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Page 1 of 5 MAA 262 – Management accounting Trimester 1, 2018 Assessment –Individual Assignment Part 2 DUE DATE AND TIME: Week 9, Wednesday 9th May at 11:59 PM (online submission via CloudDeakin)...

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MAA 262 – Management accounting
Trimester 1, 2018
Assessment –Individual Assignment Part 2
DUE DATE AND TIME: Week 9, Wednesday 9th May at 11:59 PM
(online submission via CloudDeakin)
PERCENTAGE OF FINAL GRADE: 20% (20 marks) of your total marks for the unit.
Learning Outcome Details
Unit Learning Outcome (ULO) Graduate Learning Outcome
(GLO)
ULO 3: Prepare and explain alternate product
costing using job costing, variable and absorption
costing, and activity based costing systems.
Prepare an analysis; demonstrate
the use of Excel in the analysis, and
Microsoft word programs to prepare
the assignment.
GLO 2 & 5: Problem
solving and
communication.
Assessment Feedback:
Students who submit their work by the due date will receive their marks and feedback on
CloudDeakin within 15 working days of the assignment submission due date.
Description / Requirements
You will need to have completed topic 5 to complete this part of your assignment. The
assignment must be completed individually. The assignment requires development of a
model using a spreadsheet and a word document. Both excel spreadsheet and word
document have to be submitted to the assignment folder.
Please monitor CloudDeakin regularly for any further instructions or announcements.


XXXXXXXXXXDeakin's Bachelor of Commerce and MBA are internationally EPAS accredite d .
Deakin Business School is accredited by AACS B .
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www.efmd.org/index.php/accreditation-main/epas
https:
www.efmd.org/index.php/accreditation-main/epas
https:
www.efmd.org/index.php/accreditation-main/epas
http:
www.aacsb.edu
http:
www.aacsb.edu
http:
www.aacsb.edu
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Submission Instructions
This assignment is to be submitted online only. (You are not required to submit a hard copy)
The completed assignment must be submitted into the allocated area on CloudDeakin under
the drop-box folder on or before the due date.
Once submitted, you cannot retract your assignment but you can submit another version.
Only the most recent version submitted will be marked.
You must keep a backup copy of every assignment you submit, until the marked assignment
has been returned to you. In the unlikely event that one of your assignments is misplaced,
you will need to submit your backup copy.
Any work you submit may be checked by electronic or other means for the purposes of
detecting collusion and/or plagiarism.
When you are required to submit an assignment through your CloudDeakin unit site, you will
eceive an email to your Deakin email address confirming that it has been submitted. You
should check that you can see your assignment in the Submissions view of the Assignment
Dropbox folder after uploading it, and check for, and keep, the email receipt for the
submission.
Notes
• There is a discussion area on Cloud Deakin titled ‘Assignment discussion’. This area
is for you to discuss the assignment. It is an area for students to help each other.
• Penalties for late submission: The following marking penalties will apply if you
submit an assessment task after the due date without an approved extension: 5% will
e deducted from available marks for each day up to five days, and work that is
submitted more than five days after the due date will not be marked. 'Day' means
working day for paper submissions and calendar day for electronic submissions. The
Unit Chair may refuse to accept a late submission where it is unreasonable or
impracticable to assess the task after the due date.
• The final examination is the only hurdle requirement for this unit. If you choose not to
submit this assignment, you will score zero for this assignment.
• Plagiarism and collusion are forms of cheating and are considered a serious academic
misconduct, and severe penalties are associated with them. Please refer to the
MAA262 unit guide for your responsibilities with regard to plagiarism and other
academic offences.

• For more information about academic misconduct, special consideration, extensions,
and assessment feedback, please refer to the document Your rights and
esponsibilities as a student in this Unit in CloudDeakin unit site.
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Assignment Part 2
Question 1

Wayco Leisure Pty Ltd assembles three types of caravan at the same factory in Geelong: the
Getaway; the Relax and the Unwind. It sells the caravans throughout most of the world where
there has been a big increase in demand for caravans and camper trailers catering to the
growing number of retirees who wish to travel. In response to market pressures Wayco
Leisure has invested heavily in new manufacturing technology in recent years and, as a
esult, has significantly reduced the size of its workforce.
Historically, the company has allocated all overhead costs using total direct labour hours, but
is now considering introducing activity-based costing (ABC). The accountant at Wayco
Leisure has produced the following analysis.
Annual
Output
(Units)
Annual
Direct labour
hours
Selling price
($ per unit)
Raw material
cost ($ per
unit)
Getaway XXXXXXXXXX,000 4,000 400
Relax XXXXXXXXXX,000 6,000 600
Unwind 400 20,000 8,000 900
The three cost drivers that generate overheads are:
• Deliveries to retailers: the number of deliveries of caravans to retail showrooms
• Set-ups: the number of times the assembly line process is re-set to accommodate a
production run of a different type of caravan.
• Purchase orders: the number of purchase orders.

The annual cost driver volumes relating to each activity and for each type of caravan are as
follows:
Number of deliveries to
etailers
Number of set-
ups
Number of
purchase orders
Getaway XXXXXXXXXX
Relax XXXXXXXXXX
Unwind XXXXXXXXXX
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The annual overhead costs relating to these activities are as follows:
Particulars Amount ($)
Deliveries to retailers 2,400,000
Set-up costs 6,000,000
Purchase orders 3,600,000
All direct labour is paid at $20 per hour. The company holds no stocks. At a board meeting
there was some concern over the introduction of activity-based costing.
The finance director argued: “I very much doubt whether selling the Unwind model is viable
ut I am not convinced that activity-based costing would tell us any more than the use of
labour hours in assessing the viability of each product”.
The marketing director argued: “I am in the process of negotiating a major new contract with
a caravan rental company for the Getaway model. For such a big order they will not pay our
normal prices so we will need to ensure very competitive pricing, and therefore accurate
costing. I am not convinced that activity-based costing would achieve this as it merely
averages costs for our entire production”.
The managing director argued: “I believe that activity-based costing would be an
improvement but it still has its problems. For instance, if we ca
y out an activity many times
surely, we get better at it, and costs fall rather than remain constant. Similarly, some costs
are fixed and do not vary either with labour hours or any other cost driver”.
The chairman argued: “I cannot see the problem. The overall profit for the company is the
same no matter which method of allocating overheads we use. It seems to make no
difference to me”.
REQUIRED:
(a) Calculate the product cost and profitability of each of Wayco Leisure’s three types of
product using each of the following methods to attribute overheads:
(I) The existing methods based upon labour hours.
(II) Activity-based costing.
You are required to use Excel for your calculations. You should design your
spreadsheet appropriately such that is in a logical format and the reader can clearly
follow your calculations XXXXXXXXXX = 40 marks)
Page 5 of 5
(b) You, as the consultant management accountant, are required to write a report to the
directors of Wayco Leisure. The report should:
(I) Evaluate the labour hours and the activity-based costing methods in the
circumstances of Wayco Leisure.
(II) Examine the implications of activity-based costing for Wayco Leisure, and in so
doing evaluate the issues raised by each of the directors.

In drafting the report to directors, refer to your calculations in requirement (a) above where
appropriate. (up to 500 words) XXXXXXXXXX30 marks)


Question 2
In a recent article published in The Australian newspaper, experts claimed that the benefits
of activity based costing in universities would be significant. The additional cost information
would enable much better allocation of resources and funding outcomes.

You are required to undertake research to find two journal articles centred on the use of
activity based costing in the service sector. Using these articles and what the authors’
findings, discuss how activity based costing could be used in a university. In your answer
provide examples of cost pools that may be appropriate XXXXXXXXXXwords XXXXXXXXXXmarks)
Total of 100 marks will be scaled to a mark of 20% .
Answered Same Day May 06, 2020 MAA262 Deakin University

Solution

Pulkit answered on May 09 2020
127 Votes
Report of the Board of Directors of Wayco Leisure-
Activity based costing is the most systematic form of cost allocation to different products. Although using direct labor hours or direct labor costs as the basis of cost allocation is quite simpler but it is not that accurate as compared to Activity Based System.
The various amounts of overheads as allocated under these two methods are as under:
Under Direct Labor Hours-
    
    Getaway
    Relax
    Unwind
    Total Overhead Costs
     $ 4,800,000.00
     $ 5,280,000.00
     $ 1,920,000.00
Under Activity Based Costing-
    
    Getaway
    Relax
    Unwind
    Total Overhead Costs
     $ 4,860,000.00
     $ 4,518,000.00
     $ 2,622,000.00
The above computations state the differences in allocation of overhead costs amount in each product. The overhead costs allocated to Getaway are a bit higher in case of activity based costing as compared to direct labor hour’s basis. Whereas in case of Relax the costs allocated is higher in direct labor hour as compared to activity based costing. Now since the activity based costing allocates lesser costs to Relax the...
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