MAA703 – Accounting for Management

Deakin’s Bachelor of Commerce and MBA are internationally EPAS accredited.
Deakin Business School is accredited by AACSB and EQUIS.
MAA703 – Accounting for Management
Trimester 1, 2020
Assessment Task 3 – Part B

5 June 2020, by 5:00PM (AEST)
20% (overall this assignment is worth 60%, but each part is
worth 20%)
50% of marks in the three parts (of the 60%)
1 000 (200 words for Q1; 800 words for Q2)

Part B consists of two questions. You need to answer both questions in a word document, clearly
labelling your answers.
Question 1 (7 marks)
Magic Cakes Co. produces birthday cakes, biscuits, and a variety of quality confectionery. The
company recently installed a flexible manufacturing system for the production of its range of quality
confectionery. The company was experiencing serious problems in the production of confectionery
products that were affecting the quality of the final products and the capacity to deliver on time to
its customer. The problems were due to several major breakdowns in the company’s old production
machinery. The installation of the new production system was not anticipated when the current
year’s budget and cost structure were developed.
The new system was expensive, but management expects it to cut the labour time required by a
substantial amount. Management also expects the new equipment to allow a reduction in direct
material waste. On the negative side, the new flexible manufacturing system requires a more highly
skilled labour force to operate it than it was needed for the company’s old equipment.
The following cost variance report was prepared for October, the first full month after the equipment
was installed:

Magic Cakes Co. Cost Variance Report October 2019
Direct material:
Standard cost $1 204 900
Actual cost 1 197 400
Direct material price variance 300 U

Page 2 of 3

Direct material quantity variance 7 800 F
Direct labour:
Standard cost 786 000
Actual cost 767 600
Direct labour rate variance 9 600 U
Direct labour efficiency variance 28 000 F
Manufacturing overhead:
Applied to work in process $800 000
Actual cost $816 000
Variable overhead spending variance 16 000 U
Variable overhead efficiency variance 20 000 F
Fixed overhead budget variance 60 000 U
Fixed overhead volume variance 40 000 F

Explain the possible interactions between the variances listed in the report. Which ones are likely to
have been caused by the purchase of the new system? Provide reasons for why you think this.
Please note: The company budgets, and applies manufacturing overhead costs, on the basis of direct
labour hours. (1 mark for each correct explanation).
Question 2 (13 marks)
Despite its potential advantages, the adoption of Integrated Reporting across the world has been
What are the potential benefits for business entities of adopting Integrating Reporting and what
are some of the reasons that may explain the slow adoption of Integrated Reporting?
The following readings, available on the MAA703 CloudDeakin site, will help you answer the question.
KMPG 2017 Corporate Reporting. A significant shift towards adoption of the principles of
integrated reporting. KPMG.
Burke, J J & Clark, C E 2016 ‘The business case for integrated reporting: Insights from leading
practitioners, regulators, and academics’, Business Horizons, vol. 59, no.3, pp. 273- 83.
Page 3 of 3
Hughen, L Lulseged, A Upton, D 2014 ‘Improving stakeholder value through sustainability and
integrated reporting’, The CPA Journal, vol. 84, no. 3, pp.57-61.
You should include reference to at least three relevant sources (in addition to the references provided
above), but note that it is not the number of sources you cite that will be assessed – it is the quality
of the sources (their relevance, currency, validity, authority) and the way you use these sources to
justify your response that will be assessed.
You must correctly use the Harvard style of referencing.
Your written answers should provide evidence that you have carefully examined the literature,
understood the articles you have selected, and been able to critically analyse their essential contents
by integrating their insights and conclusions into your own arguments and perspective. If your
arguments are not supported by relevant references, you will not achieve full marks.
Submission Instructions
Part B must be submitted electronically by the due date, Friday 5 June 2020, on or before 5:00PM.
Submit your responses to the two questions in one Microsoft Word document by uploading it to
the assignment Dropbox, T1 2020 Assessment Task 3 Part B, in the MAA703 site on CloudDeakin.
When uploading your assignment, give the document a name using the following syntax: <your
surname_your first name_your Deakin student ID number_MAA703.doc (or ‘.docx’), For example,
‘Jones_Barry_123456789_MAA703.doc’. Submitting a hard copy of this assignment is not
Please be sure that you adhere to the word limit as penalties apply for failure to remain within the
prescribed word limit. A 10% tolerance will be applied to the word limit. References are not
counted towards the word limit.

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