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FNSACC507 Provide management accounting information: Assessment Task 2

Assessment Task 2: Case studies

Task summary 

For this assessment task you are required to review five case studies and complete the tasks outlined. 

Required

  • Access to textbooks/other learning materials
  • Computer and Microsoft Office
  • Access to the internet

Timing

The assessor will advise you of the due date of this submission.

Write in the due date below as advised by your assessor:

Submit

  • Answers to activities 1,2,3,6,7,9,10 in a Word document.
  • Answers to activities 4,5,8 in an Excel Workbook, a separate Worksheet for each.
  • Send these documents to your assessor as email attachments.

Assessment criteria

Students must complete all of the activities listed and will be assessed against the assessment criteria included in the checklist included with this task.

Assessment Task 2 Instructions 


Case study 1


Mehil owns a taxi business in Newcastle. He recently expanded his business by including limousines.

Mehil’s accountant has provided the following information on monthly revenues and costs: 

  • The taxi division has monthly revenues of $3,475,000
  • The Limousine division generates revenues of $375,000.
  • Expenses of $2,656,750 were allocated to divisions based on the number of kilometres travelled. 

Mehil has heard about Activity Based Costing and wants to know what benefits it could provide, so he has obtained the following monthly information on expenses for NSW:



TaxisLimousines
Bookings44,0001,500
Kilometres1,200,000150,000
Driver hours67,50010,000


Mehil has identified that the main activity cost areas include salaries, vehicle costs and booking fees.

Salaries$1,360,000
Booking fees$22,750
Fuel$1,193,000
Call centre booking fees$45,500
Vehicle maintenance$35,500


Complete the following activities:

  1. Identify the appropriate cost pools and calculate the appropriate driver rates for the activities listed above. 

You may wish to use the following table in your answer


Cost pool
DriverDriver unitDriver rate
















  1. Using ABC costing, prepare a product line profitability report. 

Show all workings in your answer and ensure you have reconciled data to ensure accuracy of calculations. 

  1. Discuss two key observations identified from your calculations?         

Case study 2


OZ TOYS manufacturing has the following standard cost sheet or information for the production of children Toys.

Direct material2   ft @ 45.00$10
Direct labour0.5ft@   $105
Fixed overhead0.5hrs   @ $2.00*1
Variable overhead0.5hr   @ 4.002
Standard unit cost
$18


Note: * means rate is based on expected activity level of 2500 hour

During the year the following actual results were recorded

Production6000 units
Direct material(11750ft purchased and   used)$61100
Direct labour (2900hrs)29500
Fixed overhead6000
Variable overhead10500


Work out the following variances: 

  1. Material price and usage variances                    
  2. Material price variance 

Formula: Actual quantity x Actual price  less Actual quantity x standard price

  1. Material usage variance

Formula: Actual quantity x Standard price less standard quantity x standard price

  1. Labour rate and efficiency variance
  2. Labour rate variance formula

Formula: Actual hours x Actual rate less Actual hours x standard rate

  1. Labour efficiency variance

Formula: Actual hours x Standard rate less standard hours x standard rate

  1. Variable overed spending and efficiency variances

Variable Overhead variances

  1. Spending variance

Formula: Actual variable overhead rate x actual hours less standard variable overhead rate x actual hours

  1. Efficiency variance

Formula: Standard variable overhead rate x actual hours less standard variable overhead rate x  standardhours

Case study 3

Ethereal Enterprises manufactures microchips for computers. A market survey shows that a 10% reduction in price will result in a 30% increase in sales, with variable costs per unit remaining unchanged. On the other hand, an investment of $30,000 in machinery would reduce variable costs by $3 a unit.

  1. Determine the sales volume and break-even point for each option given Majestic currently sells 10,000 units @ $20 each, has variable costs of $80,000 and fixed costs of $40,000. Ensure you have checked all calculations for accuracy prior to submission.
  2. Using the current information provided in a) as the budget for month 1 and the additional information below, complete the 12-month budget for Majestic Enterprises. Ensure that you have checked all calculations for accuracy prior to submission.
  3. Sales expected to rise monthly by 10%
  4. Variable costs to increase by 5% per month to the 6th month and then stabilise.
  5. Fixed costs to remain stable for the first 9 months then record an increase of $10,000.
  6. Admin expenses of $5,000 to be incurred in the first month with a 2% increase per month.

Calculate your response to this question in a separate Worksheet in an Excel Workbook. 

Case study 4

Mixed Meats Industries is a fine food company producing burgers and sausages. 

It has 300 staff who work 8 hours a day, 5 days a week for 50 weeks per year. 

The demand for burgers and sausages does not exceed 50,000 and 150,000 kilos respectively per year. 

Currently, Mixed Meats receives $10 for one kilo of burgers, and $15 for one kilo of sausages.

Fixed factory overheads are applied on the basis of direct labour hours @$1 per hour. 

Mixed Meats Industries is interested in maximising its profit and wants to know what the most profitable mix of sausages and hamburgers. 

  1. Meet with the company’s bookkeeper (your assessor)

In order to determine the most profitable product manufacturing mix, you will need more information than what is included in the case study above. 

You will gather that information by consulting with the company’s bookkeeper.

Before going to this meeting, make sure that you know which information you need from the bookkeeper.

During the meeting, demonstrate effective communication skills including:

  • Using tone and pace appropriate to the audience
  • Using non-verbal communication to assist with understanding 
  • Asking questions to identify required information 
  • Responding to questions as required 
  • Using active listening techniques to confirm understanding 
  1. Calculate the maximum profit and most profitable mix of products.

Show your calculations.

Answer

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