MANAGERIAL ACCOUNTING

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HI5017
MANAGERIAL ACCOUNTING
final assessmeNt

Trimester 2, 2022

 

TIME ALLOWED:  24 hours

Assessment Weight:   50 total marks

 

Instructions:

All questions must be answered by using the answer boxes provided in this paper.
Completed answers must be submitted to Blackboard by the published due date and time.

Please ensure you follow the submission instructions at the end of this paper.

 

Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.

                                               

                               

 

 

Question 1                                                                                                             (7 marks)

Discuss one of the costing systems you found interesting in this unit from the list below, and provide 2 reasons for what was interesting about it. (4 marks)

                                 Word Limit:  250 words

Students are to reflect on any one of the costing systems stated below:

Job Costing system
Process Costing system
Hybrid Costing or Operation Costing system
Service Costing system

ANSWER a):  ** Answer box will enlarge as you type

 

 

 

 

 

 

 

Best Toys Company manufactures a variety of battery-operated toys. Information on its popular product 3D is provided to you. Materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Production and cost data for the month of October 2022 are as follows:

Production Data- 3D Popular Toy
Units
Percentage Complete

Work in process units, October 1
 500
80%

Units started in production
1000
 

Work in process units, October 31
 400
40%

Cost Data- 3D Popular Toy
 
 

Work in process, October 1
 
 

      Materials                                    $700
 
 

      Conversion costs                       600
$1,300
 

Direct materials
 2,500
 

Direct labor
1,680
 

Manufacturing overhead
1,340
 

 

Required:

Calculate the equivalent units of production for materials and conversion costs using the weighted average method.                                                                                                                                                                     (3 marks)

SHOW YOUR WORKINGS

 

ANSWER b): 

 

 

 

 

 

 

Question 2                                                                                                                                                                                                                                                                                                 (11 marks)

Based on your individual assignment, describe what you have learnt about ABC system implementation in Australia. What was interesting, and what lessons did you learn?

Word limit: 250 words                                                                                                            (3 marks)

ANSWER a):

 

 

 

 

 

When would it be necessary to have departmental overhead rates instead of a single plant-wide overhead rate?

Word limit: 150 words                                                                                                            (2 marks)

ANSWER b):

 

 

 

 

 

 

 

 

 

Returning from a seminar on ABC system, the CEO of Momi Company has requested the management accountant to consider switching to ABC. Information is collected for the three approaches to allocating manufacturing overhead, and you are to assist in deciding which of the three approaches the company should use to apply overhead to products.

 

Information for each approach is provided as follows:

One plant-wide rate. The predetermined overhead rate is 150 percent of the direct labour cost.
Direct labour costs for the year totalled $100,000.
Department rates. The Machining department uses a rate of $50 per machine hour, and the Assembly department uses a rate of $45 per direct labour hour.
During the year, the Machining department used 1,200 machine hours, and the Assembly department used 1,100 direct labour hours.
Activity-based costing rates. Three activities were identified, and rates were calculated for each activity.

 

Purchase requisitions
$18 per requisition processed

Production setup
$40 per setup

Quality control
$85 per inspection

 

During the year, 850 purchase requisitions were processed, 1,300 production setups were performed, and 400 products were inspected.

 

Required:

Using the plant-wide method, calculate the amount of overhead applied to products. (1 mark)
Using departmental overhead rates, calculate the amount of overhead applied to products. (1 mark)

Using the activity-based costing approach, calculate the amount of overhead applied to products. (1.5 marks)

Based on your results, which method(s) have overcosted the company’s products? (1 mark)
Which method would you recommend for the company, and state the reason for your choice. (1.5 marks)

SHOW YOUR WORKINGS

ANSWER c): 

 

 

 

 

 

 

 

tivity-based  costing  should  improve  the  accuracy  of  cost  information. Allocating  costs  to  activities

rather than departments enable the identification of even more appropriate allocation bases. For example ABC

uses  both  volume and  non-volume  based  cost  drivers  as  allocation bases  and  attempts to aggregate costs that

have similar behaviour patterns. Again, however, there is an additional cost in analysing costs and cost drivers at

an activity level rather than at a department level.

sing  activity-based  costing  should  improve  the  accuracy  of  cost  information. Allocating  costs  to  activities

rather than departments enables the identification of even more appropriate allocation bases. For example ABC

uses  both  volume and  non-volume  based  cost  drivers  as  allocation bases  and  attempts to aggregate costs that

have similar behaviour patterns. Again, however, there is an additional cost in analysing costs and cost drivers at

an activity level rather than at a department level.

sing  activity-based  costing  should  improve  the  accuracy  of  cost  information. Allocating  costs  to  activities

rather than departments enables the identification of even more appropriate allocation bases. For example ABC

uses  both  volume and  non-volume  based  cost  drivers  as  allocation bases  and  attempts to aggregate costs that

have similar behaviour patterns. Again, however, there is an additional cost in analysing costs and cost drivers at

an activity level rather than at a department level.

Question 3                                                       (7 marks)

Exquisite Shoes are stockists of industry-approved safety boots. The company is planning for the quarter ending in December and has supplied the following information:

Purchases

The forecast purchases of raw materials for the next three months are:

Month                                  Purchases ($)

October                                                                70 000

November                                                          75 000

December                                                           80 000

 

40% of its purchases are in cash, and the remainder is on credit. Of the credit purchases, 50% is paid in the month of purchase, and the other 50% is paid in the month after the purchase. The September 30 accounts payable balance is $30 000

 

Required:

Prepare a schedule of expected cash disbursements for each of the three months (October – December), including the total cash payments of raw materials for the quarter. (5 marks)

ANSWER a):

 

 

 

 

 

Suggest two ways Exquisite Shoes can improve its cash position in the next quarter.

(2 marks)

ANSWER b):

 

 

 

 

 

 

Question 4                                                      (7 marks)

a)
i) Explain in your own words how using ROI as a performance measure can lead to decisions that may harm a company’s future competitiveness. (2 marks)
ii) Recommend a solution to using ROI as a performance measure. (1 mark)

Word limit: 250 words  

ANSWER a):

 

 

 

 

 

 

 

 

b) Explain the value strategy maps offer to an environmental consulting firm, which provides expert assessment and advisory services for their clients on matters pertaining to the management of environmental issues. Include an example to support your answer.

Word limit: 250 words                                                                                                                  (4 marks)

ANSWER b): 

 

 

 

 

 

 

 

 

Question 5                                                      (11 marks)

Scooters Ltd sells three types of scooters. It has fixed costs of $258,000 per month. The sales and variable costs of these products for April are shown below:

 

 
S1
S2
S3

Sales
$1 000 000
$1 500 000
$2 500 000

Variable costs
$ 700 000
$ 900 000
$1 250 000

 

Determine the sales mix of the three products. (1.5 marks)
Calculate the break-even point in sales dollars for the company. (3.5 marks)
Calculate the break-even point in sales dollars for each scooter. (1.5 marks)
Calculate the margin of safety at the present sales level in dollars. (1.5 marks)
Discuss the weaknesses of the CVP analysis technique as a financial planning tool.

Can flexible budgets be used to overcome its weaknesses? Explain.

Word limit: 200 words                                                                                                     (3 marks)

 

SHOW YOUR WORKINGS

ANSWER: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 6                                                                                                                                                  (7 marks)

In your own words, suggest to the Manager of the New Products Division of a mobile phone company about the pricing of new products.

Word limit: 250 words                                                                                                            (4 marks)

ANSWER a):

 

 

 

 

 

 

 

 

 

Electroz Ltd has the following data concerning a model electric car it manufactures:

·         Variable manufacturing cost                                                                       $ 45

Applied fixed overhead $ 15
Variable selling and administrative cost $ 10
Allocated fixed selling and administrative cost $ 18

 

Required:

If the company uses cost-plus pricing based on manufacturing costs, determine the mark-up percentage used by the company to obtain a price of $150.                                                                                     (3 marks)

SHOW YOUR WORKINGS

ANSWER b): 

 

 

 

 

 

 

 

END OF FINAL ASSESSMENT

 

Submission instructions:

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