Microsoft Word - SEMESTER 1 Assessment BAHBSM2 Management Accounting Nov 21
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National College of Ireland
BA (Honours) in Business Management – Part-Time – Stage 2
Semester One Assessment – 2021/2022
[Due 24th November 2021 (Cut off: 12 pm]
Management Accounting
Dr Gillian Ba
ett
Tara Cheevers
Assessment percentage of overall grade for module: 100%
This Assessment requires a mandatory pass to complete this module: Yes
STUDENT INSTRUCTIONS AND RELEVANT GUIDELINES:
All Sections of the assessment should be completed.
Students can use Work, Excel or submit a Handwritten Assessment
Please check your submission and ensure the FULL assessment is being submitted in ONE document.
DO NOT upload several individual photos, the submission must be ONE document.
If your assessment is handwritten take clear full-size photos of each handwritten page and insert the
photos into one word document, photos must be clear and visible, save the document and upload as
a word document or a pdf document.
DO NOT upload links to files in your submission, an actual document containing the assessment must
e uploaded.
Student Name & Student Number must be on EVERY page that is submitted.
If using Excel, please ensure you use PRINT PREVIEW option and keep your workings to an A4 page
in portrait or landscape format. For printing purposes your exam must be kept to the A4 layout/format.
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Question 1 – Total Marks 40
You are a newly qualified management accountant recently appointed by JMP Limited. JMP is a long-
established manufacturing company. The company manufactures and sells three products, Product 1,
Product 2 & Product 3.
Product 3 has been attracting additional business with overheads increasing however Product 2 has
een losing market share. JMP have approached you with a view to introducing a new costing system.
Since its creation JMP have been using a single direct labour cost percentage to assign overhead costs
to products.
A team lead by the senior management accountant have spent several weeks collecting data for the
different activities and products. For the accounting period 31st December 2020, the following data
elates to the three product lines for JMP.
Product 1 Product 2 Product 3
Production Volumes 7,600 12,600 4,100
Selling Price per unit €48.00 €81.00 €70.00
Material Cost per unit €19.00 €25.50 €16.75
Direct Labour Cost per unit €4.20 €8.10 €6.50
Additional Information
Materials Movements 8 50 100
Machine Hours per unit 0.6 0.6 0.3
Set‐ups (in total) 2 10 10
Orders packed (in total) 2 14 22
Proportion of Engineering work 35% 25% 40%
Cost Pools
Overhead
Cost
Packaging €60,000
Engineering €110,000
Set‐up Labour €19,650
Machine Maintenance & Depreciation €400,000
Materials Receiving & Handling €155,000
Total €744,650
(a) Calculate the overhead rate and the product unit costs for each product under the existing
costing system. (8 Marks)
(b) Identify the appropriate cost driver for each overhead activity, calculate the overhead
absorption rate for each cost pool. (15 Marks)
(c) Calculate the product unit costs for each product using an activity based costing system. (6
Marks)
(d) Comment on the results of each costing system in particular the profits for each product. (11
Marks)
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Question 2 – Total Marks 30
EFT Limited is a manufacturing company manufacturing specialised tables. The following information
is available for the company for the year ended 30th December 2020.
Trial Balance extract for EFT Limited for the year ended 30th December 2020
€ €
Revenue 350,000
Returns inwards 4,200
Returns outwards 7,100
Ca
iage inwards 2,100
Ca
iage outwards 1,900
Manufacturing machinery at cost 60,000
Rent 54,000
Inventory of raw materials at 1 Jan XXXXXXXXXX,200
Inventory of raw materials at 31 December XXXXXXXXXX,500
Manufacturing royalties 15,200
Factory wages 66,500
Other factory overheads 35,000
Purchase of raw materials 68,500
Administration salaries 17,000
Sales department wages 30,000
Additional information:
1. Rent is to be charged 75% to the factory and 25% to the office.
2. Depreciation has not yet been charged for manufacturing machinery. EFT uses straight line
depreciation for machinery at a rate of 25%.
3. Factory wages are 80% direct labour with the balance being indirect labour costs.
4. Work in progress inventory was as follows:
1 January 2020 €12,100
31 December 2020 €14,300
5. Finished Goods inventory was as follows:
1 January 2020 €26,100
31 December 2020 €28,700
a) Prepare the manufacturing account for the year ending 31st December XXXXXXXXXXMarks)
) Prepare the income statement for the year ending 31st December XXXXXXXXXXMarks)
c) Prepare the extract from the Statement of Financial Position as at 31st December XXXXXXXXXX
Marks)
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Question 3 – Total Marks 30
EXCEL Ltd manufactures 3 types of cabinet, the standard, the modern and the premium. The
udgeted standard costs for each product are as follows:
Standard Modern Premium
€ € €
Direct Material Sq Mtr XXXXXXXXXX
Direct Materials €30.00 €35.00 €50.00
Direct Labour €12.00 €15.00 €12.00
Variable Overhead €10.00 €9.00 €13.00
Fixed Overhead €12.00 €15.00 €14.00
€64.00 €74.00 €89.00
Sales Price €105.00 €122.00 €118.00
Quarterly Budgeted Volume 1,575 2,310 500
Sales Mix % 36% 53% 11%
The following information has also been provided:
Direct materials are a specialist rose wood which is priced at €10 per Sq Mtr
No stocks are being maintained and production volumes are the same as sales volumes
Fixed overhead costs are abso
ed on the basis of production units
Due to recent forest fires in the area where the wood supplier is based the supply of rose wood will be
limited to 13,000 Sq Mtr in the coming quarter.
(a) Calculate the total
eakeven point in units for the quarter. (6 Marks)
(b) Advise Excel on the optimum production plan detailing the mix of products they should produce
during the next quarter to maximise their profits; calculations must be included in your advice
note setting out optimum profit. (12 Marks)
(c) List Four are the assumptions of Cost Volume Profit Analysis? (4 Marks)
(d) List Four limitations of Cost Volume Profit Analysis? (4 Marks)
(e) The purchasing manager has advised that a management accountant would be of great benefit
to the business, the managing director has asked you to provide details on the role of the
management accountant. Four key points will be sufficient. (4 Marks)