Reference no: EM131082207

This assignment will assess the following learning outcomes:

- Analyse costs in business organisations contexts

- Apply cost estimation techniques in a range of business situations

- Evaluate cost and revenue information and costing methods for managerial decision-making

- Effectively communicate cost and revenue information in a decision making context.

ANSWER ALL THE QUESTIONS

Question 1:

CAREPRO LTD Company is producing three kind of products X, Y and Z. The information related to the production costs are as follows:

	A	B	C
Total Direct material cost (OMR)	648,000	720,000	204,000
Direct material cost per unit (OMR)	180	240	340
Direct labour per unit	1/2 hours	1/3 hours	3/4 hours
Machine time per unit	1/4 hours	1/3 hours	1/2 hours

The products X, Y and Z are produced in a production set-ups of 30 units and sold in batches. Every production set up includes 3 batches. Each order contains five batches.

One hour of labour costs 24 OMR and one hour of machine costs 12 OMR

Cost pool	Cost driver
Inspection and quality check	Number of set up
stores	Number of batches
Set up costs	Number of set up
Distribution and handling	Number of orders

Total production overhead recorded by the cost accounting system is analysed

Question 2:

a) You are provided with the following data from the books of the company ALYSSA LTD. producing one product DELTA, for the year 2015.

Direct material cost per unit	OMR 24
Direct labor cost per unit	OMR 27.20
Variable manufacturing overhead per year	OMR 2.80
Total fixed manufacturing overhead per year	OMR 360,000
Variable selling and administration expenses	OMR 6 unit sold
Fixed selling and administration expenses	OMR 180,000
Number of units produced per year	30,000 units
Opening stock of finished goods	0
Selling price	OMR 120

You are required to:

(a) Calculate the profit under marginal costing and absorption costing.

(b) Explain the difference between the marginal costing method and the total absorption costing method, using academic articles to support your analysis.

(c) Explain the reason for any difference in net profit reported in the two statements and reconcile any such difference.

(d) Calculate the quantity of product DELTA that ALYSSA LTD needs to sell to breakeven next year, according to the information given.

(e) Based on the following expectations of ALYSSA LTD for the next year 2015.

- All the variable costs will increase by one third.
- Fixed costs will increase by 10%.
- The income tax rate of 40% will be unchanged

You are required to:

i. Calculate the selling price to be adopted in 2016 and that would maintain the same contribution rate as 2015.

ii. Calculate the sales volume for a target net profit of OMR 180,000 in 2016.

iii. Write a report where you critically evaluate the use of 'Cost-Volume-Profit analysis in decision making, and using academic articles to support your analysis.

Question 3:

LILIUM LTD is a company manufacturing two products ‘Gamma' and 'Sigma'. For this, Purpose, LILIUM has three production departments (Cutting, Assembly and Finishing) and departments (Canteen, Stores and Maintenance).

The annual budgeted overhead cost for the year 2015 is as following:

	Indirect wages OMR	Consumable Indiarect supplies OMR
Cutting	93,040	25,200
Assembly	82,680	36,400
Finishing	32440	8400
Canteen	16400	5600
Stores	10600	8200
Maintenance	15040	6200
	250,200	90,000

	OMR
Depreciation: Machinery	88,000
Insurance for Machinery	16,000
Insurance for Machinery	7,200
lighting and heating	12000
Rents and rates	30200
Electrictiy for machines	14,400

You also provided with the following data:

Departmaent	Book value machinery OMR	Floor area Square meters	Electricity use%	Direct labor hours	Machine hours
Cutting	120, 000	10,000	40	400,000	80,000
Asembly	90,000	12,000	30	300,000	100,000
Finishing	30,000	16,000	20	600,000
canteen	12000	4,000	5
stores	36000	5,000	5
maintenance	12000	3,000
Total	300,000	50,000	100

answering the following questions and using academic -

You are required to critically evaluate the way Management accounting can help decision using by answering the following question and using acadmics articles to support your analysis:

1. How can management accounting helps strategic decision making process within organisations?

2. Giving examples of the management accounting tools that are used in a decision making.

3. The extent to which management accounting can help in decision making by highlighting the limitations of certain tools.