Management Accounting

Management Accounting.

Assessment Task – Tutorial Questions Assignment
Unit Code: HA2011
Unit Name: Management Accounting
Assignment: Tutorial Questions Assignment (Individual)
Due: Week 13 – Friday 26th February, 2021
Weighting: 50%
Total Assignment Marks: 50 marks
This assignment is designed to assess your level of knowledge of the key topics covered in this unit
Unit Learning Outcomes Assessed:
1. Outline the differences between fixed costs, variable costs, and mixed costs by categorising various costs
of an entity into these categories
2. Calculate fixed and variable costs, contribution margin, contribution margin ratio, breakeven point in sales
dollars and units, and target sales volume in dollars and units
3. Appraise how pricing decisions are made
4. Calculate both return on investment and residual income and explain how each method is use
5. Apply the concept of costs to various costing systems including justification of cost and system choices
6. Implement systems to plan and control business operations
Each week students were provided with three tutorial questions of varying degrees of difficulty. These
tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials
are designed to assist students with the process, skills and knowledge to answer the provided tutorial
questions. Your task is to answer a selection of tutorial questions from weeks 2 – 11 and submit these answers
in a single document.
The questions to be answered are:
Question 1 – Week 2 (7 marks)
Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities costs
and hours of operation for the last six (6) weeks are as follow:
Week Hours of Operation Utilities Cost
1 55 6 480
2 60 6 600
3 64 7 460
4 70 7 600
5 45 5 400
6 40 5 200
a) Use the high-low method to estimate the cost behaviour for the restaurant’s utilities costs, assuming that
variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y =
a + bX). (4 marks)
b) During the second week of June, Bourbon House will be opened for 49 hours. Predict the restaurant’s total
utilities cost for the week. (2 marks)
c) Explain the impact of a decrease in the level of activity on (i) total variable cost; and (ii) variable cost per
unit of activity. (1 mark)
2 3 (11 marks)
Bulla Ltd, which uses a job costing system, had one job in process at the start of the year: Job K1 ($78 000).
The following information is available:
(i) The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and
machine activity for the year were anticipated to be $920 000 and 20 000 hours, respectively.
(ii) The company worked on three jobs during the first quarter (i.e. from 1st January to 31st March). Direct
materials used, direct labour incurred and machine hours consumed were as shown in the following table:
Job Numbers Direct Material Direct Labour Machine Hours
K1 $ – $30 000 1 000
K2 50 500 23 000 600
K3 45 000 65 000 2 000
(iii) Manufacturing overhead incurred during the first quarter was $275 000.
(iv) Bulla Ltd completed Job K1 and Job K3 during the first quarter. Job K3 was sold on credit, producing a
profit of $30 000 for the company.
a) Calculate the company’s predetermined overhead rate. (1.5 marks)
b) Calculate manufacturing overhead applied to production for the first quarter. (1.5 marks)
c) Determine the cost of jobs completed in the first quarter. (4 marks)
d) Determine the cost of the jobs still in process at the end of the first quarter. (2 marks)
e) Describe how overhead may be under applied and give one reason for this. (2 marks)
(Hint: No calculation is required.)
3 6 (7 marks)
Lyon Productions manufactures two products, Chevalier and Dame. Estimates for the company’s products for
next year are provided below:
Chevalier Dame
Estimated Production Volume 6 000 4 000
Direct Material Cost $30 / unit $50 / unit
Direct Labour per Unit 3 hours @ $12 / hour 4 hours @ $12 / hour
The company’s estimated overhead of $400 000 can be identified with three major activities: order
processing ($75 000), machine processing ($280 000) and product inspection ($45 000). These activities are
driven by number of orders processed, machine hours, and inspection hours respectively. Estimated activity
levels for the next year are as follows:
Chevalier Dame Total
Orders Processed 300 200 500
Machine Hours 36 000 44 000 80 000
Inspection Hours 4 000 16 000 20 000
Assuming that Lyon Productions uses activity-based costing (ABC) to apply overhead to production,
calculate the total cost per unit for Chevalier and Dame if the estimated production volume is attained. (7
4 8 (7 marks)
Aqua Company Ltd manufactures recyclable soft drink cans. A unit of production is a case of twelve (12)
dozen cans. The following standards have been set by the production engineering staff and the management
Direct Material $3.12
Quantity 4 kg
$0.78 per kg
Direct Labour $4.025
Quantity 0.25 hour
Rate $16.10 per hour
Actual costs incurred in the production of 50,000 units were as follows:
Direct Material $170,100 for 210,000 kg
Direct Labor $210,600 for 13,000 hours
All materials were purchased during this time period.
a) Use the variance formulas to calculate the direct material price and quantity variances and the direct labor
rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (6 marks)
b) Comment on the company’s material variances. (1 mark)
5 9 (7 marks)
Memory Production manufactures photo frames. The photo frames are assembled in the Frame Division. The
half-finished frames are then transferred to the Finishing Division, where the glass and other components are
installed. The standard cost for the company’s A4 side frame is detailed as follows:
Frame Division Finishing Division
Direct material $4.50 $9.00 (exclude transfer)
Direct labour 6.00 4.50
Variable overhead 9.00 9.00
Total 19.50 22.50
The frame division can also sell half-finished frames to photo framing companies which install the glass and
other components. The sales price of a half-finished frame is $24.00. The Finishing Division sells finished
frames for $57.00.
a) Assume that there is no spare capacity in the Frame Division, use the general transfer pricing rule to
calculate the transfer price for half-finished frames. (2 marks) b) Assume that there is spare capacity in the
Frame Division.
i. Use the general transfer pricing rule to calculate the transfer price for half finished frames. (1 mark)
ii. Assume that the predetermined fixed overhead rate in the division is 135 per cent of direct labor cost,
calculate the transfer price for half-finished frames based on standard absorption cost plus 10 per cent markup. (2 marks)
c) Provide two examples of non-financial performance measures that could be used to measure the
performance of a hotel. (2 marks)
Question 6 – Week 11 (11 marks)
QUIK Manufacturing Company Ltd produces two products from a joint process. Information about the two
joint products is as follows:
Information Product A Product B
Budgeted production (in kg) 2 000 4 000
Selling price per kg at split-off $ 10 $ 20
Additional processing costs per kg after split-off (all variable) $ 15 $ 30
Selling price per kg after further processing $40 $50
The cost of the joint process is $ 90 000.
a) Which of QUIK company’s joint products should be sold at split-off point? Please support your answer
with the necessary calculations. (4 marks)
b) Which of QUIK company’s joint products should be processed further? Support your answer with the
necessary calculations. (4 marks)
c) The company currently sells both products at the split-off point. If the company makes decisions that
maximises profits, by how much would the company’s profits increase by? (3 marks)
Submission Directions:
The assignment has to be submitted via Blackboard. Each student will be permitted one submission to
Blackboard only. Each student needs to ensure that the document submitted is the correct one.
Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is
integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all
assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of
Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your
assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support
resources. Many of these resources can also be found through the Study-Skills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of
marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of
course enrolment.
Table 1: Six Categories of Academic Integrity Breaches
Plagiarism Reproducing the work of someone else without attribution. When a student submits their own
work on multiple occasions this is known as self-plagiarism.
Collusion Working with one or more other individuals to complete an assignment, in a way that is not
Copying Reproducing and submitting the work of another student, with or without their knowledge. If a
student fails to take reasonable precautions to prevent their own original work from being copied, this may
also be considered an offence.
Impersonation Falsely presenting oneself, or engaging someone else to present as oneself, in an in-person
Contract cheating Contracting a third party to complete an assessment task, generally in exchange for money
or other manner of payment.
Data fabrication and falsification Manipulating or inventing data with the intent of supporting false
conclusions, including manipulating images.
Source: INQAAHE, 2020
If any words or ideas used the assignment submission do not represent your original words or ideas, you must
cite all relevant sources and make clear the extent to which such sources were used.
In addition, written assignments that are similar or identical to those of another student is also a violation of
the Holmes Institute’s Academic Conduct and Integrity policy. The consequence for a violation of this policy
can incur a range of penalties varying from a 50% penalty through suspension of enrolment. The penalty
would be dependent on the extent of academic misconduct and your history of academic misconduct issues.
All assessments will be automatically submitted to Safe-Assign to assess their originality.
Further Information:
For further information and additional learning resources please refer to your Discussion Board for the unit.

Management Accounting


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