Reference no: EM132124548

Establish and maintain accounting info systems and Provide management accounting information Assignment -

Assignment 1 - Case Studies

Case Study 1 - Review the case study information below and complete the steps mentioned in the Assessment Task.

Exotica, a kitchen appliances business wants to convert their paper-based accounting system over to an electronic system, as they believe it will be more efficient in the long run to manage the accounts. They want whatever new system you recommend to them to be compliant with all Australian requirements for small businesses.

Exotica has sixteen full-time and seven part-time staff, but only three members of staff will have/need access to the financial system. These will be the business manager Jodie, the accounts manager Rod and the payroll manager Helen. They want software that is a single purchase with no ongoing license fees, and plan to keep using if for the next three to five years, while the organisation continues to grow. They are anticipating that within five years they will have over 50 full-time staff, and that at least six staff will require access to the financial system by then.

The company has just upgraded its computers, and has three new desktop PCs which will be used by the finances staff. They are current (for 2015) specification machines with i5 CPUs and 4Gb RAM each, and all have Windows 8 Professional and Norton's 360 installed, with the professional version of Microsoft Office Small Business as well. Other staff will use their machines at various times, so it is important that the software requires a login to access data, and that data stored by the software cannot be accessed in any other way.

They do not have any backup software or mechanisms in place, as they have not used computers within the business at all until now. All financial matters have been handled in physical ledgers, etc. They would prefer to now have no paper-based records at all and want to be able to enter all of their existing current data to create opening balances and then throw out their old paper-based records.

Procedure -

Using this case study information provided, you need to complete the following steps:

1. Create a spreadsheet containing:

a. A prioritised list of objectives to meet system and record requirements of the organisation.

b. Identified security requirements to maintain system integrity.

c. Identified technological capabilities of the organisation.

2. Use the spreadsheet to clearly compare at least two pieces of publicly available software, measured against the prioritised system requirements, security requirements and capabilities of the existing technology.

3. Prepare a written report, that reflects the information on the spreadsheet and includes information under the following headings:

a. Software (a brief summary of each piece of software you have compared in the spreadsheet)

b. Preferred Option (a clear identification of your preferred option, including a cost-benefit analysis of the different types of software available)

c. Security (a brief description of how the identified software satisfies security requirements)

d. Reporting (a brief description of the reporting capabilities of the identified software, including description of types of reports that may be generated)

e. Improvements (identify any improvements to the system that could be implemented with improved or new technology within the organisation).

4. Give your written feedback after using these two accounting information system. Your feedback must include the following:

a. a brief biography or description of your experience in using these softwares (50 words maximum)

b. clear agreement that all system requirements and capabilities are being met by the identified software system

c. clear confirmation that the identified system is suitable to meet the identified needs of the case study.

Specifications -

You must provide:

• a completed spreadsheet, as outlined above in Step 1 and Step 2
• a completed written report, as outlined above in Step 3
• Written supporting feedback, as outlined above in Step 4.

Your assessor will be looking for:

• evidence that you analysed and identified the needs of the case study organisation
• evidence that you have identified appropriate software systems, and have compared them
• evidence that you can setup a spreadsheet to assist with analysis of the software systems.

Case Study 2: For this task you are required to implement an electronic asset register, using spreadsheet software for an organisation, as it transitions from a paper-based system. You will need to transfer existing data into the new system, develop implementation and usage documentation, establish contingency plans, establish training systems to support implementation, consult with selected users, and make available system documentation for all users.

Procedure -

Using this case study information provided, you need to complete the following steps.

Create a spreadsheet using spreadsheet creation software in the format as recommended by the ATO (see example with this assessment task).

Transfer all existing data from asset cards to the new spreadsheet, and confirm that the end of year depreciation amount is the same as identified in existing records.

Prepare an Implementation Plan, with the following key sections.

a. Implementation Strategy: for use of the spreadsheet, outlining how it can be regularly updated and checked for accuracy, how backups will be managed and how integrity of the system will be maintained.

b. Contingency Approaches: plans outlining possible or anticipated implementation problems, and how they can be managed.

c. Usage Documentation: a clear, step-by-step description outlining how the spreadsheet is to be accessed, updated and have new assets added to the spreadsheet (this may be in the form of a policy and procedure document).

d. Availability: a description of how the usage documentation will be made available to users within the organisation.

e. Training: a description of a schedule and program to train users of the system through the implementation phase.

Specifications -

You must provide:

• a completed Implementation Plan, as outlined above
• a completed spreadsheet, as outlined above

Your assessor will be looking for:

• evidence that you correctly interpreted and incorporated the information provided in the case study
• evidence that you have developed a suitable implementation strategy.

Case study 3: Asset information

Assets currently kept track of in a hand-written register:

• Motor vehicle (Ford Sedan), purchased 1/07/2014 for $40000 and written down on the 30/06/2015 to be worth $35000.
• Computer, purchased 1/07/2014 for $2400, and written down on the 30/06/2015 to be worth $1800.
• Photocopier, purchased 1/07/2014 for $4000, and written down on the 30/06/2015 to be worth $3200.
• TV purchased 1/07/2014 for $1800, and written down on the 30/06/2015 to be worth $1620.
• Carpets purchased 1/07/2014 for $6000, and written down on the 30/06/2015 to be worth $5250.

Additionally, a fire extinguisher was purchased on the 1/09/2015 at a price of $800.

Depreciation rates (ATO)

Depreciating asset	Effective life in years
Carpets
- in commercial office buildings	8
- in ten-pin bowling centres	4
Computers
- generally	4
- laptops	3
Curtains and drapes	6
Fire extinguishers	15
Hot water installations for commercial office buildings (excluding commercial boilers and piping)	15
Lawn mower
- motor	6 2/3
- self propelled	5
Library (professional)	10
Motor vehicles
- cars generally	8
- hire and travellers' cars	5
- taxis	4
- motor cycles and scooters	6 2/3
Office machines and equipment
- photocopying machines	5
Point of sale assets
- cash registers, stand-alone type	10
Power tools (hand operated)	5
Television receivers
- generally	10
Tools (loose)	5
Vacuum cleaners (electric)	10

Use the prime cost method to calculate depreciations for the motor vehicle, computer and copier.

Assignment 2 -

Assessment Task 1: Project

QUESTION 1 - A business has variable costs of $10 per unit. The selling price is $40 per unit. Fixed costs amount to $300,000. The manager of the business has set a net profit objective of $42,000 after tax. The income tax rate is 30%.

REQUIRED:

(i) Calculate the break-even point sales revenue.

(ii) Calculate the break-even point sales units to achieve an after tax profit of $42,000.

(iii) Calculate the break-even point sales dollars to achieve a before tax profit of 15% on sales revenue.

QUESTION 2 - Gillan Ltd uses a perpetual inventory system. The unit cost of inventory is assigned using the First-In, First-Out method. During June 2015 the company had the following transactions for an item of material:

June  1	Balance	240 units @ $6.00	$  1,440
5	Purchased on credit	160 units @ $5.50	880
10	Issued 40 units to Job 60
15	Issued 220 units to Job 61
20	Purchased on credit	260 units @ $6.00	1,560
22	Issued 100 units to Job 62
25	Issued 200 units to Job 63
29	Returned 10 units to the supplier purchased on the 20 June

REQUIRED:

(a) Prepare an inventory ledger card (stock card) to record the above.

(b) Prepare a general journal entry to record the total issues for June.

(c) Prepare a general journal entry to record the return to the supplier of 10 units purchased on 20 June.

QUESTION 3 - PART A - Factory overhead cost and production data for a firm for a year were as follows:

	Variable Cost	Fixed Cost	Machine Hours
	$	$
Actual	90,000	205,000	20,000
Budget	95,000	190,000	19,000

Factory overhead is recovered from production using machine hours as the cost driver.

REQUIRED:

a) Calculate the factory overhead recovery rate.

b) Determine the amount of over or under-applied overhead. Your answer must clearly state whether the calculated amount is over or under-applied.

PART B - Huxstep Ltd is developing factory overhead rates for the coming year. Budgeted overhead costs for the five factory departments are as follows:

	Cost ($)	Cost Driver
Cutting	66,750	Machine hours
Assembly	49,500	Direct labour hours
Maintenance	33,750	Repair hours
Factory office	43,500	Square metres
Personnel	31,500	No. of employees
Total	$225,000

Estimated operating statistics for this year are:

	Repair hours	Square metres	No. of employees	Machine hours	Direct labour hours
Producing:
Cutting	9,000	2,000	12	5,895	10,710
Assembly	6,000	3,000	16		26,790
Support:
Maintenance	400	700	3
Factory office	1,600	100	2
Personnel	1,000	200	3
Total	18,000	6,000	36	5,895	37,500

REQUIRED:

a) Calculate a plant-wide overhead rate based on direct labour hours.

b) Calculate departmental overhead rates assuming the support departments' costs are allocated using the direct method.

QUESTION 4 - PART A - Condamine Ltd produces a single product that sells for $80 per unit. Variable costs are $60 per unit. Fixed costs amount to $142,500.

REQUIRED:

(i) Calculate the break-even point in units.

(ii) If the business is to achieve a profit before tax of $50,000, how many units must be sold?

(iii) Given a tax rate of 30%, how many units must be sold to earn a profit of $42,000 after tax?

PART B - Which of the following do you believe is the best response?

i. A business has a unit contribution margin of $10 and break-even sales units of 8,000. What is the net profit if 12,000 units are sold?

(a) $40,000

(b) $80,000

(c) $120,000

(d) None of the above

ii. A business has a 25% margin of safety. This means that:

(a) Sales are 25% above the break-even volume,

(b) Net profit is 25% of sales.

(c) If sales fall by 25%, net profit will be nil.

(d) The contribution margin is 25% of sales.

QUESTIONS 5 - PART A - Bulloo Ltd recycles water from its production operations. The cost of treating the waste water is considered a semi-variable cost. Records of litres of water recycled and total treatment costs incurred over the past six months are as follows:

Month	Litres Recycled	Cost ( $ )
December	175,000	11,900
January	160,000	11,600
February	200,000	12,800
March	230,000	14,000
April	220,000	13,500
May	240,000	14,000

REQUIRED:

(a) Using the high-low method, calculate:

(i) The variable cost per litre.

(ii) Total fixed cost per month.

(b) What would be the expected total cost for a month when 225,000 litres are recycled?

PART B - Clarence Ord Ltd uses a perpetual inventory system. Inventory on hand at 1 July 2015 of lubricating oil used on machinery in the factory was 50 litres @ $8.10 per litre. During July the following transactions occurred:

July 3: Purchased 150 litres @ $8.30 per litre

July 11: Issued 60 litres

REQUIRED:

(i) Assuming the weighted average inventory costing method is used, calculate the total cost of the issue on 11 July.

(ii) Using the first-in, first-out inventory costing method, prepare a general journal entry to record the issue on 11 July.

QUESTION 6 - Payroll details for Gascoyne (NSW) Pty Ltd for September 2015 are as follows:

Factory:
Wages at ordinary hourly rates	25,992
Wages for overtime (time and one-half)	2,916
Salary (Supervisor)	4,835
Annual leave paid	1,607
Administration wages and salaries	16,350
Total gross	51,700
PAYG tax withholding	11,260
Medical fund deductions	1,200

i. The company reduces the appropriate provision for any leave paid.

ii. Analysis of time sheets shows 1,290 hours chargeable to jobs for the month. Factory overtime premiums are not chargeable to jobs. All factory wage employees are paid $18 per hour for ordinary time.

iii. The company's superannuation guarantee liability for the month is $4,550.

iv. Workers' compensation insurance of $18,600 was paid on 1 August 2015 for the year.

v. There were no accrued wages and salaries at 1 September.

REQUIRED:

(a) Prepare entries in general journal form to record the gross wages and salaries and payment of net pays for September.

(b) (i) Calculate direct and indirect labour cost for the month. Show all workings.

(ii) Prepare the general journal entry to account for the factory pays as direct and indirect labour.

(c) Prepare entries in general journal form to record the incurrence of the other labour related costs for September.

QUESTION 7 - PART A - Factory overhead cost and production data for Barwon Bogan & Co Ltd for the year are as follows:

	Actual	Budget
Variable Cost	$92,800	$88,500
Fixed Cost	$160,000	$159,000
Machine Hours	16,000	15,000

A predetermined factory overhead rate based on machine hours is used to recover overhead costs.

REQUIRED:

(a) (i) Calculate the amount of over or under-applied overhead.

(ii) Assuming the amount calculated above in (a) (i) is of minor value (immaterial), prepare the general journal entry to dispose of this variance.

PART B - Alice & Katherine Pty Ltd is developing factory overhead rates for the coming year. Overhead costs budgeted for the four factory departments are as follows:

	Cost ($)	Cost Driver
Brewing	49,500	Direct labour hours
Bottling	71,920	Machine hours
Maintenance	28,700	?
Factory store	36,880	?
Total	$187,000

Estimated operating statistics for the current year are:

	Repair hours	Material Requisitions	Machine hours	Direct labour hours
Producing:
Brewing	2,000	1,000	2,500	12,500
Bottling	5,000	600	8,500	9,500
Support:
Maintenance	200	200
Factory store	800	200
Total	8,000	2,000	11,000	22,000

REQUIRED:

(a) Calculate a plant-wide overhead rate based on direct labour hours.

(b) Calculate departmental overhead rates assuming the support departments' costs are allocated using the direct method.

QUESTION 8 - The following information has been prepared from the accounting records of Doubting Ltd for the six months to 30 June 2015. The business uses a periodic inventory system.

Accounts receivable:		$
Balance 01/01/2015		178,300
Sales		1,846,500
Inventories 01/01/2015:
Raw Materials		95,940
Factory Supplies		8,440
Finished Goods		174,690
Work in Process		28,650
Factory insurances:
Prepaid 01/01/2015		2,920
Annual Premium paid 01/04/2015		12,360
Factory Plant & Equipment:
At cost 01/01/2015		343,800
Accumulated Depreciation 01/01/2015		154,710
Depreciation - Straight-line @ 10% p.a.		?
Accounts payable:
Balance 01/01/2015		45,180
Purchases	- Raw materials	442,230
	- Factory supplies	18,620
	- Finished goods	38,730
Payments		317,840
Freight Inwards:
Raw materials		15,450
Factory supplies		1,790
Freight outwards		50,060
Wages and salaries:
Direct Labour		154,680
Indirect Labour		78,030
Factory Maintenance		11,430
Factory Lighting and Power:
Accrued 01/01/2015		4,110
Payments		16,750
Other adjustments as at 30 June 2015:		$
Inventories	- Raw Materials	102,660
	- Factory Supplies	9,070
	- Finished Goods	171,890
	- Work In Process	37,220
Annual Leave accrued - Factory		16,320

REQUIRED:

Prepare the following statements (appropriately classified) for the six-months ended 30 June 2015:

(a) Manufacturing statement and

(b) Trading statement.

Assessment Task 2 - Portfolio

1. Why is a cost referred to as variable if it remains constant per unit for all volume levels within the relevant range?

2. The high-low method of analysing mixed costs uses only two observation points: the high and the low points of activity. Are these always the best points for prediction purposes? Why or why not?

3. Why are some material and labour costs that should, in theory, be considered direct costs instead accounted for as indirect costs?

4. Discuss the reasons a company would use a predetermined overhead rate rather than apply actual overhead to products or services?

5. Why can it be said that the cost of goods manufactured schedule shows the flow of production costs in a manufacturing company?

6. Why are departmental overhead rates more useful for managerial decision making than plant wide rates? Similarly why are separate variable and fixed rates more useful than total rates?

7. Match the following lettered terms on the left with the appropriate numbered description on the right.

a. Budgeted cost	1. An expense or loss
b. Direct cost	2. A cost that remains constant on a Per unit basis
c. Distribution cost	3. A cost associated with a specific Cost object
d. Expired cost	4. Direct material, direct labour and Manufacturing overhead
e. Fixed cost	5. Product cost
f. Inventoriable cost	6. A cost that varies inversely on a  per-unit basis with changes in  activity
g. Period cost manufacturing overhead	7. A cost primarily associated with the passage of time rather than production activity
h. Product cost	8. An expected future cost
i. Variable cost	9. A cost of transporting a product

8. What production conditions are necessary for a company to use job order costing?

9. Describe the following: Financial Accounting and Cost and Management Accounting.

10. How can contribution margin be used to calculate break-even point in both in units and dollars?

11. A company is in the 40 percent tax bracket. Why is desired profit after tax divided by 60 percent to determine the needed before-tax profit amount?

12. How are BEP and margin of safety integrally related?

13. What are the purposes of a break-even chart?

14. Outline the basic budgeting process

15. The projected sales, in units, for Einstein Inc. by month for the first four months were:

January 8,000

February 12,000

March 16,000

April 19,200

Inventory of finished goods on December 31 was 6,400 units. The company desires to have an ending inventory each month equal to one-half of next month's estimated sales. Determine the company's production requirements for each month of the first quarter.

16. SLB Co wishes to sell 14,000 units of its product, which has a variable cost of $15 to make and sell. Fixed costs are $47,000 and the required profit is $23,000. What is the required sales price per unit?