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Student Number: (enter on the line below)
Student Name: (enter on the line below)
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
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