Reference no: EM132180759
Provide management accounting information Assignment -
Assessment Task 1: Written Questions
Provide answers to all of the questions below:
1. Describe the concept of cost behaviour.
2. Explain why it is important to understand cost behaviour.
3. Describe two cost behaviour characteristics of fixed costs.
4. Describe two cost behaviour characteristics of variable costs.
5. Describe the purpose of costing systems in a workplace.
6. Discuss the differences between financial accounting and cost accounting.
7. Identify the four basic steps in accounting to determine process cost.
8. Comparing the costs associated with a particular machine, department, line or location gives you the information to decide where and how to manufacture products. By calculating process costs, you know how costs are accrued as they pass through your manufacturing process.
9. What are Critical success factors (CSFs), and how do they define key management information requirements?
10. Discuss a benefit of budgeting.
11. Explain the concept of a top down budget approach.
12. Explain the concept of a bottom up participative budget approach.
13. List at least three principles that should be observed when developing budgets.
14. Describe the concept of variance analysis in management accounting.
15. Provide two examples of commonly derived variances in variance analysis.
16. Give two reasons why variance analysis may not be a useful tool.
17. Explain the concept of horizontal analysis and give two reasons why this is useful.
18. Describe the key principles of double entry book keeping.
19. Provide two examples of security processes that may be in place in an organisation in order to ensure data is adequately protected?
Assessment Task 2: Case studies
Case study 1 -
Mehil owns a taxi business in Newcastle. He recently expanded his business by including limousines. Mehil's accountant has provided the following information on monthly revenues and costs:
- The taxi division has monthly revenues of $3,475,000
- The Limousine division generates revenues of $375,000.
- Expenses of $2,656,750 were allocated to divisions based on the number of kilometres travelled.
Mehil has heard about Activity Based Costing and wants to know what benefits it could provide, so he has obtained the following monthly information on expenses for NSW:
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Taxis
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Limousines
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Bookings
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44,000
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1,500
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Kilometres
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1,200,000
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150,000
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Driver hours
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67,500
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10,000
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Mehil has identified that the main activity cost areas include salaries, vehicle costs and booking fees.
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Salaries
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$1,360,000
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Booking fees
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$22,750
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Fuel
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$1,193,000
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Call centre booking fees
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$45,500
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Vehicle maintenance
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$35,500
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Complete the following activities:
1. Identify the appropriate cost pools and calculate the appropriate driver rates for the activities listed above.
Create a Word document for your response to this and the following activities.
2. Using ABC costing, prepare a product line profitability report.
Show all workings in your answer and ensure you have reconciled data to ensure accuracy of calculations.
3. Discuss two key observations identified from your calculations.
Case study 2 -
Tomorrow Aged Care (TAC) builds and runs aged care centres.
TAC runs on very tight budgets, and a fixed construction cost for each centre of $250,000 is set.
Once TAC raises $300,000, they commission construction on the next centre.
Recently, TAC's CFO undertook a project to determine variances to the standard construction budgets set.
Projects are expected to be completed in 26 weeks and use the following standards.
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Cost Item
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Standard Cost
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Standard quantities
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Bricks
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$500 per 1,000 bricks
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50,000 bricks
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Timber
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$15 per square metre
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1,000 square metres
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Pre-Fabricated Walls
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$10,000 per wall
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8 walls
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Other fixed costs
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$45,000
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Per construction project
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Labour - builders
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$55 per hour
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800 hours
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Labour - specialists
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$70 per hour
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400 hours
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Sundries
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$5,000
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per construction project
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Fees, permits and insurance
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$10,000
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Per construction project
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Recently GAC completed construction on a new centre in Ballarat in regional Victoria, and the following information was obtained:
- The project commenced on 1 June and was completed 32 weeks later.
- GAC decided to purchase all materials from the same supplier. GAC purchased 75,000 bricks at a total cost of $36,000 and 2,000 square metres of timber for $32,000.
- GAC purchased the required pre-fabricated walls were purchased for $80,000.
- The balance of project costs, including other fixed costs of $47,500 totalled $58,000.
- Overall labour costs on the project were $70,000 for 1,250 hours of labour, with an even split of hours between builders and specialists engaged.
R4. Calculate the total direct materials price and efficiency variances.
Create a new Excel Workbook and calculate your response to this activity in a Worksheet.
5. Calculate the total labour price and efficiency variances.
Calculate your response to this question in a separate Worksheet named Activity 4.
6. Calculate the project overhead variance. Show your calculations.
Case study 3 -
Ethereal Enterprises manufactures microchips for computers. A market survey shows that a 10% reduction in price will result in a 30% increase in sales, with variable costs per unit remaining unchanged. On the other hand, an investment of $30,000 in machinery would reduce variable costs by $3 a unit.
7. Determine the sales volume and break-even point for each option given Majestic currently sells 10,000 units @ $20 each, has variable costs of $80,000 and fixed costs of $40,000.
Ensure you have checked all calculations for accuracy prior to submission.
8. Using the current information provided in a) as the budget for month 1 and the additional information below, complete the 12-month budget for Majestic Enterprises. Ensure that you have checked all calculations for accuracy prior to submission.
- Sales expected to rise monthly by 10%
- Variable costs to increase by 5% per month to the 6th month and then stabilise.
- Fixed costs to remain stable for the first 9 months then record an increase of $10,000.
- Admin expenses of $5,000 to be incurred in the first month with a 2% increase per month.
Case study 4 -
Mixed Meats Industries is a fine food company producing burgers and sausages.
It has 300 staff who work 8 hours a day, 5 days a week for 50 weeks per year.
The demand for burgers and sausages does not exceed 50,000 and 150,000 kilos respectively per year.
Currently, Mixed Meats receives $10 for one kilo of burgers, and $15 for one kilo of sausages.
Fixed factory overheads are applied on the basis of direct labour hours @$1 per hour.
Mixed Meats Industries is interested in maximising its profit and wants to know what the most profitable mix of sausages and hamburgers.
9. Meet with the company's bookkeeper (your assessor).
In order to determine the most profitable product manufacturing mix, you will need more information than what is included in the case study above.
You will gather that information by consulting with the company's bookkeeper.
Before going to this meeting, make sure that you know which information you need from the bookkeeper.
During the meeting, demonstrate effective communication skills including:
- Using tone and pace appropriate to the audience
- Using non-verbal communication to assist with understanding
- Asking questions to identify required information
- Responding to questions as required
- Using active listening techniques to confirm understanding
10. Calculate the maximum profit and most profitable mix of products. Show your calculations.
Case study 5 -
Gluten Free Gangsters (GFG) is a small company that imports, manufactures and wholesales gluten free foods. GFG products are minimally processed and contain no artificial additives. In a world with growing interest in premium quality foods, GFG invests heavily in research and is building a reputation for its quality goods.
GFG has always invested heavily in Research and Development, and the R&D budget is currently $20 million per annum. It employs a senior food scientist, five junior scientists and two administration staff. The goal of the R&D department is to develop high quality new products that are then tested and found to be acceptable for human consumption by an external quality testing agency. The agency provides specific feedback on the products and has even rejected products in the past. A rejected product results in high additional costs or severe losses to GFG.
11. Identify two key KPI's for the Board to consider for each of the internal process and the learning and growth quadrants of the balanced scorecard for the R&D department.
Attachment:- Assignment File.rar