Reference no: EM133562741

Accounting for Management Decision Making

Learning Outcome 1: Determine how costs are calculated, effectively and efficiently managed, and how this knowledge is applied to support organisational decision making.

Learning Outcome 2: Critically analyse and interpret financial and non-financial information to support business decision making, control and performance evaluation.

Learning Outcome 3: Critically reflect on the effective use of modern accounting systems and processes for key management accounting functions such as product and service costing, budgeting, and cash flows.

Assessment Task

This assessment involves business problem solving and preparation of a reflection report. There are two parts to this assessment:
- Part A requires you to apply management accounting knowledge and techniques to answer problem solving questions.
- Part B requires you to complete accounting transactions and analyses using SAP (an Enterprise Resource Planning software), and reflect on your understanding of the experience gained from this task.

Context
Managers use cost and management accounting information for making business decisions and managing business operations effectively and efficiently. Management accountants facilitate this need by sourcing, analysing and communicating decision- relevant information. To work as a management accountant, one must develop the skills to analyse cost information and prepare reports interpreting the results of their analysis.

The advancement of digital technology has impacted the way management accountants work in today's dynamic business environment. Enterprise Resource Planning (ERP) systems have become popular information and communication technologies for management accountants in this changing environment. Major management accounting functions related to budgeting, costing, sales and profitability analysis are now performed through ERP systems such as SAP.

Part A of this assessment requires you to apply management accounting knowledge for analysing cost information and preparing reports that are useful for solving business problems. In particular, this will enable you to understand how the knowledge and techniques related to costing can be applied to support organisational decision making.

Part B of this assessment will require you to prepare a reflection report discussing your experience and knowledge gained while completing various accounting tasks using SAP. This will enable you to understand the important role that modern accounting systems and processes play in performing key management accounting functions.

Instructions

Part A - Problem based scenarios

Please answer the questions below to complete Part A of this assessment.

Question 1

Topic: Process Costing

Skatehut Limited manufactures electric scooter parts for different types of scooters. As each type of product is manufactured in large quantities by the company, the unit cost of each product is determined by a process costing system. The Moulding Department manufactures scooter parts and transfers them to the Assembly Department for assembly. Upon completion of assembly, scooter parts are delivered to the packing department. For the month of June, the following costs and production figures are presented for the Assembly Department:

Required

1. Determine the cost per equivalent unit for the Assembly Department's direct materials and conversion costs, and the total unit cost for the current period, underthe
a. Weighted-Average method
b. FIFO method

2. Assign total costs to units completed (and transferred out) to Packaging Depart- ment and to units in ending work in process in the Assembly Department.

Question 2

Topic: Cost Volume and Profit (CVP) Analysis

Mediflex Limited operates in an industry that is highly sensitive to economic cyclical movements. There is a great deal of variation in profits from year to year depending on the general economic conditions. The company has a lot of unused capacity, and it is looking for ways to increase profits. The following information is taken from Mediflex Limited's contribution format income statement for the most recent month:

Required

1. There is new equipment on the market that could allow Mediflex Limited to automate a portion of its operations. It would reduce variable costs by $6 per unit. The fixed costs would however increase to a total of $432,000 each month. Using proper format, prepare one contribution format income statement reflecting operations if the new equipment were purchased. In the income statement, you shouldinclude a column for Amount, a column for Per Unit, and a column for Percentage. Pleasedo not include percentages for fixed costs.
2. As part of both present operations and planned new operations, compute (a) the degree of operating leverage, (b) the break-evenpoint in dollars, and (c) the margin of safety both in terms of dollar amounts and in terms of percentages.
3. Refer to (1) above. In your role as a manager, what factors are going to bethe most important one in deciding whether or not to purchase the new equipment? You may assume that there are sufficient funds available to make this purchase.
4. Please refer to the original data. The marketing manager argues that the company should change its marketing strategy rather than purchase new equipment. As an alternative to paying commissions on sales, which are included in variable expenses, the marketing manager suggests to the company that salespeople be paid fixed salaries and more investments be made in advertisement.
According to the marketing manager, the new approach would increase unit sales by 50% without changing the price; the company's fixed expenses would increase by $240,000. Calculate the break-even point in dollar sales for the company based on the new marketing strategy. Would you agree with what the marketing manager proposed? Why or why not?

Part B - SAP Reflection Report

To complete Part B of this assessment, please follow the instructions below.

• You will need to perform several activities using SAP, a leading enterprise resource planning software.
• To access SAP during the course, you will need the following details:
» Weblink to access SAP platform
» Login name
» Login password

These details will be provided to you by your lecturer. Refer to the SAP Materials
folder in the Learning Resources section of the blackboard for these details.

• You are required to provide evidence to demonstrate that youhave developed theoretical management accounting knowledge and practical skills of using SAP. For this purpose,
o You may navigate through the case study materials on Production Planning and Execution (PP) module. These materials are available in the Learning Resources section.
o You may watch SAP production planning videos available on LinkedIn Learning. For this, you will need subscribe to LinkedIn Learning for 1 month free trial.

• The following three reflection tasks must be answered using the templates provided. These reflection tasks need to be completed individually.
• Each screenshot you provide as evidence must show your unique Log in ID on top right hand corner of your screen.

Task 1: Demonstrate that you have developed the theoretical management accounting knowledge necessary to use SAP

Your response should address the following points.
(i) Evidence: Provide evidence to demonstrate that you understand the connection between management accounting knowledge and SAP functions. As evidence, you can provide (a) an example of an activity performed or a concept learned in this subject and (b) an activity or report generated in SAP.
(ii) Reflection: Explain how management accounting knowledge gained in this subject helped you to complete the SAP task or report you have provided evidence for.

Task 2: Demonstrate that you understand how SAP can help management accountants improve business decision making.

Your response should address the following points.
(i) Evidence: Provide evidence to show that you can use SAP to produce management accounting information that supports business decision. As evidence, you can provide (a) an activity or report generated in SAP and (b) an example of a management accounting decision you had to make in this subject.

(ii) Reflection: Reflect on your understanding of how the SAP activity or report you generated can benefit the management accounting decision that have identified.

Task 3: Demonstrate that you understand how SAP can be used to improve business performance.

(i) Evidence: Provide evidence to show that you can use SAP to improve business performance. As evidence you can provide (a) a SAP report or analysis that can be used to improve business performance.
(ii) Reflection: Explain how this report improves can be used for improving business performance.