ACC8101 Assignment 2
ACC2113 Assignment
(Due Date Monday 21st May 2018) – TOTAL MARKS 100 converted
to a mark of 20 (weighting 20%)
You should make use of the materials from Modules 1-9 to help answer this
assignment. Submission is via studydesk.
QUESTION 1 (20 marks)
Maasai Trails generates average revenue of $8,000 per person on its five-day (and 5
nights) package tours to the Maasai Mara National Reserve, Kenya. Tours average 4
people per tour.
The business has the following expenses:
Insurance costs per annum $25,000
Airfares per person on tours $980
Accommodation costs per person per night $200
Total costs per person for 5 days’ meals $80
Salary of tour managers $30,000 per annum
Ground transportation per person for tour $400
Park tickets and costs per person for the 5 days $140
Casual staff hire per tour $400
Other fixed costs per annum $15,000
The cu
ent expected number of bookings for the 5 day tours are 200 tours per annum.
Required
a) Calculate the number of package tours that must be sold for the business to
eak even. (8 marks)
) Calculate the cu
ent annual expected profit. (3 marks)
c) Calculate the amount of revenue necessary to make a post-tax annual profit of
$60,000, given a tax rate of 20%. (3 marks)
d) Maasai Trails is considering hiring another tour manager (at an annual salary
$15,000) which would mean fewer casual staff are needed and would therefore
educe the cost of casual staff hire to $100 per tour. Is this worthwhile for the
usiness at its cu
ent expected number of bookings? (Justify your answe
showing calculations.) (6 marks)
QUESTION 2 (30 marks)
Custom Tables Pty Ltd makes unique dining tables from various native Australian
woods. They use normal costing in their job costing system (i.e. a pre-determined
overhead rate to apply overhead costs to jobs).
The following are partially completed T-accounts representing the General Ledger
Accounts.
Direct Materials Inventory Work-In-Process Inventory
XXXXXXXXXX
30,000
380,000
XXXXXXXXXX
20,000
400,000
Dir. Manuf.
Labou
360,000
XXXXXXXXXX
XXXXXXXXXX
Finished Goods Inventory
XXXXXXXXXX, XXXXXXXXXX,000
940,000
XXXXXXXXXX
Manufacturing Overhead Control Manufacturing Overhead Allocated
540,000
Cost of Goods Sold
Sales Revenue Profit & Loss Summary
ADDITIONAL INFORMATION
1. The direct manufacturing labour wage rate was $15 per hour
2. Budgeted manufacturing overheads were $520,000 for the year
3. Manufacturing overheads are allocated based on direct labour hours. Budgeted
labour hours were 26,000 hours.
4. During the year sales revenue was $1,290,000 and marketing and distribution
costs were $140,000
Required
Complete the General Ledger T-accounts (4 marks) in order to answer the following:
a) What was the amount of direct materials issued to production in 2017?
(1 mark)
) What was the amount of allocated overhead issued to jobs in 2017? (3 marks)
c) What was the total cost of jobs completed during 2017? (3 marks)
d) What was the balance of Work-In-Process Inventory at 31st December 2017?
(2 marks)
e) What was the cost of goods sold BEFORE proration of under or over allocated
overhead? (2 marks)
f) What was the under or over allocated overhead in 2017? (3 marks)
g) Write off the under or over allocated overhead in 2017 to Cost of Goods Sold
(2 marks)
h) Calculate the operating income for XXXXXXXXXXmarks)
i) Assume the business decided to change its method of writing off under or over
allocated overhead to a proration basis based on ending balances of Work-In-
Process Inventory, Finished Goods Inventory and Cost of Goods Sold (before
proration). Calculate the revised ending balances for Work-In-Process
Inventory, Finished Goods Inventory and calculate revised Cost of Goods Sold
and Profit for XXXXXXXXXXmarks)
j) Which method for accounting for the under or over allocated overhead would
you recommend in this instance? State the reasons for your choice. (2 marks)
Note: Show all workings
QUESTION 3 (50 marks)
Rocklea Furniture (RF) makes one type of settee/sofa – the Queen. In 2017 the
average monthly sales figures were:
Units Selling Price
Queen 100 $1,200
RF intends lowering the selling price per unit for the Queen beds due to increased
competition to $1,000 per unit. It is hoped that this will increase sales in January by
20% compared to the December 2017 level and again by a further 20% from January
to Fe
uary 2018 and then remain at that level for the rest of the year.
80% of sales are on credit, and the remainder cash. RF offer a 2% discount for credit
customers who pay within the month and 10% of customers do so. Another 70% pay
in the month following the sale and the remaining customers pay 2 months following
the sale. RF do not have any problem with bad debts.
Each unit requires the following materials:
Queen XXXXXXXXXXCost
Fa
ic 5 m2 $10 per m2
Wood 10 m $2 per m
Filler 3 m2 $3 per m2
Springs 600 $0.02 each
Materials are paid for in the month after purchase. The amount of accounts payable at
31 December 2017 was $18,266.
Direct Labour required (at $15 per hour)
Queen
Labour hours 2
Labour is paid for as incu
ed (in the month when the work is done).
Opening materials inventories:
Fa
ic 100 m2
Wood 10 m
Filler 20 m2
Springs 600
The desired materials ending inventory is 50% of that required for the next month’s
production.
Opening finished goods inventories:
Queen
Finished sofas 20
For 2018 the desired ending finished goods inventory is equal to the 50% of following
month’s sales in units.
Variable manufacturing overheads are expected to be $22 per unit manufactured in a
month. These are paid for as incu
ed.
Fixed manufacturing overheads are expected to be $13,000 per month (including $500
for depreciation). These are paid for as incu
ed.
Other expenses are estimated at $50,000 per month, also paid as incu
ed.
A $20,000 loan will be repaid in Fe
uary. A $6,000 tax expenses will be paid in
March.
Interest received on an investment is due to be paid into the business bank account in
January, totalling $300.
The cash at bank balance at 31st December was a credit balance (overdraft) of
$40,000.
Required:
a) Prepare a sales budget in units and dollars for the 3 months and the total
quarter for the Queen sofas. (2 marks)
) Prepare a production budget in units for the 3 months and the total quarter for
the Queen sofas. (10 marks)
c) Prepare a materials usage budget in units for each of the four materials
(separate budgets) and calculate the dollar purchases for each, showing the 3
months and the total quarter for the Queen sofas. (14 marks)
d) Calculate the total value of materials purchases each month. (1 mark)
e) Prepare a direct labour budget. (3 marks)
f) Prepare a schedule of collection of sales. (10 marks)
g) Prepare a cash budget showing each month and the quarter total. (10 marks)
NOTES ON ASSIGNMENT SUBMISSION
Submission is electronic via the link on studydesk. Students must submit ONE file
ONLY. Acceptable file types are office Word documents or excel spreadsheets. All
workings should be shown..
Please ensure that you include your last name and your student number in naming
your file and that you include a header or footer within your document giving you full
name and student number.
If you have questions regarding the assignment please ask these in the studydesk
assignment discussion forum provided unless they are of a personal nature, in which
case please contact your lecturer or course examiner directly (preferably via email).
Email: XXXXXXXXXX
mailto: XXXXXXXXXX