MANAGERIAL ACCOUNTING

24 Jul MANAGERIAL ACCOUNTING

MAJAN UNIVERSITY COLLEGE

FACULTY OF BUSINESS MANAGEMENT

 

STUDENT ASSIGNMENT COVER SHEET

 

Module Name and Level	Management Accounting (Level 2)
Module Code	AC 06-2
Assessment No.	One
Assessment Type & weighting:	Group Task – Weighting 50% – (Report (30%) + Viva (20%)
STUDENT MCUC NUMBER: Please note that a grade will only be given to those whose student number is noted on this form.  Please ensure that the student numbers from all group members are recorded accurately.
Submission Date:	13-04-2017
MODULE TUTOR:	Umar Farooq Awan

 

DECLARATION ·         The work contained in this assignment is my own and that all materials and sources used have been acknowledged. ·         I/We have not copied or colluded in part or in whole, or otherwise plagiarised the work of other students. ·         This assignment has not been submitted for previous assessment in any other subject or to a substantial extent has been accepted for the award of any other unit, module, degree or diploma of a university or any other institute, except where due acknowledgement is made in the text. ·         I/We confirm that I/we have read, understood and followed the guidelines for assignment submission and presentation provided by the lecturer. ·         I/We understand that this assignment may be retained on the database and used to make comparisons with other assignments in future. ·         I/We have made a copy of my assignment ·         This work may be photocopied and/or communicated for the purpose of identifying plagiarism. ·         I/We give permission for a copy of this marked assignment to be retained by the Faculty of Business Management for the purpose of course reviews by external examiners and to be used as a resource by Majan College. ·         I/We understand that unauthorized late submission without a valid written extension will be marked as per the college policy mentioned in the Student handbook page 16-17 section 4.4..

 

 

 

 

Assignment.

Management Accounting (Code: AC 06-2)

Group Task – Weighting 50% –

(Report (30%) + Viva (20%)

50 % weighting

Assessment one (Report)

 

Excellent Engineering Limited is a medium sized, well established company, producing high quality products. The company is performing quite well in terms of market share and profitability during the last few years in the competitive environment. The management of the company has a team of professionals and all the decisions are taken on merit in consideration with the pros and cons of the situation.

 

You are the management accountant of the company who is responsible for performing financial analyses based on the information given below

 

Pricing of Product:

A board meeting is to be held next week where the team will decide on pricing of products for the forthcoming period

The following information is available from the records:

 

	RO	RO
	Previous Period	Current Period
No. of units	100,000	106,000
Sales price per unit	26	26
Sales revenue	2,600,000	2,756,000
Costs	2,000,000	2,154,800
Profit	600,000	601,200

 

You find that between the previous and current periods there was 4% general cost inflation and it is forecasted that costs will rise a further 6% in the next period. As a matter of policy, the company did not increase the selling price in the current period although competitors raised their prices by 4% to allow for the increased costs. A survey by economic consultants was conducted and it is revealed that the demand for the product is elastic with an estimated price elasticity of demand of 1.5 (i.e., the rate of change in demand is 1½ times of the price change rate). However, there will be no change in demand if Excellent Engineering Ltd., increases the price along with its competitors.

 

Special Machinery Order:

Excellent Engineering Ltd., has just completed an order for a piece of special machinery for Friends Engineering Ltd., and learnt that the company has defaulted on the order due to bankruptcy. The selling price of the said order is RO. 145,000 and Excellent Engineering Ltd., has right to forfeit the deposit of RO. 14,500 as per contract agreement. The product manager of the Excellent Engineering Ltd., has identified the costs already incurred in the production of the special machinery for Friends Engineering Ltd., as follows:

 

		RO
Direct material		33,200
Direct labour		42,800
Manufacturing overhead applied:
Variable	21,400
Fixed	10,700	32,100
Fixed selling and administrativecosts		10,810
Total		118,910

 

 

Another company, Novelty Engineering Ltd., is also interested to buy the special machinery if it is reworked to Novelty’s specifications. Excellent Engineering Ltd., has offered to sell the reworked machinery to Novelty as a special order for RO. 136,800. However, Novelty would pay the price After two months , when the delivery of the machine is due. The additional identifiable costs to rework the machinery to Novelty’s specifications are as follows:

 

	RO
Direct material	12,400
Direct labour	8,400
Total	20,800

 

A second alternative available to Excellent Engineering Ltd., is to convert the special machinery to the standard model, which sells for RO. 125,000. The additional identifiable costs for this conversion are as

 

 

	RO
Direct material	5,700
Direct labour	6,600
Total	12,300

 

A third alternative for Excellent Engineering Ltd., is to sell the machine as it is for a price of RO. 104,000. However, the potential buyer of the unmodified machine does not want it for 60 days. This buyer has offered RO. 14,000 down payment, with the remainder due upon delivery.

 

The sales commission rate on sales of standard models is 2%, while the rate on special order is 3%. Normal credit terms for sales of standard models are 2/10, net/30. In general, customers pay the bills for the standard model within discount period. However, credit terms for a special order are negotiated with the customer(s). The time required for rework is one month.

The allocation rates for manufacturing overheads and fixed selling and administrative costs are as follows:

 

10% of the total of direct material, direct labour, and manufacturing overhead costs

 

Manufacturing costs:
Variable	50% of direct labour cost
Fixed	25% of direct labour cost
Fixed selling and administrative costs	10% of the total of direct material, direct labour, and manufacturing overhead costs.

 

Marketing a New Product: Excellent Engineering Ltd., is also considering whether to develop and market a new product Liphon. Development costs are estimated to be RO. 360,000, and there is a 0.75 probability that the development effort will be successful and a 0.25 probability that the development effort will be unsuccessful. If the development is successful, the product will be marketed, and its possible outcome would be as under:

Possible Outcome	Profit/ (Loss) (RO.)	Probability
Very successful	1,080,000	0.4
Moderately successful	200,000	0.3
Failure	(800,000)	0.3
	Total	1

 

 

 

Each of the above profit and loss calculations is after taking into account the development costs of RO. 360,000.

 

Required:

 

 

 

You being the Management Consultant, have been asked by the Management to write a detailed report. Your report should include the following:

 

a.      Introduction of the report with relevant literature review.

 

b.      What would be the financial outcome if the company decides to maintain the selling price of RO 26 for the next period, whilst the competitors increase their prices by 6%. Would your financial outcome be different if the company also raises its price by 6%?

 

c.       Comment with appropriate figures, recommending whether the company should maintain the selling price of RO. 26 or raise it by 6%.

 

d.      State Your assumptions in relation to fixing the selling price for the forthcoming period.

 

e.       Determine the net contribution each of the three alternatives, special machinery will add to Excellent Engineering Ltd’s  profit before tax.

 

f.       If Novelty makes a counteroffer, what would be the lowest price for which Excellent Engineering Ltd., should accept for the reworked machinery? Justify your answer. 

 

g.      Discuss the influence of fixed manufacturing overhead cost on the sales price quoted by Excellent Engineering Ltd., for special orders.

 

h.      Final conclusion with recommendations.

 

 

 

 

 

 

 

 

 

Sr No	Area / Topic	% age.
1	Grasp of concepts Understanding of relevant concepts. ·         Relevant Costing ·         Opportunity Cost. ·         Capacity Utilization.	15 %
2	Argument/Analysis :  Development of Argument / Analysis , Detailed discussion on the tasks involved,  Critical awareness / interpretation     ·         Calculation of expected Relevant Costs and impact on the overall profitability. ·         Analysis of current scenario and recommendations about accepting the proposal. ·         Qualitative factors that should be considered before making decision. ·         Suggestions about use of full capacity or under utilization of capacity with pros and cons of both.	40%
3	Conclusion	10%
4	Structure Logical flow, Cohesion, Completion and focus of task/s	15%
5	Language	5%
6	Information, Research & Referencing: Variety of sources used, relevance of sources used	15 %

The paper will be graded taking into account the following points.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INSTRUCTIONS

 

1.      This is a group assignment (group of 3 students) and carries a total of 30% weighting for the report and 20% for viva grade.

2.      The assignment MUST be submitted on-line (through MOVE) on or before the due date     __13-4-2017______

3.      Your assignment shall reflect the depth and breadth of your original analyses in a clear and coherent manner.

 

4.      Use of the relevant academic literature to support ideas and issues discussed. The range of academic sources such as texts and journals to support your arguments and comments.

 

 

5.      Any reference to authors and other writers shall be quoted with due acknowledgement in your assignment report using the Harvard Referencing System. For details of Harvard referencing style refer the student’s hand book page 46-47 section7.2.

 

1. This is an individual assignment and carries a 50% weighting of the module grade.

 

1. This assignment follows an essay format(modify according to the requirement of your assignment) and must be original and creative. An analytical piece of work is required. The use of ‘cut and paste’ approach will be penalized. It must be presented in a structured manner, with appropriate cover page, content page, introduction, body (with appropriate heading / sub-headings), conclusion, references, page numbered and any required appendices.

 

1. Your assignment should be word processed and professionally presented. The length of your assignment should not exceed 2500 words (+/- 10%), presented in text of font size 12 with 1.5 line spacing. Please state the exact word count at the end of the assignment.

 

1. The cover page should be attached with the assignment and uploaded through MOVE (on-line. Name of the student, The Programme, Module Title, Assignment Title and number of words must be reflected on the cover sheet.

 

1. All assignments must be adhered strictly to the deadlines specified by Majan College. Failure to hand in the assignment for any reason and without prior approval and a valid written extension from the module tutor will not be marked and will be awarded a grade G (0) irrespective of the quality of the work. See Student handbook page 16-17section 4.4.
2. Unacknowledged use of work of others (plagiarism) is regarded as a dishonest practice and will be will be penalized. See the penalties in the student’s handbook page 35-36 section 5.8.

 

 

 

Additional Guidelines

·         The Assignment Submission link on MOVE will be open, a week ahead of the submission date.

·         You can submit your assignment multiple times, till the submission deadline. Note that Turnitin could take up-to 24 hours to produce similarity reports for submissions.

·         The last submission, within the deadline, will be considered as your final submission.

·         Assignments should be submitted by 6pm on the day of the deadline. There is a grace period until midnight to allow for any technical difficulties, but any assignments submitted after this will be counted as late. Technical problems will not be accepted as an excuse for submitting after the day of the deadline.

·         You are required to tick to confirm the statement: “I confirm that this assignment is my own and all sources have been    acknowledged. I understand that the use of other people’s work or ideas without acknowledgement is plagiarism and could result in failing the assignment”. You will not be able to submit the assignment without ticking this box.

·         In a case of group work, it is recommended that the group should identify a leader who can be responsible for uploading the assignment on Turnitin and to share the feedback received from lecturers with the group members.

·         The similarity percentage of your final submission will be one of the factors considered, for assessing the originality of your assignment. However, the decision to report an assignment for plagiarism is taken by the Lecturers, who mark your assignment.

·         The Lecturers will consider a number of factors such as Assignment type, Part of the assignment where similarity occurs, Nature of similarity etc., along with the similarity percentage of your assignment, to assess the originality of your assignment. Therefore, similarity percentage would not be accepted as a basis for disputing academic judgments regarding plagiarism.

·         Note that the similarity percentage of your submission can change till the submission deadline, if the submissions of other students have similarity to your assignment. Therefore, the similarity percentages are not final, till the assignment submission is closed.

 

GRADING SYSTEM

Although grades may be awarded on the basis of marks in some assessments, students should note that both marks and grades will be awarded on the basis of the assessment criteria for each grade.

 

 

 

 

Old grading System (Before Feb 2015)

 

GRADE	GRADE POINT	DESCRIPTION	GENERAL Assessment Criteria
A+	16	Excellent	·         An outstanding piece of work. ·         Shows evidence of wider reading and originality ·         Strongly analytical. All important points are covered. ·         Arguments should be supported by examples and evidence, objectively presented and evaluated, ·         Well-structured and well written, without noticeable grammatical or other errors. ·         Correctly referenced
A	15
A-	14
B+	13	Very Good	·         Very good work. ·         All main points will have been covered, though minor issues may have been omitted. ·         The work will be analytical, balanced and soundly based. ·         Examples and supporting evidence should have been included. ·         The writing should be essentially correct, without major grammatical or other errors. ·         Generally referenced correctly.
B	12
B-	11
C+	10	Good	·         Generally good work. ·         Most points will have been covered, but many finer points will generally have been missed. ·         Shows limited reading. ·         Arguments/analysis should be basically well structured and balanced with relevant examples, but with errors and gaps. ·         The writing is clear, but has errors that nevertheless do not obscure the meaning. ·         Referencing will be present but may at times be inaccurate or insufficient.
C	9
C-	8
D+	7	Pass	·         Satisfactory. ·         Shows sufficient grasp of the subject to be acceptable. ·         Tends to be descriptive. ·         Examples and evidence is likely to be weak and limited. ·         Shows limited reading. ·         Referencing is likely to be absent or very poorly carried out.
D	6
D-	5
E	4	Refer	·         Unsatisfactory/ Compensatable fail. ·         Serious errors and omissions. ·         Very little analysis
F	2	Fail	·         Work of a very poor standard with little relevant information and/or serious errors.
F-	1		·         Work containing little of merit
G	0		·         No work submitted

 

 

 

New Grading System (Starting Feb. 2015)

 

Marking Criteria for the Written Report

Marking Criteria for the Viva????

Viva is group or individual? Can provide information related to the assignment (both report and viva) in the document, preferably before the case.

 

AUDITING ASSGNMNT.	Substandard 0 pts	Poor 40pts	Fair 60pts	Good 80pts	Exceptional 100pts
STRUCTURE & CLARITY OF PRESENATION 15% Understanding of relevant concepts	Does not show any grasp of the subject matter; demonstrating inadequate understanding of the topic/s and issue/s.	Shows a  limited grasp of the subject matter demonstrating limited but acceptable understanding of topic/s and issue/s.	Shows  the required level of grasp of the subject matter demonstrating an average  understanding of topic/s and issue/s.	Shows  a good grasp of the subject matter demonstrating an accomplished   understanding of topic/s and issue/s.	Shows  a comprehensive grasp of  the subject matter demonstrating a sophisticated understanding of topic/s and issue/s.
Argument/Analysis and Computations:  (40%) Development of Argument / Analysis , Detailed discussion on the tasks involved,  Critical awareness / interpretation	Lack of analysis of information. No discussion is evident. The discussed tasks are completely out of focus.   Little or no evidence of critical evaluation of material.	Poor analysis of information. Although there is evidence for some discussion, they are discrete and lacking focus. It does not reflect critical application of the concepts to the task.   Evidence of limited critical evaluation in some areas, with some lost opportunities or misunderstandings	The information from various sources although relevant is not properly applied to the task. There is some evidence for critical analysis and reasoning.   Evidence of a general critical stance, although some material not evaluated	Good application of the information to the task. There is evidence of in-depth analysis of data. But, all the tasks are not consistent in the analytical rigor. The inferences drawn could have been more meaningful.   Evidence of good critical appreciation and evaluation of relevant theory and research and a systematic attempt to relate it to the topic	Excellent analysis of the information and precise application to the task. Critical reasoning is evident in the discussion of all tasks.     Evidence of thorough critical appreciation and evaluation of relevant theory and Research and a systematic and creative attempt to relate it to the topic.
Conclusion & Recommendations: (10%)	Conclusions are not supported with any reasons or evidence; no evidence of any interpretations       Presents hardly any recommendations, realistic, appropriate or otherwise.	Conclusions are supported with very weak reasoning and little evidence; Interpretations are one –sided and not objective.   Presents recommendations but these not realistic or appropriate and with little, if any, support from the analysis and concepts discussed.	Conclusions are supported with limited reasoning and evidence; presents a somewhat one-sided interpretation.   Presents recommendations which are somewhat realistic and appropriate but not very specific; there is some support from the analysis and concepts discussed.	Conclusions are supported with reasons and evidence; presents a fairly balanced view; interpretation is both reasonable and objective.     Presents specific, realistic and appropriate recommendations supported by the analysis and concepts discussed.	Conclusions are supported with strong arguments and evidence; presents a fairly balanced and critical view; interpretation is both reasonable and objective.   Presents detailed, specific, realistic and appropriate recommendations clearly supported by the analysis and concepts discussed
Structure: (15%) Logical flow, Cohesion, Completion and focus of task/s	The report is unorganized to the point of being virtually unreadable. Lacks cohesion and orderly flow.   The assignment has unacceptable failings in structuring and/or clarity of written Expression.           Tasks are incomplete and unfocussed. Incomplete in all respects; does not reflect any requirements	The report is unorganized, but can be read. Poor flow of the report structure.       The assignment has failings in structuring and/or clarity of written expression, Which impair its capacity to communicate.     All the tasks lack proper focus in discussion. Incomplete in most respects; barely reflects requirements	The report is somewhat organized. The flow is not coherent and needs improvement.   While the assignment Has some failings in structuring and/or clarity of written expression, these do not impair its capacity to communicate.   All the tasks are addressed and discussed but one/two lack focus/clarity. Incomplete in many respects; reflects few requirements	The report is fairly well organized. There is order, cohesion and coherence, but there is still scope for improvement.   A generally well- structured assignment, which manages clear communication of ideas. All the tasks are addressed and discussed with the required focus   Complete in most respects; reflects most  requirements     .	The report is very well organized with a cohesive discussion lending coherence to the content.  The structure is exemplary.   An assignment with excellent clarity of expression which significantly enhances communication of ideas.       All the tasks are discussed astutely with proper focus. Complete in all respects; reflects all requirements fully.
Language (5%)	The report is difficult to  read due to overwhelming errors or misspellings	Frequent compositional errors or misspellings, but the report can be read.	More than occasional errors or misspellings, but that does not take away significantly from the quality.	Well executed. Few grammar or writing errors. Reads easily.	Execution is excellent. No grammar or writing errors. Reads easily.
Information, Research & Referencing: (15 %) Variety of sources used, relevance of sources used	There is no evidence for information search	Information search is not adequate.   Limited and uncritical use of a restricted range of sources	Relevant information search is evident, but not adequate.   Use of a range of appropriate sources.	Good usage of variety information from various sources.   Use of a wide range of appropriate sources with some critical awareness of their status and relevance	Excellent compilation of the relevant information from variety of sources. Excellent usage of the information to support the discussion. Use of a wide range of appropriate sources, indicating personal research and with full critical awareness of their status and relevance.