MANAGERIAL ACCOUNTING

PRODUCTION BUDGETING COMPANY

BY:
I Gusti Ngurah Friday Palaguna
NIM. 1306205006
Attendance Number: 02

FACULTY OF ECONOMICS AND BUSINESS

UDAYANA UNIVERSITY
2015

Scatter Plot Method

5700
5600
5500
5400

f(x) = 0.69x + 3578

R = 0.6

5300
5200
Linear ()

5100
5000
4900
4800
4700
2100

2200

2300

2400

2500

2600

2700

2800

2900

3000

1. Based on the table 4th about monthly raw material price growth in the past 4,5 years (per
kg), its shows that the price of this raw material mostly increase. There are some
assumption based on the pattern of price fluctuations in 2014 as follows.
July
14

August
14

September

October 14

November

December

January

14
14
14
15
3.1
3.3
3.2
3.1
3.3
3.4
3.5
And based on my assumption, it will increase for 3.5 in the beginning of 2015. As the
additional information, to make 1 unit, 10 kg of raw materials are needed. And for each
product means it will cost $35 of raw materials.
2. Based on the table 5th about monthly labor rate growth in the past 4,5 years (per hour),
its shows that the cost of labor is increasing slowly. There are some assumption based on
the increasing of the production units that could be made in 2014 to the beginning of
2015 as follows
July
14

August
14

September

October

November

December

January

14
14
14
14
15
6.0
6.0
6.5
6.5
6.5
6.5
7.0
And based on my assumption, it will increase for 7.0 in the beginning of 2015. As the
additional information, to make 1 unit, 8 hours of labor are needed. And for each product
means it will cost $56 of labor.
3. Based on table 6th, the companys fixed assets consist by office building, warehouse
building, and machineries. We only count the depreciation which has relation with the
production activity as follows.
$ 100,000$ 10,000
Warehouse Building =
10 years
Machineries

$ 17,000$ 1,000
8 years

= $10,000/years.
= $ 2,000/ years.

This calculation uses the straight-line depreciation method.

4. In table 7th of electricity cost in the past 4 years, electricity is included as fixed cost and
variable cost (mix cost), so we need to separate the electricity into fix cost and variable
cost using Scatter plot method (attached in the previous page). In this method we need to
find which costs that have same standard of deviation, which are 5,000 and 5,450.
Then we find the variable cost by high-low method

cost changes
Variable cost = output changes

5,4505,000
700

= 0.64

In calculating fixed cost, I use information in 2011.

Cost
= Fixed Cost + Variable Cost
$5,450
= FC + 0.64 (2,500)
Fixed Cost
= 3,850
5. Inspection cost can be determined by using high-low method. We use data from table 8th.
cost changes
$ 2,650$ 2,500
= $3
output changes =
150100
Based on table 8th of raw material inspections cost in past 4 years, there is an additional
information that the management wishes to minimize this fixed cost and to get rid of
this cost in the next 5 years. To get this goal, the company should decrease 36 hours of
inspection in every year ( 180:5=36) and the cost as $570 ($2,850:5= $570).The decrease
of the inspection time and cost will be explained in the table as follows:
Perio

Inspection

Cost
($)

d
time (hours)
2013
180
2,850
2014
144
2,280
2015
108
1,710
2016
72
1,140
2017
36
570
2018
0
0
Based on those calculation, I assumed that in 2015 there are 108 hours in inspection time.
So the fixed cost are :
108 hours x $3= $324
6. In determining total production unit, we need the number of market share and the
demand. As the information, the Company X holds 40-45% market share. I am going to
use 40% market share as the assumption that I use the lowest value from 40 to 45. For
the economic growth in 2015 I use 6.8%, same with in 2014 because there is no
additional information about that. The calculation of total production unit estimation is
as follows.
Demand in 2013
= 7,000
Estimation of demand in 2014
= 7,000 x 106.8% = 7,476
Estimation of demand in 2015
= 7,476 x 106.8% = 8,000
Because of Company X holds demand as 40% with the estimation of demand in
2015 as 8,000, so the total production expected is 40% x 8,000 = 3,200. And the variation

of flexibility is 200 with 7 scenarios, which are 3,200; 3,400; 3,600; 3,800; 4,000; 4,200;
and 4,400.