02 Mar 1 ACC5213 Management Accounting with a Strategic P
1 ACC5213 Management Accounting with a Strategic Perspective Assignment (weighting 30%) S2 2015 Due date: 12th October 2015 This Assignment is designed to give you an opportunity to: 1. integrate traditional, contemporary and advanced theoretical and technical management accounting knowledge for planning, control and evaluation, as well as decisions making; 2. critically apply traditional, contemporary and advanced theoretical and technical accounting knowledge and skills to solve emerging and/or advanced management accounting problems that require planning, control and evaluation, as well as decision making from a strategic perspective; and 3. demonstrate information literacy and numeracy skills required by accountants to access relevant data from research and business literature sources and use contemporary and advanced analytical techniques. Background information You are the management accountant working for a privately owned leisure goods company, a smallto medium-sized enterprise. The company has two manufacturing plants located in Brisbane and Melbourne, Australia. The company also imports a range of finished products. The industry is highly competitive and the company relies on a regular launch of new products to the market, which is critical to its success. The company’s accounting system has not been updated for 10 years, and the staff has had limited training and development over the last five years. The owner of the firm, Bob Spikes, is concerned about profitability trends and has asked you to investigate the following issues: Sales have increased over the past three years; however, profitability has declined. The company’s product range has continued to increase and overhead costs have also risen significantly. The pricing policy used has been based on contribution margin. Your investigation has concentrated on three products and has uncovered the following information. Product profitability on current costing approach Product 1 Product 2 Product 3 Total Unit volume 150,000 200,000 180,000 Machine Hours 3,000 3,000 4,000 10,000 Revenue $ 2,200,000 3,000,000 2,100,000 7,300,000 Direct Materials $ 500,000 900,000 500,000 1,900,000 Direct Labour $ 600,000 700,000 300,000 1,600,000 Total manufacturing overheads $ 471,900 471,900 629,200 1,573,000 Product profitability $ 628,100 928,100 670,800 2,227,000 1 2 Currently the products from this division have overhead costs allocated on the basis of machine hours. You are concerned that these costs do not reflect what is actually occurring with cost structures. You have been able to establish further information on these three products that can be used in an activity-based costing (ABC) analysis. Activities, cost drivers, cost driver volume usage and manufacturing overhead costs Product Product Activity Cost driver 1 2 Product Manufacturing Total 3 overhead $ Cleaning machine Cleaning machine hours 1,930 1,000 1,000 3,930 628,800 Quality tests Quality inspection and testing hours 3,000 3,762 1,000 7,762 419,200 Procurement Number of purchase orders 600 1,400 1,150 3,150 315,000 Administration Estimated administration hours 500 900 1,600 3,000 210,000 Total 1,573,000 Your investigation also revealed that the administration activity cost pool includes an allocation of $30,000 for the factory manager’s salary. There is no relevant allocation basis for this cost, and the estimated administration hours do not include any estimate of the factory manager’s time. Required: One of the traditional responsibilities of the management accountant is to provide cost information. Activity-based costing (ABC) is the process of allocating costs incurred in supplying the product or service based on the amount of activity required to produce it. a) Calculate the profitability of the three products (including a total of all three) using an activity-based costing approach. Show all workings. b) Analyse and explain the differences between the current costing approach and the ABC approach for each product. (max 500 words) c) Based on relevant research (max 1500 words): i. Identify and explain key practical issues that need to be discussed and considered prior to any implementation of an ABC approach applicable to this company. ii. Summarise how the ABC information may be used to improve managerial decisionmaking (activity-based management (ABM)). Source: Adapted from CA Program, Management Accounting & Applied Finance (1) 2015 2
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.