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Introduction To Cost Management & Basic Management Concepts

This document provides an assessment for Module 1 of the STRACOS cost management course. It includes two lessons - the first on classifying actions as related to financial vs cost accounting systems and describing managerial responsibilities. The second lesson defines product cost types and provides calculation questions related to materials, labor, and overhead costs. Key information includes classification of line vs staff roles, definitions of value-chain, operating and manufacturing costs, and preparation of a cost of goods manufactured statement.

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87 views3 pages

Introduction To Cost Management & Basic Management Concepts

This document provides an assessment for Module 1 of the STRACOS cost management course. It includes two lessons - the first on classifying actions as related to financial vs cost accounting systems and describing managerial responsibilities. The second lesson defines product cost types and provides calculation questions related to materials, labor, and overhead costs. Key information includes classification of line vs staff roles, definitions of value-chain, operating and manufacturing costs, and preparation of a cost of goods manufactured statement.

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STRACOS

Module 1
(Introduction to Cost Management & Basic Management Concepts)

ASSESSMENT: LESSON 1

1. Classify each of the following actions as either being associated with the financial
accounting information system (FS) or the cost management information system (CMS):
a. FS
b. FS
c. CMS
d. FS
e. CMS
f. CMS
g. FS
h. CMS
i. CMS
j. FS
k. FS
l. CMS

2. Required:
1. Describe each of the four managerial responsibilities.
 The Four Managerial responsibilities are:
o Planning – this is one of the main roles of a manager. This involves assigning
the employee the tasks that fits them, that will surely do a better job. Set
realistic deadlines for you to follow and complete the job without problems
and delays.
o Controlling – this is to make sure that all of the jobs are doing well and will
be completed on time. Managers should also check the employees, if they are
doing the job properly, if they completed their job on time. This function or
responsibility is about making sure that the goals will be achieved.
o Continuous Improvement – this function or responsibility continuously
makes improvement for the customers.
o Decision Making – this is the process of choosing among competitive
alternatives. This is to make sure that all of the decision will give benefit to
the company.

3. Identify Kaylin, Joseph, and Leo as line or staff, and explain your reasons.
 Kaylin Hepworth Leo Tidwell are a staff. When you read their job responsibilities, you
can see that the nature of their job is to help and support others. For Kayli, she supervises
the line workers, responsible for meeting the production budget, and she is the one
responsible for the production of plastic casing for the speaker components. And for Leo,
he supervises three (3) cost accounting managers and four (4) staff accountants. He also
helps explain and interpret the reports and provides advice to the plant manager on how
to control costs. While Joseph Henson is a line because he has the direct responsibility in
the organization. He supervises all the personnel in the plant. He oversees all that takes
place in the plant, including production, logistics, personnel, and accounting. He helps
develop the plant’s production budgets and is responsible for controlling plant costs.

ASSESSMENT: LESSON 2
STRACOS
Module 1
(Introduction to Cost Management & Basic Management Concepts)

1. Three possible product cost definitions were introduced: (1) value-chain, (2) operating,
and (3) manufacturing. Identify which of the three product cost definitions best fits the
following situations:
a. Value-chain
b. Manufacturing
c. Operating
d. Value-chain
e. Value-chain
f. Value-chain
g. Operating
h. Value-chain
i. Value-chain

2. Alexander Washington owns and operates three Compufix shops in the Chicago area.
Compufix repairs and upgrades computers on site. In May, purchases of materials equaled
$9,350, the beginning inventory of materials was $1,050, and the ending inventory of
materials was $750. Payments for direct labor during the month totaled $18,570. Overhead
incurred was $15,000. The Chicago shops also spent $5,000 on advertising during the
month. Administrative costs (primarily accounting and legal services) amounted to $3,000
for the month. Revenues for May were $60,400.

a. What was the cost of materials used for repair and upgrade services during May?
- 1,050 + 9,350 – 750 = 9,650
b. What was the prime cost for May?
- 9,650 + 18,570 = 28,220
c. What was the conversion cost for May?
- 18,570 + 15,000 = 33,570

3. Dale Company produced 150,000 floor lamps during the past calendar year. These lamps
sell for $50 each. Dale had 2,500 floor lamps in finished goods inventory at the beginning of
the year. At the end of the year, there were 11,500 floor lamps in finished goods inventory.
Dale’s accounting records provide the following information:

Purchases of direct materials $1,550,000


Direct materials inventory, January 1 290,000
Direct materials inventory, December 31 112,000
Direct labor 2,000,000
Indirect labor 790,000
Depreciation, factory building 1,100,000
Depreciation, factory equipment 630,000
Property taxes on the factory 65,000
Utilities, factory 150,000
Insurance on the factory 200,000
Salary, sales supervisor 85,000
Commissions, salespersons 490,000
General administration 390,000
Work-in-process inventory, January 1 450,000
Work-in-process inventory, December 31 750,000
Finished goods inventory, January 1 107,500
STRACOS
Module 1
(Introduction to Cost Management & Basic Management Concepts)
Finished goods inventory, December 31 489,000

a. Prepare a cost of goods manufactured statement.


Direct Materials
Beginning, Inventory 290,000
Add: Purchase 1,550,000
Less: Ending Inventory 112,000
Direct Materials used in production 1,952,000

Direct Labor 2,000,000


Manufacturing Overhead 2,935,000
Total Manufacturing Costs 4,935,000

Add: WIP, Beginning Inventory 450,000


Deduct: WIP, Ending Inventory 750,000

Cost of Goods Manufactured for the Year 6,587,000

b. Compute the cost of producing one floor lamp last year.


=6,587,000 /150,000
= 43.9133

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