This website uses cookies to ensure you have the best experience. Learn more

Managerial Accounting Case Solution To Seligram, Inc.: Electronic Testing Operations

1355 words - 5 pages


Seligram, Inc.: Electronic Testing Operations

Wang Nan (0876 8430)

1. Introduction of ETO

Electronic Testing Operations (ETO), a division and the service sector of Seligram, Inc., provided testing for electronic components such as integrated circuits, transistors, capacitors, transformers, relays, and crystals. Function of testing includes two: Electrical Testing and Mechanical Testing. Based on that, the testing facility was divided into two rooms. The main testing room used for electrical testing and mechanical room for mechanical testing.

2. The Current Cost System: One Cost Pool System

In order to determine the lot's total cost and finally supports the pricing decision of Seligram, this existing accounting system uses one cost pool system. All overhead allocation only bases on direct labor dollar base. To be specific, all overhead is divided by direct labor dollar in order to get the burden rate, and then to calculate each lot's resulting burden cost. Finally, plus actual labor dollar to get the lot's cost. Each lot's cost as follows:

Burden Rate=Total Burden/Direct Labor=$4,712,982/$3,260,015=144.6%

Effective Rate=145%

A) ICA=917+1.45*917=$2,246.65

B) ICB= 2,051+1.45*2,051=$5,024.95

C) CAPACITOR= 1,094+1.45*1,094=$2,680.30

D) AMPLIFIER= 525+1.45*525=$1,286.25

E) DIODE= 519+1.45*519=$1,271.55

Total: $12,509.70

This single cost pool system shows that all the products consume the same direct labor and overhead. However, some products consume more labor and some products require more machine operation rather than simply direct labor. In addition, as the introduction of high-tech components created, the need for automatic testing, equipment intensive products will definitely increase and labor intensive ones will decrease. Therefore, it is impossible that all products consume the equipment and labor in the same percentage now, let alone in the future. It is unwise to just use one cost pool to calculate costs and determine the price.

3. Accounting manager's solution: Two Cost Pools System

In order to solve such issue, the division's manager submitted a proposal, a new accounting cost system: two cost pools. The first pool contains burden related to the administrative and technical functions: charged on a rate per direct labor dollar. The second pool contains all the other burden: charged bases on machine hours. Cost of each lot as follows. That is Direct Labor Dollars Base and Machine Hours Base cost system.

Burden Rate=Engineering + Administrative Burden / Direct Labor Dollars

=$684,603 / 3,260,015 = 21% Effective=20%

Machine Hour Rate= Other Burden / Machine Hours

= $4,029,379 / 50,304 = $80.10 Effective=$80

Each lot's cost as follows:

A) ICA=917+0.2*917+80*18.5=$2,580.40

B) ICB= 2,051+0.2*2,051+80*40=$5,661.20

C) CAPACITOR= 1,094+0.2*1,094+80*7.5=$1,912.80


Find Another Essay On Managerial Accounting case solution to Seligram, Inc.: Electronic Testing Operations

A case study of Walmart Stores Inc. with SWOT,internal and external elements which add to the company success

2087 words - 8 pages IntroductionWalmart Stores Inc. is synonymous with low prices and name brand quality products. The company basis of success and foundations cannot be credited to the current CEO Lee Scott but famed Sam Walton. Walmart formula for success simply put is their relationship with customers,employees, and technology that assists in forming relationships with their suppliers;places Walmart Stores Inc. as the top discount retailer.History,Development

A case study on RIO TINTO (ILMENITE), a mining company, which has operations around the world on the subject related to GLOBAL STRATEGIC MANAGEMENT

2729 words - 11 pages operations globally and Canada and South Africa was chosen for their expansion. By doing so, they have created jobs in these 2 countries, even though according to CIA World Factbook (2005), Canada has a low unemployment rate of only 7%, South Africa has a much higher unemployment rate of 26.2%. Thus, the impact of providing employment in South Africa is much higher and thus, Rio Tinto is most welcome to have a mining operation in South Africa.Fig1

Managerial and Financial Accounting

933 words - 4 pages goals (Investopedia, 2008). Managerial accounting is concerned with providing information to managers inside the organization and those who directly control the company's operations. The management team strives to create value for the organization by managing resources, activities, and people in order to attain the organization's goals effectively. The main objective of managerial accounting is to motivate managers and other employees to direct

ABC, Inc. Case Study Analysis

518 words - 2 pages timely fashion. •     Background Carol Robins, a new campus recruiter for ABC, Inc., in early April he was able to hire 15 new trainees who were destined to work for Monica Carrolls, the operations supervisor. From the interviews that were conducted, it appears that Carl was unable to accomplish all of the tasks necessary so that the new hires could begin work. These tasks included documentation, drug testing

International Business Financial & Management Accounting

6097 words - 24 pages , particularly, what drives similarity.In the next section the drivers of financial and management accounting practices are identified and analyzed. We argue that the drivers of convergence have started to dominate those of divergence. For our analysis, we developed a framework which includes both economic and institutional perspectives. In case of the latter, we heavily lean on the model of institutional isomorphism (DiMaggio and Powell 1983). Our analysis

Financial and Managerial Accounting: What's The Difference?

2912 words - 12 pages accounting and managerial accounting. Financial accounting generally abides by the GAAP to record the activities of a business and to report the results of a business's operations. Every transaction that occurs, both big and small, are recorded as an entry in a journal, and

Seligram Case Study

937 words - 4 pages calculating the true cost of a product which would lead to better management decision.Question 3:Under the existing system, whether the manufacturing division of Seligram should be required to purchase their testing from ETO depends on the simplicity/ complexity of the inspection services. Since "low technology" outside laboratories is often cheaper, especially on large lots, the division should be required to purchase the testing from outside services

Data Collection and Descriptive Research for ISO 9000:2000 Compliance Case Study

852 words - 3 pages population under study for data collection (Joppe, n.d.). At ImageStream, the "population" in question is the company's customer base. Researchers using observational research collect data through mechanical, human, electronic, electrical or other means (Joppe, n.d.). Case studies compare representative situations from the studied population with other situations to determine relationships between circumstances, events, individuals, processes, and


1587 words - 7 pages Introduction The purpose is to explain the similarities and differences between financial and managerial accounting. Provide examples of managerial accounting reports that she could see within EEC. This paper will explain both financial and managerial representing Eddison Electronic Company (EEC). They will both have the same usage which is to get ready and examine money related information related to the organization. The motivation behind both

Managerial and Financial Accounting

1117 words - 4 pages only between these categories but also in their rules and regulations, reporting requirements and management information. Accounting is an important factor in the world, not only in the business segment but also in the day to day living.According to Edmonds, Edmonds, McNair, Olds, Schneider (2006), what managerial accounting is a branch of accounting that provides information useful to internal decision makers and managers in operating an

Difference between financial and managerial accounting

833 words - 4 pages The primary difference between financial and managerial accounting is that financial accounting is used for external members of the company; they do not control or run the businesses’ operations. An example of external members would be customers and shareholders of the business. On the other hand, managerial accounting is used for internal members in the company such as managers and officers. The internal members use managerial accounting to

Similar Essays

Seligram Incorporations (Electronic Testing Operations) Essay

1632 words - 7 pages % Effective rate for 1st pool = 20% Burden rate for the 2nd pool: charged on a base of machine hours Burden rate relating to the testing rooms according to the accounting manager Total burden (testing rooms) $4.029.379,0 total machine hours 50.304 = 4.029.379,0/50.304 = 80,10056854 Effective rate for the 2nd pool = $80 Calculation for the proposal of the accounting manager ICA ICB Capacitor Amplifier Diode

Solution To Electronic Junkyards Essay

611 words - 3 pages environment, another problem lies in the advances of virtual technology. Games, operating systems, and even web applications require far greater processing speeds and power. The result, more advanced and far sophisticated hardware and software is required for many gaming consoles, computers, and mobile devices. The most pragmatic solution to e-waste or any other waste is to recycle. The typical American possesses a TV, personal computer, mobile phone

Managerial Accounting, Applied To Successful Project Accounting Practices

1844 words - 8 pages Managerial Accounting, Applied to Successful Project Management Accounting Practices 1.1 Introduction to Managerial Accounting in Project Work Environments This paper provides research and pertinent Managerial Accounting strategies that support the overall financial goals of project management professionals within the context of project management work environments. Many industries rely on project management as an important part of a

Imaginative Staffing Inc Case Solution If So, Who Should Be On The Team?

765 words - 3 pages CHAPTER 7 - DEVELOPING, DELIVERING AND REINFORCING A SALES TRAINING PROGRAM Just as Borland assigned Judy Morgan the task of researching team selling, instructors may want to ask students to bring in relevant articles from popular business magazines on team selling. These would provide students concrete examples of forming, training, use, compensation, and effectiveness of a sales team.Questions:1. Should Imaginative Staffing, Inc. adopt a team