CMA Individual Assignment Manu M EPGPKC06054
CMA Individual Assignment Manu M EPGPKC06054
CMA Individual Assignment Manu M EPGPKC06054
Manu M
EPGPKC06054
Working sheet
Existing
A B C D Total
Material cost 15 5 10 5
Direct Labour 30 5 15 10
Varaiable Overhead 15 7.5 5 7.5
Variable cost 60 17.5 30 22.5
Fixed cost 10000 10000 12500 12500 45000
Number of units 1000 1000 1000 1000
Labour hours per unit 6 1 3 2
Total labour hours 6000 1000 3000 2000 12000
Total variable over head 15000 7500 5000 7500 35000
Industry
Standard cost 70 27.5 42.5 35
Mark on 28 11 17 14
Selling price 98 38.5 59.5 49
40% 40% 40% 40%
B D
Material 5 5
Labour 5 10
Allotted cost 15 30
Standard cost 25 45
40% Markup 10 18
Selling Price 35 63
Product D to be discontinued
Answer 4
Existing
A B C D Total
Material cost 15 5 10 5
Direct Labour 30 5 15 10
Varaiable Overhead 15 7.5 5 7.5
Variable cost 60 17.5 30 22.5
Fixed cost 10000 10000 12500 12500 45000
Material 15 5 10 5
Labour 30 5 15 10
Variable overhead 15 7.5 5 7.5
Allocated cost 22.5 3.75 11.25 7.5
Standard cost 82.5 21.25 41.25 30
40% Mark up 33 8.5 16.5 12
Selling price 115.5 29.75 57.75 42
Answer 6
A+B C+D
Variable overhead 22500 12500
Fixed overhead 20000 25000
Labour hours 7000 5000
Allocation rate 6.1 7.5
A B C D
Material 15 5 10 5
Labour 30 5 15 10
Allocated cost 36.4 6.1 22.5 15.0
Standard cost 81.43 16.07 47.50 30.00
Industry selling price 98 38.5 59.5 49
Margin 16.57 22.43 12.00 19.00
Margin % 20% 140% 25% 63%
Answers
1)CCI has to charge 8.14 , 22.43 and 14.24 from B, C and D respectively to achieve 40% margin
If the policy is to discontinue product below 25% margin , then product B has to be discontinued
2) Product D to be discontinued
3)What is going on : CCI is following burden rate for cost allocation, due to whicha)Fixed overhead is fixed not consideri
So there is difference with the industry costing method. Certain products are getting advantage of wrong allocation of c