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Akuntansi

Manajemen


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Presented By : SPA FEUI Akuntansi Manajemen Semester Genap 2012/2013

Question I : Decision Making and Relevant Information

Madison Industries received an order for a piece of special machinery from ConcradCompany. 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 ofthe special machinery for Jay Company as follows:

Direct Material.............................................. ............... $26,600

Direct Labor............................................................ ..... $21,400

Manufacturing Overhead Applied :

Variable........................................................ ..... $10,700

Fixed............................................................. ..... $ 5,350 $16,050

Fixed selling and administrative cost .................................................. $15.405

Total.................................................................................................. ........ $79.455

Anothe company, Johnson Corporatio, will buy the special machinery if it is reworked toJohnsons 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 deliveryin two months. The additional identifiable costs to rework for the machinery to Johnsonsspecifications are as followsL

Direct Material...................................................... .... $16,200Direct Labor........................................................... .... $ 4,200

Total...................................................................... .... $ 20.400

A second alternative available to Madisons management is to convert the specialmachinery to the standard model, which sells for $60,000. The additional identifiable costsfor this conversion are as follows :

Direct Material........................................................ .... $ 8.800

Direct Labor............................................................ .... $ 3.300

Total....................................................................... .... $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. Nocommission 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 onspecial orders is 5% of the sales price.


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Normal credit terms for sales of standard models are 2/10, net/30. This means thata customer receives 2% discount if payment is made within 10 days, and payment isdue no later than 30 days after billing. Most customer take 2% discount. There isno discount for special order item.

The allocation rates for manufacturing overhead and fixed sellinh andadministrative costs are as follows :

Manufacturing Cost

Variable....................................................................... 50% of DL Cost

Fixed........................................................................... 25% of DL Cost

Fixed selling and administrative costs............................ 10% of the total ofdirect material, direct labor, and manufacturing-overhead cost

REQUIRED :

1. Determine the dollar contribution each of the thre alternatives will add to MadisonIndustries before tax profit. Which alternative Madison should choose?

2. If based on decision in question 1 Madison doesnt choose Johnson as a buyer, what isthe lowest price Madison should accept from Johnson for the reworked machinery?Explain your answer!

3. Referring to the 3rdalternative, if right now there is still no potential buyer who wantsto buy the product, and Madison Industries can not make any modification at all (themachine has to be sold as it is). What is the minimal price that Madison Industriesshould accept for this machine?

Question II : Transfer Pricing

The Gaga Furniture Company produces all types of desks. The company divides its activitiesinto 2 division (HouseHold Division and Office Division). The Household Division iscurrently producing 10.000 desks per year with a capacity of 15.000. The variable costsassigned to each desk are Rp600.000 and annual fixed costs of the division areRp1.800.000.000. The desk division sells the desk for Rp800.000.

The Office Division wants to buy 5.000 desks for its custom office design business. TheHousehold Division Manager refused the order because the price is too low (below themarket price). The Office Division manager argues the order because the order should beaccepted because it will lower the fixed cost per desk from Rp180.000 to Rp120.000 and willtake 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 atRp640.000 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 afterincurring additional costs of Rp200.000 per desk?


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d. Refer to your answer in question a and c, what action should the Gaga Companypresident 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, isattempting to recover from a fire that destroyed some of their accounting records. The maincomputer system was also severly damaged. The following information was salvaged :

Jakarta Division Bandung Division Surabaya Division

Sales 10,000,000 (a) 2,400,000

Net Operating Income 1,000,000 1,440,000 600,000

Net Assets (b) (c) 2,000,000

Return on Investment* 0.20 0.10 (d)

Return on Sales (e) 0.12 0.25

Investment Turnover (f) (g) 1.2

*) Use net assets

REQUIRED :

1. Calculate the missing amounts2. 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. PRODUCTIVITYPetro Company has recently installed a computer-aided manufacturing system. The decisionto automate was made so that material waste could be reduced. Better quality and a reductionof labor inputs were also expected. After on year of operation, management wants to see ifthe expected productivity improvements have materialized. The CEO is particularlyinterested in knowing whether the trade-off between capital, labor and materials wasfavorable. Below is data pertaining output, materials, labor and capital :

Year Before

ImplementationYear After Implementation

Output 120.000 150.000Input Quantities

Materials (kgs) 25.000 21.000

Labor (hours) 5.000 3.000

Capital (dollars) 10.000 300.000

Input Prices

Materials $5 $5.5

Labor $10 $10

Capital 10% 11%

REQUIRED :

By how much does profit increase due to productivity? Assuming that these are the only threeinputs, evaluate the decision to automate.


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B. COST OF QUALITYDescribe the difference between the traditional view of conformance and the robus (zerodefect) view.

Question V : Balance ScorecardFollowing is a random order listing of perspective, strategic objectives, performancemeasures for the balanced scorecard.

PERSPECTIVE

Internal Business Process

Customer

Learning and Growth

Financial

PERFORMANCEMEASURES

Percentage of productspassing the cost of quality

Return on Assets

Number of patents orcopyrights

Employee turnover rate

Net Income

Percentage of processeswith 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 customerloyalty.

STRATEGICOBJECTIVES

Increase market share

Increase shareholder value

Maintain Customersatisfaction

Improve manufacturingquality

Develop profitablecustomer

Increase proprietaryproducts

Increas InformationSystem Capabilities

Enchance Employee

CompetenceOn time delivery bysuppliers

increase Salesmanproductivity

Introduce new product

minimize invoice error rate


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PROBLEM IDECISION MAKING AND RELEVANT INFORMATION

1. Determine dollar contribution of each alternatives; diasumsikan Madison sudahmemproduksi mesin yang dipesan Conrad Company

alternative 1

Price $ 68.400Direct Material $ 16.200Direct Labor $ 4.200Sales Commission ( 5% x 68.400) $ 3.420Manufacturing Overhead :

VOH (50% x 4.200) $ 2.100FOH (25% x 4.200) $ 1.050

Fixed Selling and Administrative Cost $ 2.355 (10% x 23.550)Total Cost $ 29.325Total Operating Income $ 39.075

alternative 2

Price $ 60.000Sales Discount (2% x 60.000) ($ 1.200)

Direct Material $ 8.800Direct Labor $ 3.300Sales Commission ( 3% x 60.000) $ 1.800Manufacturing Overhead :

VOH (50% x 3.300) $ 1.650FOH (25% x 3.300) $ 825

Fixed Selling and Administrative Cost $ 1.457,5 (10% x 14.575)Total Cost $ 17.832,5Total Operating Income $ 40.967,5*) Fixed SGA didasarkan pada DM+DML+MOH

alternative 3

Price $ 40.000

Additional Cost -

Total Operating Income $ 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 specialmachinery. Minimum price is the variable cost of special machinery :

Direct Material 26,600


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Direct Labor 21,400

MOH

Variable 10,700

Total Cost 58.700

PROBLEM IITRANSFER PRICING

Transfer Pri cing adalah harga yang sebuah sub-unit dalam sebuah perusahaan kenakan

untuk intermediate product atau jasa kepada sub-unit lain dalam perusahaan yang sama.

Keduanya harusprofit center.

Transfer pricing from Household Division to Office Division

Household Division

Produce 10.000 units

Capacity 15.000 units

Variable Cost 600.000

Fixed Cost 1.800.000.000

Price 800.000/ unit

Office Ordered

Quantity 5.000

Price 560.000/unit

Market Price 640.000/unit

a) Revenue (5.000 x 560.000) 2.800.000.000Variable Cost (5.000 x 600.000) 3.000.000.000

CM (200.000.000) reject

b) Maximum TP ; market yaitu 640.000/unitMinimum TP ; variable cost + Opportunity Cost = 600.000/unitOpportunity 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 capacityjadi Opportunity Costnya 0.

c) Company as a wholeHouseHold; 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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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 HoldDivision karena Transfer Price yang ditawarkan lebih rendah dibandingkan Variable

Cost yang seharusnya di cover. Pada point (c) TP diterima karenaselling pricepada

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 IIIPERFORMANCE 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 IncomeJakarta 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 BonusJakarta Division = 50% x 250.000

= 125.000

Surabaya Division = 50% x 300.000

= 150.000


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PROBLEM IVCOST OF QUALITY

a) Productivity(menggunakan cara Hansen Mowen)Before After

Materials 120.000/25.000 =4.8 7.14

Labor 120.000/5.000 = 24 50

Capital 120.000/10.000 =12 0.5

Productivity Neutral Quantity of Input (PQ)

=

Material = 150.000/4.8 x $5.5 =171.875 Labor = 150.000/24 x $ 10 = 62.500 Capital = 150.000/12 x $11% = 1.375 Total = 235.750

Actual Quantity

=

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

Profit-linked effect = Total PQ CostTotal Current Cost

= 235.750178.500 = 57.250 (F)

# Jika menggunakan Balance Scorecard

Cost Effect :

Variable Cost =Material : (21.000

150.000

120.000x 25.000) x $5.5 = (56.375)

Labor : (3.000 -150.000

120.000x 5.000) x $10 = (32.500)

Capital : (300.000 -150.000

120.000x 10.000) x 11% = 31.625

Profit-Linked effect 57.250 (F)

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


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b)

Traditional View vs Zero Defect View

Traditional View (AQL View) Zero Defect View

Mengasumsikan bahwa ada trade-off antaraControl Cost denganFailure Cost. Jadi jikacontrol costnya meningkat seharusnya failurecostnya menurun. AQL adalah point dimanaTQC paling rendah yaitu saat Control Costdan Failure Cost berpotongan (sama).

Lebih menekankan kepadazero-defectatautitik target kualitas produksi. Sehingga,terkesan understate(tidak menitikberatkan)kepada total quality cost yang rendah.

PROBLEM VBALANCED SCORECARD

Perspective Strategic Objectives Performance Measures

Financial Perspective - Increase Shareholder Value- Grow Operating Income -Net Income- Earning per Share

- Return on Equity- OI from productivity gain- OI from growth- Revenue Growth

Customer Perspective - Increase Market Share- Maintain Customer

Satisfaction- Develop Profitable

Customer

- Customer cost per unit-Number of New Customer- Percentage of Customer

Loyalty- Market Share in

Communication NetworkAgreement

- Customers satisfactionrating

Internal Business Process - Improve ManufacturingQuality

- Increase proprietaryproducts

- On time delivery bysupplier

- Introduce new product- Improve Manufacturing

Capabilities

- Percentage of ProductPassing the QC

- Return on Asset-Number of Patents or

Copyrights- Percentage of Processes

with real time feedback- Product Cost per Unit

Learning and Growth - Increase information-system capabilities

- Increase salesmanproductivity

-Minimize Invoice ErrorRate

- Employee turnover rate- Salesman profitability- Percentage of error free

invoices

-Employee ratingsatisfaction rating


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- Align employee andorganization goals

- Develop process skill

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