Page 1 of 3
Problem 1
Outdoors produces high-end camping tents. The following information is available for the
years 2020 (right column) and 2021 (left column):
XXXXXXXXXX
Number of tents produced and sold 5,500 5,000
Selling price $440 $400
Direct materials (kg) 15,375 15,000
Direct materials costs per kg $44 $40
Manufacturing capacity for tents 10,000 10,000
Conversion costs $1,100,000 $1,000,000
Conversion costs per unit of capacity $110 $100
Selling and customer-service capacity (customers) 58 60
Total selling and customer-service costs $362,500 $360,000
Selling and customer-service capacity cost per customer $6,250 $6,000
Outdoors has zero defective production and planned to reduce direct materials usage per
tent in 2020. Manufacturing conversion costs in each year depend on production capacity
defined in terms of the number of tents that can be produced. Selling and customer-service
costs depend on the number of customers that the customer and service functions are
designed to support. Outdoors has 50 customers in 2020 and 57 customers in 2021. The
industry market size for camping equipment increased 5% from 2020 to 2021.
Required:
In explaining the change in Outdoors’ operating income from 2020 to 2021:
(a) What is the revenue effect of the growth component? (2 marks)
(b) What is the revenue effect of the price-recovery component? (2 marks)
(c) What is the net effect on operating income as a result of the productivity component?
(5 marks)
For all effects, indicate whether they are favourable or unfavourable.
Problem 2
Nature Bees produces honeycomb and beewax. The production is made in
two decentralised divisions.
The Honey Farm Division produces honeycomb at a variable cost of $20 per kg.
Honeycomb and can be sold at $30 per kg.
The Wax Farm Division produces 0.50 kg of beewax from 1 kg of honeycomb at a variable
cost of $12 plus the cost of the honeycomb. Beewax can be sold at $95 per kg.
The processing of honeycomb into beewax is done by the worker bees in the division’s
eehive box. The worker bees work 35 hours per week in the beehive box.
Required:
(a) Propose an ideal transfer price for Nature Bees and explain with calculations why the
proposed price is ideal. XXXXXXXXXX6 marks)
(b) The cu
ent production process at Natural Bees is that Natural Bees receives orders fo
45 kg of beewax on a weekly basis. It takes 40 minutes for 2 kg of honeycomb to be
processed by into 1 kg beewax in the beehive box. Identify three independent scenarios
where the customer wait time would decrease at Natural Bees? (3 marks)
Page 2 of 3
Problem 3
Information below relates to a manufacturing company that uses a standard costing
system for planning and control purposes. The company applies the following standards to
account for its production costs.
Direct Materials (15 kg @ $6.00 per kg) $90.00
Direct Labour (4 hours @ $15.00 per hour XXXXXXXXXX
Variable Overhead (10 machine hours @ $4.00 per machine hour XXXXXXXXXX
Fixed Overhead (10 machine hours @ $5.00 per machine hour XXXXXXXXXX
Standard cost per unit of output $240.00
Information regarding the company’s 2020 operation is available below:
Actual Production Master Budget
Number of output units 19,000 18,000
Direct materials $1,976,500 $1,620,000
Direct labour 1,116,000 $1,080,000
Variable Overhead 861,000 720,000
Fixed Overhead 970,000 900,000
Total $4,923,500 $4,320,000
Additional information:
• 335,000 kg of raw materials were purchased and used during the year.
• 72,000 direct labour hours were worked during the year.
• 210,000 machine hours were worked during the year.
• During the year a factory supervisor retired and was not replaced.
• Defective materials delivered by a supplier had gone undetected before use in
production. This defective material caused the additional use of 30,000 kg of raw
materials; 1,000 labour hours, and 2,500 machine hours to meet the required
production.
Required:
Calculate all level-3 variances for direct labour (DL), variable and fixed overhead costs in
2020. Indicate whether each variance is favourable or unfavourable; present your workings in
the worksheet format. XXXXXXXXXX9 marks)
Page 3 of 3
Problem 4
The SECaT Course survey at the University of Queensland consists of the
following questions to seek feedback from students regarding course quality:
1. I had a clear understanding of the aims and goals of the course.
2. The course was intellectually stimulating.
3. The course was well structured.
4. Course experiences, tools or materials were useful for my learning.
5. Assessment requirements were made clear to me.
6. I received helpful personal or group feedback on how I was going in the
course (in person or online).
7. I learned a lot in this course.
8. Overall, how would you rate this course?
9. What were the best aspects of this course?
10. What improvements would you suggest?
Required:
Critically evaluate the SECaT teaching survey as a tool to evaluate a lecturer’s performance
in teaching AND discuss any behaviour implications XXXXXXXXXXmarks)
Hint: consider the following - controllability, responsibilities and the characteristics of a
alanced performance evaluation tool (such as a balanced scorecard). You are encouraged
to refer to specific survey questions in your discussion.
This problem does not require your responses to the SECaT questions.
Semester_Two_Final_Examinations_2021_ACCT7107 (PART A).pdf
Semester_Two_Final_Examinations_2021_ACCT7107 (PART B).pdf