June 1

MOJAKOE

2013
Akuntansi Manajemen

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Question I : Decision Making and Relevant Information Madison Industries received an order for a piece of special machinery from Concrad Company. Just as Madison completed the machine, Concrad Company declared bankrupty, defaulted on the order, and forfeited the 10 percent deposit paid on the selling price $92,500. Madisons manufacturing manager identified the costs already incurred in the production of the special machinery for Jay Company as follows: Direct Material.............................................. ............... Direct Labor............................................................ ..... Manufacturing Overhead Applied : Variable........................................................ ..... Fixed............................................................. ..... $10,700 $ 5,350 $16,050 $15.405 $79.455 $26,600 $21,400

Fixed selling and administrative cost .................................................. Total.................................................................................................. ........

Anothe company, Johnson Corporatio, will buy the special machinery if it is reworked to Johnsons specificatios. Madison industries offered to sell the reworked machinery to Johnson as special order for $68,400. Johnson agreed to pay the price when it takes delivery in two months. The additional identifiable costs to rework for the machinery to Johnsons specifications are as followsL Direct Material...................................................... Direct Labor........................................................... Total...................................................................... .... .... .... $16,200 $ 4,200 $ 20.400

A second alternative available to Madisons management is to convert the special machinery to the standard model, which sells for $60,000. The additional identifiable costs for this conversion are as follows : Direct Material........................................................ .... Direct Labor............................................................ .... Total....................................................................... .... $ 8.800 $ 3.300 $11.100

All cost information above doesnt include the overhead and operating cost yet.

A third altenative for Madison Industries is to sell the machine as is for price of $ 40,000. However, the potential buyer of the unmodified machine does not want it for 60 days. This buyer has offered a $7,000 down payment, with the remainder due upon delivery. No commission will be paid on this transaction. The following additional information is available regarding Madisons operation. The sales commission rate on sales of standard models is 3%, while the rate on special orders is 5% of the sales price.
Akuntansi Manajemen Semester Genap 2012/2013

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Normal credit terms for sales of standard models are 2/10, net/30. This means that a customer receives 2% discount if payment is made within 10 days, and payment is due no later than 30 days after billing. Most customer take 2% discount. There is no discount for special order item. The allocation rates for manufacturing overhead and fixed sellinh and administrative costs are as follows : Manufacturing Cost Variable....................................................................... Fixed........................................................................... 50% of DL Cost 25% of DL Cost

Fixed selling and administrative costs............................ 10% of the total of direct material, direct labor, and manufacturing-overhead cost REQUIRED : 1. Determine the dollar contribution each of the thre alternatives will add to Madison Industries before tax profit. Which alternative Madison should choose? 2. If based on decision in question 1 Madison doesnt choose Johnson as a buyer, what is the lowest price Madison should accept from Johnson for the reworked machinery? Explain your answer! 3. Referring to the 3rd alternative, if right now there is still no potential buyer who wants to buy the product, and Madison Industries can not make any modification at all (the machine has to be sold as it is). What is the minimal price that Madison Industries should accept for this machine? Question II : Transfer Pricing The Gaga Furniture Company produces all types of desks. The company divides its activities into 2 division (HouseHold Division and Office Division). The Household Division is currently producing 10.000 desks per year with a capacity of 15.000. The variable costs assigned to each desk are Rp600.000 and annual fixed costs of the division are Rp1.800.000.000. The desk division sells the desk for Rp800.000. The Office Division wants to buy 5.000 desks for its custom office design business. The Household Division Manager refused the order because the price is too low (below the market price). The Office Division manager argues the order because the order should be accepted because it will lower the fixed cost per desk from Rp180.000 to Rp120.000 and will take the division to its capacity, thereby causing operations to be at their most efficient level. The Office Division Manager can buy the same model of desks from the other supplier at Rp640.000 per unit. REQUIRED : a. Should the order from the Office Division be accepted by the Household Division? Why? b. Please determine the maximum and minimum price of the desk! c. From the perspective of the Gaga Company, should the order be accepted if the Office Division plans on selling the desks in the outside market for Rp840.000 after incurring additional costs of Rp200.000 per desk?
Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

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d. Refer to your answer in question a and c, what action should the Gaga Company president take to solve the transfer pricing problem? Question III : Performance Measurement,Compensation &Multinational Consideration The top management at Green Thumb Company, a manufacturing of gardening equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severly damaged. The following information was salvaged : Sales Net Operating Income Net Assets Return on Investment* Return on Sales Investment Turnover *) Use net assets REQUIRED : 1. Calculate the missing amounts 2. The companys desired rate of return is 15% of net assets. Are any of division is in danger of being closed due to lack of performance? 3. Division manager who achieves desired rate of return will receive bonus of 50% of residual income. Calculate anticipated bonus for 2011 each manager! Question IV : Cost of Quality A. PRODUCTIVITY Petro Company has recently installed a computer-aided manufacturing system. The decision to automate was made so that material waste could be reduced. Better quality and a reduction of labor inputs were also expected. After on year of operation, management wants to see if the expected productivity improvements have materialized. The CEO is particularly interested in knowing whether the trade-off between capital, labor and materials was favorable. Below is data pertaining output, materials, labor and capital : Year Before Implementation 120.000 25.000 5.000 10.000 $5 $10 10% Year After Implementation 150.000 21.000 3.000 300.000 $5.5 $10 11% Jakarta Division 10,000,000 1,000,000 (b) 0.20 (e) (f) Bandung Division (a) 1,440,000 (c) 0.10 0.12 (g) Surabaya Division 2,400,000 600,000 2,000,000 (d) 0.25 1.2

Output Input Quantities Materials (kgs) Labor (hours) Capital (dollars) Input Prices Materials Labor Capital REQUIRED :

By how much does profit increase due to productivity? Assuming that these are the only three inputs, evaluate the decision to automate.
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B. COST OF QUALITY Describe the difference between the traditional view of conformance and the robus (zero defect) view. Question V : Balance Scorecard Following is a random order listing of perspective, strategic objectives, performance measures for the balanced scorecard.

PERSPECTIVE Internal Business Process Customer Learning and Growth Financial

PERFORMANCE MEASURES Percentage of products passing the cost of quality Return on Assets Number of patents or copyrights Employee turnover rate Net Income Percentage of processes with realtime feedback Return on Equity Product Cost per unit Salesman profitability Percentage of error-free inovices Customer cost per unit Earnings Per Share Number of new customer Percentage of customer loyalty.

STRATEGIC OBJECTIVES Increase market share Increase shareholder value Maintain Customer satisfaction Improve manufacturing quality Develop profitable customer Increase proprietary products Increas Information System Capabilities Enchance Employee Competence On time delivery by suppliers increase Salesman productivity Introduce new product minimize invoice error rate

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Akuntansi Manajemen

Semester Genap 2012/2013

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PROBLEM I DECISION MAKING AND RELEVANT INFORMATION 1. Determine dollar contribution of each alternatives; diasumsikan Madison sudah memproduksi mesin yang dipesan Conrad Company alternative 1 Price Direct Material Direct Labor Sales Commission ( 5% x 68.400) Manufacturing Overhead : VOH (50% x 4.200) FOH (25% x 4.200) Fixed Selling and Administrative Cost Total Cost Total Operating Income alternative 2 Price Sales Discount (2% x 60.000) Direct Material Direct Labor Sales Commission ( 3% x 60.000) Manufacturing Overhead : VOH (50% x 3.300) FOH (25% x 3.300) Fixed Selling and Administrative Cost Total Cost Total Operating Income *) Fixed SGA didasarkan pada DM+DML+MOH alternative 3 Price Additional Cost Total Operating Income $ 60.000 ($ 1.200) $ 8.800 $ 3.300 $ 1.800 $ 1.650 $ 825 $ 1.457,5 (10% x 14.575) $ 17.832,5 $ 40.967,5 $ 16.200 $ 4.200 $ 3.420 $ 2.100 $ 1.050 $ 2.355 (10% x 23.550) $ 29.325 $ 39.075 $ 68.400

$ 40.000 $ 40.000

Based on calculation above, Madison choose alternative 2, since it gives highest operating income among others. 2. Not choose alternative 1; so the minimum price should be : Price = X X ( 16.200 + 4.200 + 0,05X + 2.100 + 1.050 + 2.355 ) = 40.967,5 X ( 25.905 + 0,05X ) = 40.967,5 0,95 X = 66.872,5 X = 70.392,1 3. There is still no potential buyer; therefore relevant cost is the original cost of special machinery. Minimum price is the variable cost of special machinery : Direct Material 26,600
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Direct Labor MOH Variable Total Cost PROBLEM II TRANSFER PRICING Transfer Pricing adalah harga yang sebuah sub-unit dalam sebuah perusahaan kenakan untuk intermediate product atau jasa kepada sub-unit lain dalam perusahaan yang sama. Keduanya harus profit center. Transfer pricing from Household Division to Office Division Household Division Produce Capacity 10.000 units 15.000 units 21,400 10,700 58.700

Variable Cost 600.000 Fixed Cost Price Office Ordered Quantity Price Market Price 5.000 560.000/unit 640.000/unit 1.800.000.000 800.000/ unit

a) Revenue (5.000 x 560.000) 2.800.000.000 Variable Cost (5.000 x 600.000) 3.000.000.000 CM (200.000.000) reject b) Maximum TP ; market yaitu 640.000/unit Minimum TP ; variable cost + Opportunity Cost = 600.000/unit Opportunity Cost yaitu harga yang dia relakan hilang ketika dia kapasitasnya misalnya 10.000 dan dia sudah berproduksi pada kapasitasnya. Ketika household minta 5.000, jadi dia harus ngurangin 5.000 pesanan untuk pelanggan yang udah ada. Tapi karena ini masih ada excess capacity jadi Opportunity Costnya 0. c) Company as a whole HouseHold; Revenue 5.000 x 560.000 = 2.800.000.000 Cost 5.000x 600.000 = (3.000.000.000) Incremental OI (200.000.000) Office; Revenue 5.000 x 840.000 = 4.200.000.000 Cost 5.000 x 200.000 = (1.000.000.000)

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Akuntansi Manajemen

Semester Genap 2012/2013

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TIC from House Hold 5.000 x 560.000 = (2.800.000.000) Incremental OI 400.000.000 Incremental OI for company as a whole 200.000.000 Should accept the order d) Pada dasarnya, kegiatan transfer pricing ini tidak menguntungkan House Hold Division karena Transfer Price yang ditawarkan lebih rendah dibandingkan Variable Cost yang seharusnya di cover. Pada point (c) TP diterima karena selling price pada Office Division ( 840.000 ) dapat menutupi VC house hold dan tambahan biaya sebesar 200.000. Oleh sebab itu, manajer harus mempertimbangkan kembali harga Transfer Pricingnya, sehingga kedua divisi saling untung. PROBLEM III PERFORMANCE MEASUREMENT ROI = Income/ Investment ROS = Income/ Sales Investment Turnover = Sales/ Investment a) Missing amounts! Sales = 1.440.000/0.12 = 12.000.000 Net Asset = 1.000.000/0.2 = 5.000.000 Net Asset = 1.440.000/0.1 = 14.400.000 ROI = 600.000/2.000.000 = 0.3 ROS = 1.000.000/10.000.0000= 0.1 Investment turnover = 10.000.000/5.000.000 =2 Investment turnover = 12.000.000/14.400.000=0.83 b) Calculate the Residual Income Jakarta Division = Net Income ( RR x Investment) = 1.000.000 (0.15 x 5.000.000) = 250.000 Bandung Division = Net Income (RR x Investment) = 1.440.000 ( 0.15x14.400.000) = (720.000) ; danger Surabaya Division = Net Income (RR x Investment) = 1.440.000 (0.15x2.000.000) = 300.000 c) Anticipated Bonus Jakarta Division = 50% x 250.000 = 125.000 Surabaya Division = 50% x 300.000 = 150.000

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Semester Genap 2012/2013

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PROBLEM IV COST OF QUALITY a) Productivity (menggunakan cara Hansen Mowen) Materials Labor Capital Before 120.000/25.000 =4.8 120.000/5.000 = 24 120.000/10.000 =12 After 7.14 50 0.5

Productivity Neutral Quantity of Input (PQ) = Material Labor Capital Total = 150.000/4.8 x $5.5 = 150.000/24 x $ 10 = 150.000/12 x $11% = =171.875 = 62.500 = 1.375 235.750

Actual Quantity = Material Labor Capital Total = 21.000 x 5.5 = 3.000 x 10 = 300.000 x 11% = = 115.500 = 30.000 = 33.000 178.500

Profit-linked effect

= Total PQ Cost Total Current Cost = 235.750 178.500 = 57.250 (F)

# Jika menggunakan Balance Scorecard Cost Effect : Variable Cost = Material Labor Capital Profit-Linked effect : (21.000 120.000 x 25.000) x $5.5 = (56.375) : (3.000 - 120.000 x 5.000) x $10
150.000 150.000 150.000

= (32.500)

: (300.000 - 120.000 x 10.000) x 11% = 31.625 57.250 (F)

Karena seharusnya kita ngeluarin 235.750; tp krn produktivitas kita bisa hemat 57.250

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Akuntansi Manajemen

Semester Genap 2012/2013

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b) Traditional View vs Zero Defect View Traditional View (AQL View) Mengasumsikan bahwa ada trade-off antara Control Cost dengan Failure Cost. Jadi jika control costnya meningkat seharusnya failure costnya menurun. AQL adalah point dimana TQC paling rendah yaitu saat Control Cost dan Failure Cost berpotongan (sama). PROBLEM V BALANCED SCORECARD Perspective Financial Perspective Strategic Objectives - Increase Shareholder Value - Grow Operating Income Performance Measures Net Income Earning per Share Return on Equity OI from productivity gain OI from growth Revenue Growth Customer cost per unit Number of New Customer Percentage of Customer Loyalty Market Share in Communication Network Agreement Customers satisfaction rating Percentage of Product Passing the QC Return on Asset Number of Patents or Copyrights Percentage of Processes with real time feedback Product Cost per Unit Zero Defect View Lebih menekankan kepada zero-defect atau titik target kualitas produksi. Sehingga, terkesan understate (tidak menitikberatkan) kepada total quality cost yang rendah.

Customer Perspective

- Increase Market Share - Maintain Customer Satisfaction - Develop Profitable Customer

Internal Business Process - Improve Manufacturing Quality - Increase proprietary products - On time delivery by supplier - Introduce new product - Improve Manufacturing Capabilities - Increase informationsystem capabilities - Increase salesman productivity - Minimize Invoice Error Rate -

Learning and Growth

- Employee turnover rate - Salesman profitability - Percentage of error free invoices - Employee rating satisfaction rating

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Akuntansi Manajemen

Semester Genap 2012/2013

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- Align employee and organization goals - Develop process skill

Presented By : SPA FEUI

Akuntansi Manajemen

Semester Genap 2012/2013