Description
ACCT20076 – FOUNDATIONS OF MANAGEMENT ACCOUNTING
ASSESSMENT TASK 2B – TERM 2 2024
PRACTICAL AND WRITEN ASSESSMENT
Due date: Monday of Week 9 (11.45 pm AEST 9* September 2024)
Weight: 25%
- Objective:
This assessment item relates to Unit Learning Outcomes 1, 2,4 and 5.
- Students are to exhibit knowledge of the subject matter by demonstrating:
- Demonstrating accuracy in accounting calculations.
- Understanding and the ability to analyse and interpret the information from the calculations undertaken.
- Breadth of quality of analysis and providing appropriate recommendations to management decision-making
- Communication —use of appropriate grammar and use of appropriate format.
- Correctly using the APA referencing system to cite academic sources in-text and in the reference list.
- Instructions:
The assignment must be completed in a group of 2-3 students. Registration of group will be completed by Week 7 on Moodles (further instructions have been provided on Moodles). Before starting this assessment, please read the information on Plagiarism and Academic Misconduct on Moodle.
Allocation of marks:
Please refer to the marking rubric provided for this assessment task. Please ensure you use the correct referencing style (APA style) as stated in the Unit Profile.
- Assignment questions
Tassie Desk Pty Ltd manufactures variety of study desks for schools. It adopts job costing method for its management accounting system where each contract is treated as a job for recording purposes.
During May, Tassie Desk must complete three jobs — Alpha, Beta and Delta. Information about these three jobs as follow:
- Alpha: This contract is for 1,500 desks of model A to be produced in this job, selling at $120 each. Tassie Desk started the production for Alpha since last month where 80% of the production has been completed at the beginning of this month, costing $90,000 in total. To finished off the contract, Tassie Desk will need to use $9,000 direct material cost, 270 labour hours at the rate of $25 ph. Alpha will also need to share some of the manufacturing overhead with other jobs.
- Beta: There are 850 desks of model B to be produced under the Beta contract. Production for Beta will be started from the beginning of this month and Tassie Desk will have to complete the production by the end of this month for the delivery to be due next month.
Details of production input as below:
Direct materials: 7,140 units at $5 per unit
Direct labour: 1,071 labour hours at $25 per hour
Total contract value: $127,500
3.Delta: Delta contract is for producing of 1,050 desks of Model C. Delta contract was commenced by the end of last month where Tassie Desk only paid some administrative cost for preparing the production plan for the contract. Production commences by the second day of this month and is expected to be completed by the end of this month.
Details of production input as below:
Direct materials: 3,780 units at $10 per unit
Direct labour: 1,134 labour hours at $25 per hour
Selling price: $135 each
Tassie Desk normally uses pre-determined absorption rate to allocation manufacturing overhead to each job using direct labour hours. The company’s budget for the current year included the following prediction:
Budgeted total manufacturing overhead $720,000
Budgeted total labour hours 28,800.
An analysis of labour time sheets revealed the following labour usage for May:
Indirect labour — general factory clean-up – $3,500
Indirect labour — Factory supervisor salaries — $10,000
Indirect labour — personnel to manage inventory and quality inspections – $7,500.
Other transactions/ events to be recorded including:
– Depreciation of the factory building and equipment during May amounted to $18,000
– Rent paid in cash for warehouse space used during May was $5,000
– Electricity costs incurred during May amounted to $5,400. The invoice for these costs were received, but the bills were not paid in May
– Council rates and property taxes on the factory were paid in cash – $1,670
– The insurance covering factory operations for May was $3,125. The insurance policy had been paid in February.
– Materials and finished goods quality checks — $5,000 and machine maintenance cost amounted to $3,000 (these costs exclude the indirect labour costs)
– Cost of salaries and on-costs for sales and administrative personnel paid in cash during May amounted to $15,000
– Depreciation on administrative office equipment and space amounted to $4,500.
– Other selling and administrative expenses paid in cash during May amounted to $10,000.
Alpha and Delta were completed during May and invoices have been sent to the customers while Beta’s job was completed but invoice hasn’t been sent to the customer. No payment has been received during May by Tassie Desk.
The CFO of Tassie Desk is considering changing the allocation of manufacturing overhead as she believes using a single allocation criterion might underestimate or overestimate some overhead items. As such, she asks you — a management accountant of Tassie Desk to provide a report to analyse the pros and cons of the traditional costing management and the Activity-based costing method in managing the manufacturing overhead. In the report, you might need to provide any recommendations that might support the CFO’s final decision.
To prepare for your report, you have collected some additional information as below:
Job Machine hours Number of quality inspections
Alpha 150 10
Beta 1,000 65
Delta 850 50
Requirement:
Prepare a management accounting report in the following format:
- Executive Summary (5 marks): The one-page executive summary should offer a concise overview of the critical issues outlined in the case study and provide a brief background context. Additionally, it must include a summary of the key findings derived from your analysis. 2.
- Management accounting report: In the body of the report, you should:
- Analyse the cost structure of each job by outlining the direct materials, direct labour and manufacturing overhead, under the traditional costing method. Demonstrate if the manufacturing overhead is under or over applied.
- Provide the Cost of Goods Manufactured, Cost of Goods Sold and Income Statement under the traditional costing method (using a single overhead allocation criterion —direct labour hours). Provide an analysis of the overhead allocation under the Activity-based costing method. In your analysis, you need to demonstrate how you identify the cost pools and cost drivers for each of the cost pools.
- Provide the Cost of Goods Manufactured, Cost of Goods Sold and Income Statement under the Activity-Based Costing method. Compare the results of the two methods. Recommend which method might be more appropriate for Tassie Desks Pty Ltd. In the recommendation section, you must provide detailed and justified recommendations based on your case study analysis. Your recommendations should be well-reasoned and supported by evidence from your findings. Conclusion of the report.
Attention:
- Your discussion and analysis must be supported by evidence from journal articles, news or other sources from internet. When using these sources of information, you need to acknowledge them by in-text citations and add them in the reference list.
- Be sure you show all calculations for each of the costing methods. Accuracy in your calculations will be crucial for scoring well in this assignment.
- Marks are allocated for presentation of the data and writing format. Ensure you present data in a clear and organized manner to enhance the readability of your reports.
- Discuss the results whenever possible. Your discussion will help to communicate your information with the readers.
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