physically traced so would be indirect, Transit could be direct but is most likely indirect. c. What are the benefits for Oliver Cabell of providing such transparency in its costs? By being transparent customer satisfaction may increase as they know the quality of the materials being used in the bag. They are also easily able to evaluate the costs of each stage throughout the business as everyone knows what he costs and inputs are. 3. Consider the shoe manufacturing process. If the cost object was a pair of shoes identify some: i. direct and indirect costs Direct costs to a shoe would be the sole, laces, direct labour. Whilst indirect costs would comprise of delivery/transit from warehouse to shops, management costs machinery/equipment costs ii. variable and fixed costs Variable costs consist of inputs like leathers, laces and wages if on hourly for manufacturing workers. Fixed costs include rent of facilities, equipment costs (depreciation), fixed wages og managers 4. Simple Shoe Co. (SS Co) produces a single shoe model. Would the allocation method of indirect cost to each unit of output produced be an important consideration for SS? Explain. Allocating indirect costs when there is only one model of output is fairly easy. They are simply able to divide the output quantity by the indirect cost and allocate evenly. 5. Complex Shoe Co. (CS Co) produces two shoe models. - Women shoe (intricate, difficult to manufacture) - Baby shoe (simple to manufacture) How much of machine maintenance costs should be allocated to each unit of baby shoes produced by CS Co? Use the following data for a particular month to answer the question. So as the baby shoes take up 1/6 of the hours of use for the machinery first we must allocate 1/6 the total cost of the machinery. Thus $16,667 would be the annual cost for all the baby shoes. Then to get per unit it would be 16666/5000=$3.33

Number of times maintenance conducted: 3 times

Total machine maintenance costs incurred: $100,000 Units produced: - Women : 10,000 units - Baby: 5,000 units Machine hours used: - Women: 5,000 hours - Baby: 1,000 hours...