PACC6001 Management Accounting- Fluffy Unicorn Investments

Fluffy Unicorn Investments (FUI)

You are an intern working for FUI, a large venture capital firm in Adelaide which does regular due diligences. Among other regular clients, FUI has done due diligences for Deliziosa Purea & Succhi (DP&S) and Monopattino Veloce (MV).

For the sake of simplicity, this assignment does not consider taxes and other fees and whenever possible support your arguments with your calculations.

For the assignment you will be required to answers questions regarding topics which were not taught yet during the trimester. Whereas some units require students to do some research, which often means searching in academic books and journals for a suitable solution for the matter discussed, in this unit you must study parts of the textbook which were not taught yet.

Regarding how answering the questions, please note there is a choice for quality over quantity. This means most questions are complex but do not require wordy answers. Instead of asking students to define a concept, often the request is for students to apply a concept to the specific case of the assignment and supporting it with your own calculations using the data provided on the assignment. When preparing your answers, please break down the information as much as you can. Please classify apart the items (i.e., break down the items) because if you are providing the total amounts and they are incorrect, you get zero marks, whereas if you provide the breakdown and some of items are correct, you can get some marks. Keep in mind you are not preparing reports for financial accounting, so break down the cost items as much as possible.

Question 1

One of your colleagues at FUI named June is concerned whether what she has done something wrong or not at work. June is a management accountant working at FUI, and one of June’s close family members owns a small company, Company A, which provides service to FUI. When preparing the performance report for the service providers, June noticed Company A was underperforming, and it was likely to have its contract terminated by FUI. Before finalising the performance report, June calls her relative and tells him regarding the report she is preparing, and the risk Company A might have its contract terminated. She also tells her relative what the other service providers are doing for avoiding being underperforming and keeping their contracts with FUI.

Required

Please state two of the ethical standards, as provided by the Institute of Management Accountants (IMA) Statement of Ethical Professional Practice1, which are being jeopardized and justify why these two standards are being jeopardized. Please explain how June could help her relative without jeopardizing these two ethical standards. (For an answer with more than two ethical standards the first two standards will be marked, and the remainder will be ignored). (Chapter 1, 10 marks)

Question 2

Deliziosa Purea & Succhi (DP&S) has a whole plant for processing tomatoes. The plant processes tomatoes into tomato sauce, tomato paste, and tomato puree. As part of the cost planning and cost control of operations and activities, FUI is currently reviewing the gross-margin percentage of each of its products, using the estimated net realisable value (NRV) method for allocating joint costs. The company processes tomatoes in Department #1, out of which come three products: tomato sauce, tomato paste, and tomato puree. Processing 700,000 kg in Department #1 results in 50,000 kg of tomato sauce, 300,000 kg of tomato paste and 100,000 kg of tomato puree, and the costs in Department #1 are $400,000 in total.

Tomato paste is sold without further processing. Tomato sauce is processed further through Department #2 and the costs are $50,000. Tomato puree is considered a by-product and is processed further through Department #3 and the costs are $13,000. Tomato sauce sells for $4 per kg, tomato paste sells for $2 per kg, and tomato puree sells for $3 per kg.

Required

1. a)  Calculate the gross-margin percentage of each product using unit costs per kilogram for tomato sauce, tomato paste, and tomato puree, treating tomato puree as a by-product. Deduct the estimated NRV of the by-product produced from the joint cost of tomato sauce and tomato paste. (e.g., Exercise 6.15, Chapter 6, 10 marks)
2. b)  Calculate the gross-margin percentage of each product using unit costs per kilogram for tomato sauce, tomato paste, and tomato puree, treating all three as joint products. (e.g., Exercise 6.15, Chapter 6, 10 marks)

Question 3

Deliziosa Purea & Succhi (DP&S) has a department specialised in two products (juice and puree) from a joint process using fruits. The joint cost of production is $50,000. A total of 5,000 units of juice can be sold at split- off for $18 per unit or processed further as juice plus at an additional cost of $23,000 and sold for $20 per unit. A total of 10,000 units of puree can be sold at split-off for $16 per unit or processed further as puree plus at an additional cost of $15,000 and sold for $22 per unit.

Required

1. a)  What is the difference in profit if the company decides to process further the juice, instead of selling it at split-off? (e.g., Sell or process further, Chapter 6, 5 marks)
2. b)  What is the difference in profit if the company decides to process further the puree, instead of selling it at split-off? (e.g., Sell or process further, Chapter 6, 5 marks)
3. c)  How does a reduction on the joint cost of production from $50,000 to $25,000 influences the decision whether to process further the juice and the puree instead of selling them at split-off? Justify your answer. (e.g., Sell or process further, Chapter 6, 10 marks)

Question 4

Regarding the manufacture of standard scooters at Monopattino Veloce (MV), the standard costs per unit being variable manufacturing $8, fixed manufacturing $7. Selling and administrative costs are $3 per unit sold. The selling price is $20 per unit. Actual and budgeted overhead are the same for the year. Information about the company production activity for the year is:

Sales Units produced Beginning Inventory 125,000 units 155,000 units 5,000 units As part of the company cost planning and cost control of operations and activities, FIU is now reviewing its production activity and the potential impact of different stock-costing methods.

Required

2. a)  What is the value of closing inventory of finished goods under absorption costing? (Chapter 7, 10 marks).
3. b)  What is the difference in profit between absorption and variable costing and, for this specific year for this company, which of the two stock-costing methods has the higher profit and why? (Chapter 7, 10 marks)

Question 5

You have been assigned for reviewing the actual and budgeted figures of the variable manufacturing overhead of standard scooters at Monopattino Veloce (MV). The management at MV argues there are no evident issues with the variable manufacturing overhead budget as the static-budget variance is often favourable, which proves the budgeting process works quite well. The management at MV also argues the employees at the production line of standard scooters are always highly efficient because of the consistently favourable efficiency variances.

Your analysis is for a specific month of the year, comparing the budgeted and actual figures. The variable manufacturing overhead cost is allocated to each standard scooter based on budgeted direct manufacturing labour-hours per standard scooter. For the specific month of the year, each standard scooter is budgeted to take 5 labour-hours. Budgeted variable manufacturing overhead cost per labour-hour is $20. The budgeted number of standard scooters to be manufactured in this given month is 100.

Actual variable manufacturing overhead costs in the given month were $12,000 for 90 standard scooters started and completed. There was no opening or closing stock. Actual direct manufacturing labour-hours for this given month were 490.

Required

1. a)  Calculate the static-budget variance, the flexible-budget variance, the sales-volume variance and the spending and efficiency variances for the given month for the variable manufacturing overhead. (g., Exercise 16.11, Chapter 16, 10 marks)
2. b)  Explain whether the management is correct or not regarding having a good budgeting process due to often having a favourable static-budget variance and a consistently favourable efficiency variance. Use your calculations for supporting your argument. (Chapter 16, 10 marks)

Question 6

Monopattino Veloce (MV) has a division of electric scooters which can produce two different types of scooters, the Monopattino Elettrico Veloce (MEV), which is faster, and the Monopattino Elettrico Economico (MEE), which has a longest-lasting battery. There is a question regarding how much should the company produce of each product.

You are analysing the product-mix option under specific capacity constrain: one batch of MEV requires 7 machine hours and one batch of MEE requires 8 machine hours; the company has 12,000 machine hours available to produce these products.

Required

How many of each batch should Monopattino Veloce (MV) produce for maximizing the profit of the division of electric scooters and why? Use your calculations for supporting your argument and showing the maximum contribution margin (i.e., total revenues minus variable expenses) the division of electric scooters can achieve. (Product-mix decisions under capacity constraints, 10 marks)

Answer in Detail

i
Solved by qualified expert

44 More Pages to Come in This Document. Get access to the complete answer.

Physics

Home Work: 4 Pages, Deadline:
11 days

Statistics

Programming: 12 Pages, Deadline:
19 days

Maths

Course Work: 2 Pages, Deadline:
9 days

Management

Thesis: 7.2 Pages, Deadline:
4 days

Marketing

Case Study: 6.4 Pages, Deadline:
2 days

Assignment

Essay: 3 Pages, Deadline:
5 days

Operations

Assignment: 3 Pages, Deadline:
8 days

English

Thesis: 3 Pages, Deadline:
2 days

Biology

Essay: 3 Pages, Deadline:
8 days

Civil Law

Thesis: 2 Pages, Deadline:
4 days

Management

Assignment: 3 Pages, Deadline:
23 days

Finance

Assignment: 1 Page, Deadline:
3 days

Marketing

Assignment: 11.2 Pages, Deadline:
5 days

Marketing

Home Work: 11 Pages, Deadline:
4 days

HRM

Case Study: 8 Pages, Deadline:
6 days

Finance

Home Work: 4 Pages, Deadline:
7 days

Physics

Home Work: 1 Page, Deadline:
2 days

Healthcare

Assignment: 8 Pages, Deadline:
4 days

Healthcare

Assignment: 12 Pages, Deadline:
7 days

Assignment

Essay: 5 Pages, Deadline:
3 days

Excellent customer service! Really helpful!! Wanted assignment done in 8days and they managed to complete it within 1 day! And was a excellent standar …

User ID: 8***25 United Kingdom, Great Britain

I passed sucessfully thank you very much for your helpI really appreciate it…Continue doing your good work

User ID: 5***27 United Kingdom, Great Britain

This assignment was completed as per instructions. All questions were answered neatly etc.

User ID: 2***50 Kitchener, Canada

I was impressed with the services and hope to use them again, just what I wanted at the right time.

User ID: 8***95 United Kingdom, Great Britain

Will wait for the lecturer remarks. I have just submitted the work. I hope it is standard since I am using the service for the first time. Impressed w …

User ID: 6***78 United Kingdom, South Africa

I always take help from myassignmenthelp. I have no regrets as every time they provide high quality help and they provide good discounts as well.

User ID: 1***63 Longford, Australia

Good job, I am happy with the amazing services and completed work given. Thank you very much for helping me receive a good mark. Will definitely work …

User ID: 2***91 Kuala Lumpur, Malaysia

The most satisfying essay I’ve ever received. It covers all parts that I’ve mentioned at the beginning. Thanks a lot pal

User ID: 3***95 United Kingdom, Great Britain

Followed the instructions and the assignment was done well before the due date. Thank you

User ID: 7***23 United Kingdom, Canada

Always get good grades when they do my work. Keep up the good work. I will be telling my friends about it

User ID: 5***99 Raleigh, United States

Good assignment and good support.It is important to review plagiarism and grammer

User ID: 3***11 Raleigh, Qatar

This PowerPoint presentation is well-done. It fits well with this finance course and the individual did an excellent job. Thank you so much!

User ID: 8***35 Saint Louis, United States

Good job done. The assignment is well written, can get higher grade if can provide more in-depth analysis on the topic

User ID: 8***66 Saint Louis, Hong Kong

Overall well written essay, excellent and complete writing in one day, and the Expert prompt reply on comments

User ID: 8***66 Saint Louis, Hong Kong

Thanks for your effort. I appreciate it. I have grated 60, which is enough to pass.

User ID: 8***12 Dublin, Ireland

The excel formulas were perfect. But the explanation regarding the recommendation was subpar.

User ID: 5***90 Dublin, United States

Wonderful as always! Very professional and knowledgeable! I love this experts work and always use them when it comes to Physics.

User ID: 6***06 Atlanta, United States

Really appreciate this work which help me to get 8.9 out of 10. i would like to express thanks to expert.

User ID: 5***91 Atlanta, Malaysia

Good work . it was help me lots. i got 6.5 out of 10 which is good score for me.

User ID: 5***91 Atlanta, Malaysia

amazing results, received a High grade thank you very much, appreciate the help. Can’t wait to have more assignments so you guys can help me.

User ID: 5***22 Atlanta, Switzerland