Deakin’s Bachelor of Commerce and MBA are internationally EPAS accredited. Deakin Business School is accredited by AACSB. MAA 262 – Management accounting Trimester 1, 2017 Assessment – Group Assignment Part 1
DUE DATE AND TIME:
Week 7, Sunday 30 April at 11:59 PM (online group submission via CloudDeakin) 10% (10 marks) of your total marks for the unit.
PERCENTAGE OF FINAL GRADE:
Learning Outcome Details
Unit Learning Outcome (ULO)
Graduate Learning Outcome (GLO)
ULO 3: Prepare and explain alternate product costing using job costing, variable and absorption costing, and activity based costing systems.
Prepare an analysis and reflection; demonstrate the use of excel in the analysis, and word Microsoft programs to prepare the assignment.
ULO 6: Demonstrate a student-oriented approach to learning and teamwork and collaboration skills.
GLO 2 & 5: Problem solving and communication.
Assessment Feedback: Students who submit their work by the due date will receive their marks and feedback on CloudDeakin within 15 working days of the assignment submission due date. Description / Requirements You will need to have completed topic 4, Activity-based costing to complete this part of your assignment. The assignment has to be completed in a group of three (3) individuals from any class and/or cloud (online) students. It is the students’ responsibility to form/ join a group and to ensure that the group dynamics work. Part A of the assignment requires development of a model using a Spreadsheet and Part B has to be completed in a word document. Both excel spreadsheet and word document have to be submitted to the assignment folder. Please monitor CloudDeakin regularly for any further instructions or announcements. Page 2 of 7 Submission Instructions This assignment is to be submitted online only. (You are not required to submit a hard copy) The completed assignment must be submitted into the allocated area on CloudDeakin under the drop-box folder on or before the due date. Only one submission per group is required. i.e. only one student submits on behalf of all the three group members. Once submitted, you cannot retract your assignment but you can submit another version. Only the most recent version submitted will be marked. You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy. Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism. When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after uploading it, and check for, and keep, the email receipt for the submission. Notes
There is a discussion area on Cloud Deakin titled ‘Assignment discussion’. This area is for you to discuss the assignment. It is an area for students to help each other.
Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date without an approved extension: 5% will be deducted from available marks for each day up to five days, and work that is submitted more than five days after the due date will not be marked. ‘Day’ means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.
The final examination is the only hurdle requirement for this unit. If you choose not to submit this assignment, you will score zero for this assignment.
Plagiarism and collusion are forms of cheating and are considered a serious academic misconduct, and severe penalties are associated with them. Please refer to the MAA 262 unit guide for your responsibilities with regard to plagiarism and other academic offences. For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in CloudDeakin unit site. Page 3 of 7 Assignment Part 1 This assignment has two parts; part A and part B. Part A: Browns Electronics Company is a manufacturer of small screen television models. The company produces three models called High definition (HD) televisions, LED-LCD televisions and Smart curved televisions. The company uses a job costing system with manufacturing overhead applied on the basis of direct labour hours. The system has been in place with not much change for the past 10 years. Brown Electronics Company’s product costs and annual sales data are as follows:
Annual sales (units)
$15.00 (0.5hour @ $30)
$30.00 (1 hour @ $30)
$30.00 (1 hour @ $30)
Manufacturing overhead *
Total product cost
*Calculation of predetermined overhead rate: Manufacturing overhead budget:
$ 2 220 000
Depreciation, taxes and insurance for factory
Purchasing, receiving and shipping
Inspection and repair of defects
Miscellaneous manufacturing overhead costs
$ 5 355 000
Direct labour budget:
High definition (HD) model
10 000 hours
1 000 hours
Smart curved model
10 000 hours
21 000 hours
Page 4 of 7 Predetermined overhead rate: Budgeted overhead = $ 5 355 000 = $255 per hour Budgeted direct labour hours 21 000 hours For the past 10 years, Brown Electronics Company’s pricing formula has been to set each product’s budgeted prices at 115 percent of its full product cost. Lately, however, the high-definition model has come under increasing price pressure from overseas competitors. As a result of this increased competition, the price on the High-definition model has been lowered to $175.00. Brown Electronics Company’s CEO recently asked the financial controller, ‘Why can’t we compete with these other companies? They are selling their high definition televisions for $165.00. That is only a few dollars more than our production cost. Are we really that inefficient?’ The financial controller responded by saying, ‘I think this is owing to an outdated product costing system. As you may remember, I raised a red flag about our existing product costing system last year. In my opinion, our product costing system is distorting and misrepresenting our product costs. Let me run a few numbers to demonstrate what I mean.’ After getting the approval of the CEO, the financial controller compiled the basic data needed to implement an activity based costing system. These data are displayed in the following table. The percentages given are the proportion of each activity driver consumed by each product line. Page 5 of 7
High definition (HD) model
Smart curved model
Depreciation, machinery Maintenance, machinery
Engineering Inspection and repair of defects
Purchasing, receiving and shipping Material handling
Number of material orders
Depreciation, taxes and insurance for factory Miscellaneous manufacturing overhead costs
Factory space usage
Required: 1. Calculate the budgeted prices for the three models, based on the traditional product costing system. (6 Marks) 2. Construct an excel spreadsheet showing new product costs for the three models, based on the new data collected by the financial controller. Round to the nearest cent. (10 marks) 3. Calculate a new budgeted price for the three products, based on the activity based costing system. Compare the new budgeted target price with the current actual selling price for the High-definition model. (8 marks) 4. Refer to the product costs developed in requirement 2 above. Prepare a table showing how Browns Electronics Company’s traditional product costing system distorts the product costs of the three television models. (6 marks) Page 6 of 7 Part B: You have been asked to analyze the operations of an ‘Art, craft and music school’ for young children, in order to determine the ways and means that you can improve the quality of the service provided while reducing the costs. You have resolved to analyze the activities provided by the school and use an Activity Based Costing system to assign costs to activities. The list below contains potential activities from which to choose.
Art and craft activities: These activities are conducted daily as a part of the school routine. The aim of these activities to enhance the creativity of the students involved.
Music activities: This activity is conducted weekly and it aims to encourage the student’s interest in music and dancing. Learning activities: These are conducted as a part of the daily routine of the school, where the students are listening to stories and following directions as a part of games, play or other interactive activities. Meal activities: Snacks and light meals are provided by the teachers and one food-service employee. From time to time, the students are given the opportunity to prepare their own snacks. Free play activities: The school has allocated a time for the students to play. This can be indoors or outdoors and a few teachers observe them playing. Miscellaneous: These miscellaneous activities include greeting the students when they are coming in and leaving the school, helping them with any of their requirements and interacting with the parents of the students. Conferencing with the parents: This is a quarterly activity. The head teacher of the school meets and has a discussion with each student’s parents for about half an hour about the progress of the students and anything else that needs to be discussed. Page 7 of 7 Required: 1. You are required to choose several activities to use for cost pools and identify cost drivers for those cost pools. Explain your choices. (4 marks) 2. You are required to discuss the potential benefits and costs of implementing an Activity Based Costing (ABC) system for an institution like above, using at least two academic research articles as your background research. (800 words) (6 marks) Total of 40 marks, scaled down to 10 marks.