Assessment item 1
Value: 20%
Due Date: 24-Aug-2018
Return Date: 14-Sep-2018
Length:
Submission method options: Alternative submission method
Task
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The purpose of Assessment item 1 is to establish the skills needed in the workplace for costing products and services using the appropriate processes and tools and applying analytical processes to construct accounting systems and models using workplace tools. Each question uses realistic data and the professional practices similar to that found in workplaces.
Your assignment consists of different question styles including discussion questions, reports, exercises, problem questions and spreadsheet questions. It assesses learning outcomes as listed in the assignment rationale below.
Question 1: An overview of management accounting (20 marks in total)
1a. Describe and explain the differences between management accounting and financial accounting.
1b. Describe and explain the major functions of management accounting and give examples.
1c. Using your textbook and other relevant references, explain how concepts such as panopticism, control, and discipline may be relevant to management accounting, give examples.
Question 2: Manufacturing Statement and Income Statement (20 marks in total)
Lake Ltd.’s accounting department provided following financial information:
Depreciation Expense - Factory Equipment
A$90,000
Direct Labou
A$1,284,000
Raw Material Inventory (1st July, 2016)
A$183,000
Raw Material Inventory (30th June, 2017)
A$186,000
Factory Rent
A$152,820
Finished Goods (1st July, 2016)
A$264,000
Finished Goods (30th June, 2017)
A$345,000
Indirect Labou
A$75,000
Indirect Materials
A$52,500
Sales Revenue
A$6,751,500
Administration Expenses
A$600,000
Selling & Distribution Expenses
A$1,200,000
Purchase of Raw Material
A$1,200,360
Freight In
A$90,000
Work in Process (1st July, 2016)
A$60,600
Work in Process (30th June, 2017)
A$57,330
Required:Â prepare a statement of Cost of Goods Manufactured and an Income Statement for Lake Ltd. for the year ended 30th June 2017. You can prepare the statements in an Excel spreadsheet then paste into Word.
Question 3: Job order costing (20 marks in total)
The Port Furniture Company manufactures tables. In March 2017, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department A and 8,000 direct manufacturing labour-hours in Department B. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job X, the actual costs incu
ed in the two departments were as follows:
Financial Information for Job X
Department A
Department B
Direct materials purchased on account
A$110,000.00
A$177,500.00
Direct materials used
A$32,500.00
A$13,500.00
Direct labou
A$52,500.00
A$53,500.00
Indirect labou
A$11,000.00
A$9,000.00
Indirect materials used
A$7,500.00
A$4,750.00
Lease on equipment
A$16,250.00
A$3,750.00
Manufacturing Utilities
A$1,000.00
A$1,250.00
Required:
3a. Determine the budgeted manufacturing overhead rate for each department.
3b. Prepare necessary journal entries to summarise the March transactions for Department A.
3c. Determine the total cost of Job X.
3d. What are some of the major cost objects that managers often focus on in companies using job costing? Use the textbook or other references to support your answers.
Question 4: Service department cost allocation (20 marks in total)
Inns Battery Company has two service departments: Maintenance and Personnel. Maintenance Department costs are allocated on the basis of budgeted maintenance-hours. Personnel Department costs are allocated based on the number of employees. Data on budgeted maintenance-hours and number of employees are as follows:
Support Departments
Production Departments
Maintenance Department
Personnel Department
A
B
Budgeted costs
A$180,000
A$30,000
A$80,000
A$120,000
Budgeted maintenance-hours
n/a
240
720
240
Number of employees
20
n/a
60
120
Required:
4a. Using the direct method, determine the amount of support department costs to be allocated to Production Department A.
4b. Using the step-down method, determine the amount of Maintenance Department costs to be allocated to Production Department A, if the service department with the highest percentage of interdepartmental support service is allocated first.
4c. Using the reciprocal method, determine the amount of maintenance department costs to be allocated to Production Department A (round up to nearest dollar).
4d. List and explain two possible reasons why a manager might prefer that budgeted rather than actual cost-allocation rates be used when cost is being allocated to his/her department from another department. Use the textbook and/or other relevant resources to support your answer.
Question 5: Activity Based Costing (20 marks in total)
Come-On-In company produces two types of entry doors: Standard and Deluxe. The assignment basis for manufacturing overheads has been direct labour hours. For 2016, the company complied the following data for the two products:
Standard
Deluxe
Sales units
400,000 Doors
50,000 Doors
Sales price per unit
A$475
A$690
Direct material cost per unit
A$90
A$120
Direct labour cost per unit
A$40
A$60
Manufacturing overhead cost per unit
A$120
A$80
During 2016, the company purchased a state-of-art robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. The information gathered is as follows:
Activity
Cost Drive
Standard
Deluxe
Total
Cost
Setups
Number of setups
100
400
500
A$2,900,000
Machine-related
Number of machine hours
300,000
300,000
600,000
A$44,100,000
Packing
Number of shipments
200,000
50,000
250,000
A$5,000,000
Required:
5a. Using the cu
ent cost system, determine the total cost of manufacturing one unit of each product and the profit per unit for each product.
5b. Under the cu
ent cost system, estimated manufacturing overhead per unit are less for the deluxe door ($80) than the standard door ($120). What is a likely explanation for this?
5c. Using the activity-based costing data, compute the cost driver rate for each overhead activity.
5d. Compute the revised manufacturing overhead cost per unit for each type of product.
5e. Is the deluxe door as profitable as the original data estimated using previous cost system? Why or why not? Explain.
Rationale
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This assessment task will assess the following learning outcome/s:
e able to discuss and critique the historical and ethical development of management accounting.
e able to critically evaluate the design and operation of performance management systems.
e able to explain the role of management accounting in organisational contexts and the implications for management accounting of different paradigms.
e able to apply analytical and synthetical skills in report writing, and use quantitative techniques and computer software including using the Internet as a professional source.
e able to create and implement computerised decision models.
e able to critique how managers make decisions.
This assignment assesses your achievement of learning outcomes including:
the application of cognitive skills in the design and operation of costing systems;
eing able to critically evaluate the design and operation of performance management systems
manufacturing statements,
job costing systems,
Activity Based Costing (ABC),
methods of service department cost allocation;
the role of management accounting in organisational contexts,
the implications for management accounting of different paradigms;
the application of analytical and synthetical skills in report writing;
quantitative techniques and computer software including
using the Internet as a professional source;
the creation and implementation of computerised decision models and;
to critique how managers make decisions.
In particular, this assignment is designed to assess;
your application of knowledge,
understanding and skills in certain topics including cost flows in management accounting,
terminology,
manufacturing statements,
spreadsheet construction,
product costing,
materials acquisition systems,
accounting for overhead,
usiness report writing,
activity based costing, (ABC) and,
the allocation of overhead including service department costs.
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Marking criteria and standards
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Your assignments will be marked as a whole with recognition being given to application of knowledge, quality thinking and application of skills. For some questions, students have a chance to demonstrate some creativity, or provide their own examples or give evidence of wider reading or structure a computer spreadsheet model in an innovative manner. We also need to avoid the snowballing effects of cumulative e
ors - that is, an e
or early in a practical question which ca
ies through. Thus, a marking system is used with deductions for e
ors and omissions. Full marks are possible for well structured, complete, quality answers.
Any assignments with evidence of plagiarism may be refe
ed to the university's academic misconduct processes and will receive a grade of zero. See www.csu.edu.au/faculty
usiness/studentresources/plagiarism
The marking criteria for your assignments will be based on the content of the subject as identified by the learning objectives as outlined above and at the beginning of each of the various topics as outlined in the Interact topics. Good spreadsheet answers will comply with the assignment requirements.
Criteria
Relevance of the answer. Are the important issues raised in the question identified? Did the student answer the questions?
Critical capacity. Has reference material been carefully analysed or critically accepted?
Structure of the answer. Is the answer well-structured and the argument logically developed?
Writing style. Is the style concise and lucid or confused, making it difficult for the reader to get the point?
Scope of reading. Does the answer indicate a satisfactory coverage of literature relevant to the questions?
Answers should:
• be well planned with arguments flowing logically;
• use co
ect sentence structure, punctuation and spelling;
• present original ideas where appropriate;
• and present a justified conclusion and acknowledge all sources.
Note:
Normal distribution curves for grades are not utilised in this subject. Â