ACCY6007
Management ACCOUNTING
Level: 6, Credits: 15
Assignment 1
Trimester 1, 2019
Due Date: FridayMonday 5th1 Apr 2019 (Part 1)
MondayFriday 29th6 Apr 2019 (Part 2)
Weighting: 35%
Tutor: Ric Ca
Dr Jude Edeigba
Learning outcomes assessed:
Part 1: 75 Marks
1. Master Budget [Learning Outcome 2]
Part 2: 65 Marks
1. Management Accounting Tool [Learning Outcome 2]
2. Costing Systems [Learning Outcome 1]
Faculty of Business, Management and Legal Studies
Assignment Information:
This assignment has two parts and due dates are as follows:
· Part 1: is Friday 5thMonday 1 April XXXXXXXXXX:59 pm at 11.00 pm.
· Part 2: is Monday 29thFriday 26 April XXXXXXXXXX:59 pm at 11.00 pm.
This assignment is to be completed in a group of three members.
Completed assignments should be submitted via the Turnitin link on the Moodle. You will receive automatic reply once the assignment is successfully submitted. Please note that you are unable to submit your assignment if later than the above due time. The tutor will not assess assignment submitted via emails or in print copy.
One submission is required for a group. Other members of a group should request an evidence of submission from the group representative prior to the due time.
Total mark for this assignment is 140 and the assignment counts 35% towards your final course mark.
If you are unable to complete the assignment but are entitled to an aegrotat consideration (this option is not available for a group of two), please contact your tutor as soon as possible to ensure the co
ect procedure is followed. In such circumstances, it is expected that you will submit what you have completed (a substantial amount) by the due date.
The folder ‘Assessments 2019’ on eCampus contains the templates (excel files) required and the assignment in Word.
You need to complete the assignment using both Excel and Word files. All completed Excel files need to be copied and pasted (use Paste Special – Bitmap/Picture format) to a Word document where you can include the written parts. Only readable contents of your submission are assessed. Therefore, check that your document is professionally formatted and readable.
An assignment cover sheet must be attached to the front of the completed assignment and electronically signed to say this is your own. All group members must sign the document before submission. Please attach the marking sheet (last 2 pages) with your student ID to the last page of your assignment document.
This Assignment Accounts For 35% Of The Total Marks For This Subject
Assignment Hints
This assignment is in two distinct parts (Part 1 and 2). It is designed so you can complete it as you work through the related topics. DO NOT LEAVE IT TO THE LAST MINUTE!!
The nature of many of the questions ensures substantial uniformity in the answers. We expect your answers to be your own work.
Spreadsheeting
It is expected that some of the questions in Parts 1 and 2 are completed using Excel. Spreadsheets with some data already entered (eg. data sheet) are provided on eCampus.
In particular Part 1 is quite involved. It requires you to prepare a Master Budget, using a spreadsheet. A suggested template ‘Assignment template.xlsx’ has been put on eCampus. It includes:
· a separate input area (the first sheet labelled Budget data) for the year’s data and any previous year’s data (e.g. previous year’s Statement of Financial Position for budget preparation). Use cell references (e.g. = 'Data sheet'!C2) in the rest of your spreadsheet to access this data when required. In practice, this allows the data sheet to be updated annually (or revised during the year) and the rest of the spreadsheet to work automatically from this without any further alteration required. This is possible only when the spreadsheet has used formulas co
ectly. You will lose marks if you type in figures when you should be accessing a cell reference from the previous budget or data sheet. A spreadsheet is a tool and to be a useful tool in budgeting it must be able to be quickly adapted to illustrate different possible scenarios. Therefore the whole spreadsheet must be built up using formulas. You are not using a spreadsheet to just type tables!
See Lynda.com if you are having difficulty with using Excel.
You must email the spreadsheet for all Excel based parts to your respective tutor (within the timeline given) so your working copy can be viewed. Note that your solutions for each question is assessed from your MS Word submission and the use of formulas is assessed from your spreadsheet. Ensure you copy all solutions from your spreadsheet to World Document prior to submission.
Part A Budgeting and Re-forecasting 75 Marks
(A suggested template ‘Assignment template.xlsx’ to answer this question has been put on eCampus.)
TST Carpet Manufacturers (Australia) Pty LTD manufactures colourful rugs (a single product in one size which has a very high demand), using wool and dye as direct material. The business is highly successful and the firm manages to run their operations without any long term debts.
The manufacturing process of the business is as such the firm makes rugs by hand but uses a machine to dye the wool. The overhead costs are accumulated in two cost pools – one for weaving and the other for dyeing. Weaving overhead is allocated to product based on direct manufacturing labour-hours (DMLH) and dyeing overhead is allocated to product based on machine-hours (MH). There is no direct manufacturing labour cost for dyeing.
The firm uses a standard costing system to complete the annual budget. There are no seasonal or cyclical demand changes for the product. The firm assumes all income, costs and expenses are evenly distributed throughout the year. The information for the year ended 30 June 2018 is as follows:
Sales revenue:
Sales - The marketing department projected sales are 150,000 rugs per year at $2,000 each
- Beginning inventory 5,500 rugs (total cost $6,352,500)
- Target ending inventory 5,000 rugs
Material and labour requirements:
Direct materials:
Wool XXXXXXXXXXskeins per rug at $2.00 per skein
- Beginning inventory 205,000 skeins (total cost $410,320)
- Target ending inventory 200,000 skeins
Dye - 0.8 litres per rug at $6.00 per litre
- Beginning inventory 4,000 litres (total cost $23,680)
- Target ending inventory 3,800 litres
Direct manufacturing labour:
Weaving - 62 DMLH per rug (at $15 per hour)
Dyeing - Nil
Machine hours:
Weaving - Nil
Dyeing XXXXXXXXXXmachine-hours per skein
Budgeted manufacturing overhead costs:
Dyeing
(Based on 1,440,000 MH)
Weaving
(Based on DMLH calculated)
Variable costs: $
Indirect material
0
15,400,000
Maintenance
6,560,000
5,540,000
Utilities
7,550,000
2,890,000
Fixed costs: $
Indirect labou
347,000
1,700,000
Depreciation
2,100,000
274,000
Othe
723,000
5,816,000
Total budgeted costs
17,280,000
31,620,000
Non-manufacturing
Administration salaries
44,918,220
Other expenses
5,240,459
Depreciation
9,715,925
Sales salaries
17,967,288
Advertising and promotion
7,486,370
Sales commissions
6,000,000
Depreciation sales vehicles
1,497,274
Total $
92,825,536
Other information:
· 70% of monthly sales are on cash, and the balance is collected in the following month.
· All monthly purchases of material are on account and paid in the following month.
· All manufacturing labour and overhead are paid in the month incu
ed.
· While all the administration expenses are paid in same month, 50% of the sales expenses are paid in the following month.
· Firm tax rate is 28% and pays provisional taxes on a monthly basis. The previous year’s tax liability is paid within the year and this year’s tax liability is $1,327,700.
The firm’s Statement of Financial Position (Balance Sheet) as at 30 June 2017 is as follows:
TST Carpet Manufacturers (Australia) Pty LTD
Statement of Financial Position as at 30 June 2017
Assets:
$
$
$
Non-Cu
ent:
257,550,630
Less: Accumulated depreciation
__33,456,537
224,094,093
Cu
ent:
Inventory – Direct material
434,000
XXXXXXXXXXFinished goods
6,352,500
6,786,500
Accounts receivable (trading)
24,450,670
Bank / Cash
___995,534
Total Cu
ent Assets
32,232,704
Less: Cu
ent Liabilities
Accounts payable (direct material supplies)
1,345,662
Sales salaries and other payables
1,475,600
Taxes payable
1,240,740
4,062,002
Working Capital
28,170,702
Total non-cu
ent assets and WC
252,264,795
Less: Non-cu
ent Liabilities
Long-term loan
_ XXXXXXXXXX
Net Assets:
252,264,795
Financed by:
Equity and Reserves:
Share capital (fully paid 12,210,000 shares @ $10 each)
122,100,00
Reserves and retained earnings
130,164,795
Total Equity and Reserves
252,264,795
You Are Required To:
1. Prepare the following budgets for the year ended 30 June 2018. [50 marks]
a) Revenue budget
) Production budget in units
c) Direct material usage budget in quantity and dollars
d) Direct material purchase budget
e) Direct manufacturing labour cost budget
f) Manufacturing overhead cost budget
g) Finished goods unit cost using standard costing (round to two decimal places)
h) Ending (closing) inventory budget
i) Cost of goods sold budget
j) Non-manufacturing cost budget for marketing and general administration
k) Cash budget (income and disbursements)
l) A budgeted Statement of Comprehensive Income
m) A budgeted Statement of Changes in Equity
n) A budgeted Statement of Financial Position
2. Assume that you hold the position of Management Accountant of TST . Write a covering memo to your Managing Director to accompany these budgets. In this memo
iefly summarise the important features of the budgets and any implications these may have for management.
Your answer should also include implications as to the firm’s pricing of products and margins maintained, revenue and costs, direct labour and variable overheads, the importance of controlling fixed overheads and period costs, working capital management etc.
Attach this memo to the front of a printout of your budgets. [10 marks]
3. Management has decided after looking at your budget that
a. Sales are likely to be 160,000 rugs and not 150,000
. A recent wage negotiation mean in 1. above will be paid $15.50 per hour and not $15