HA2011 Role Of Strategic Planning In Management Accounting Assessment Answer

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Question :

Assessment Details and Submission Guidelines
T1 2021
Unit Code
Unit Title
Management Accounting
Assessment Type
Assessment Title
Group Assignment
Purpose of the assessment (with ULO Mapping)
Students are required to demonstrate their ability to apply their knowledge of management accounting concepts to plan and control business operations. Specifically, you are to critically evaluate the use of Activity-based Costing (ABC) for decision-making and achievement of business goals. You also will use budgets as a planning tool by preparing a master budget for a company.
(ULO 1, 6 and 7)
  • Outline the differences between fixed costs, variable costs, and mixed costs by categorising various costs of an entity into these categories
  • Apply the concept of costs to various costing systems including justification of cost and system choices
  • Implement systems to plan and control business operations
30% of the total assessments
Total Marks
Word limit
Not more than 2,500 words. Please use the “word count” function and include the no. of words in the assignment. You should use the “spell check” and “grammar check”
functions in Word.
Submission Guidelines
  • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.
  • The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
  • Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.
  • It is the responsibility of the student who is submitting the work, to ensure that the work is in fact her/his own work. Incorporating another’s work or ideas into one’s own work without appropriate acknowledgement is an academic offence. Students should submit all assignments for plagiarism checking on Blackboard before final submission in the subject. For further details, please refer to the Unit Outline and Student Handbook.
Adapted Harvard Referencing
Holmes has now implemented a revised Harvard approach to referencing:

  1. Reference sources in assignments are limited to sources which provide full
text access to the source’s content for lecturers and markers.

  1. The Reference list should be located on a separate page at the end of the essay and titled: References.
  2. It should include the details of all the in-text citations, arranged alphabetically A-Z by author surname. In addition, it MUST include a hyperlink to the full text of the cited reference source.book reference

  3. All assignments will require additional in-text reference details which will consist of the surname of the author/authors or name of the authoring body, year of publication, page number of content, paragraph where the content can be found.

For example;“The company decided to implement an enterprise wide data warehouse business intelligence strategies (Hawking et al, 2004, p3(4)).”

Non - Adherence to Referencing Guidelines Where students do not follow the above guidelines:
  1. Students who submit assignments which do not comply with the guidelines may be required to resubmit their assignments or incur penalties for inadequate referencing.
  2. Late penalties will apply per day after a student or group has been notified of a resubmission requirements.
  3. Students whose citations are fake will be reported for academic misconduct

*Note: Students are required to form and self-enrol into groups – a maximum of 4 students per group. You will not be able to submit your group assignment unless you are OFFICIALLY enrolled into a designated group in Blackboard (even if it is a solo-group of 1). Submit the group assignment as a single document, including the Holmes official COVER SHEET. Once formed, the group membership should not be changed for the duration of the trimester.

For help with any group assignment matters, please address your email to bbhelpdesk@holmes.edu.au ensuring that your full details (Name, student ID, unit name and number) are included.


Assignment Specifications

This assignment aims at developing your understanding of management accounting concepts to plan and control business operations. Specifically, you are to critically evaluate the use of Activity-based Costing (ABC) for decision-making and achievement of business goals. You also will use budgets as a planning tool by preparing a master budget for a company.

This assignment is to be completed by a group of 3 - 4 students. You are to self-enrol in to a group. Individual assignments will NOT be accepted, unless approved by the Unit Coordinator.

Instructions with Question 1 of the assignment.

  1. You are to refer to the management accounting literature in Question 1, particularly to use relevant academic journal articles from the following Accounting and Management Accounting Journals:

Accounting, Auditing and Accountability Journal; Journal of Management Accounting Research Journal of Applied Management Accounting Research

2. You can access these journals in ProQuest Database by clicking on the above links. Log in details for ProQuest are - Username: Holmes2004; Password: Holmes. These journals can also be accessed via the ProQuest Database link available via the Student Login page in the Holmes website.

You can also use Google Scholar. Don’t use Google.

3. You are to select a minimum of three (3) relevant journal articles, and follow the revised Harvard approach to referencing (on pg. 1 - 2), which include providing the hyperlink to the full text of the cited reference source.

The Assignment Structure should be as the following:

From the management accounting literature:

  1. Discuss the role of strategic planning in adding value to an organisation’s products/services. (4 marks)
  2. Explain how Activity-based Costing (ABC) can support strategic planning and the value adding processes. Include examples of the type of information and reports the management accountant can provide. (4 marks)
  3. Based on your literature findings (from Part (b)), state two key lessons that would inform contemporary organisations about the use of ABC to support strategic planning and the value adding initiatives. (2 marks)

Question This question is not related to Question 1.[20 marks]

This assignment MUST be done in groups of three or four students. Individual assignments will NOT be accepted, unless approved by the Unit Coordinator. The groups are to be formed at your discretion in your respective campuses. Group conflicts must be resolved by members.

The table below needs to be used on the cover sheet of your assignment. The assignment will be marked STRICTLY based on the order in which you list student ID’s. The details below are just examples. You must fill in your respective group details.

An example only:

Group No.
ID Number
First Name
Last Name

Students are REQUIRED to use the budget templates as illustrated in the Lecture Slides on BUDGETING Topic (Topic 7). Any supplementary working done to support the amounts in the budgets should be provided.


Rosy Hearts produces cupcakes for resale at large grocery stores throughout Australia. The company is currently in the process of establishing a master budget on a quarterly basis for the next financial year, which ends June 30. Last year quarterly sales were as follows (1 unit = 1 batch):

First quarter 60,AAA units Second quarter 75,BBB units Third quarter 96,CCC units Fourth quarter 80,DDD units

See further instructions about last year quarterly sales figures in the table below:

Group Member No.
ID Number
First Name
Last Name

First quarter 60,AAA units becomes 60,037 units. AAA is the last three digits of Member 1’s ID. Second quarter 75,BBB units becomes 75,094 units. BBB is the last three digits of Member 2’s ID. Third quarter 96,CCC units becomes 96,216 units. CCC is the last three digits of Member 3’s ID. Fourth quarter 80,DDD units become 80,104 units. DDD is the last three digits of Member 4’s ID.

NOTE that if your group has three members only, then use the value of 80,000 units for the fourth quarter. For solo group, if approved, do contact the Unit Coordinator via email (LKanainabogi@holmes.edu.au) who will provide you with the last year quarterly sales figures to use.


Unit sales are expected to increase 25 percent, and each unit is expected to sell for $8. The management prefers to maintain ending finished goods inventory equal to 10 percent of next quarter’s sales. Assume finished goods inventory at the end of the fourth quarter budget period is estimated to be 9,000 units.

Direct Materials Purchases Budget Information

Each unit of product requires 1.5 pounds of direct materials per unit, and the cost of direct materials is $2 per pound. Management prefers to maintain ending raw materials inventory equal to 30 percent of next quarter’s materials needed in production. Assume raw materials inventory at the end of the fourth quarter budget period is estimated to be 41,000 pounds.

Direct Labor Budget Information

Each unit of product requires 0.20 direct labor hours at a cost of $12 per hour.

Manufacturing Overhead Budget Information

Variable overhead costs are:

Indirect materials
$0.20 per unit
Indirect labor
$0.15 per unit
$0.35 per unit

Fixed overhead costs each quarter are:


Rosy Hearts estimates that all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year are:

$ 7,000
$ 8,000
$ 1,000

Rosy Hearts has the following information pertaining to the capital expenditures and cash budgets.

Capital Expenditures

The company plans to purchase selling and administrative equipment totalling $20,000 and production equipment totalling $28,000. Both will be purchased at the end of the fourth quarter and will not affect depreciation expense for the coming year.

Cash Budget

All sales are on credit. The company expects to collect 70 percent of sales in the quarter of sale, 25 percent of sales in the quarter following the sale, and 5 percent will not be collected (bad debt). Accounts receivable at the end of last year totalled $200,000, all of which will be collected in the first quarter of this coming year.

All direct materials purchases are on credit. The company expects to pay 80 percent of purchases in the quarter of purchase and 20 percent the following quarter. Accounts payable at the end of last year totalled $50,000, all of which will be paid in the first quarter of this coming year.

The cash balance at the end of last year totalled $20,000.

The company does not have an overdraft facility with their bank.

Assume Rosy Hearts will collect 25 percent of fourth quarter budgeted sales in full next year (this represents accounts receivable at the end of the fourth quarter). The following account balances are expected at the end of the fourth quarter:

  • Property, plant, and equipment (net): $320,000
  • Ordinary Shares: $450,000

Retained earnings at the end of last year totalled $56,180, and no cash dividends are anticipated for the budget period ending June 30.


With the information provided, assist Rosy Hearts in setting up their ‘Master Budget’. To do this, you will need

to prepare the following budgets for coming year:

  1. Sales Budget
  2. Production Budget
  3. Direct Materials Purchases Budget
  4. Direct Labour Budget
  5. Manufacturing Overhead Budget
  6. Ending Finished Goods Inventory Budget
  7. Selling & Administration Expenses Budget
  8. Expected Cash Collections
  9. Expected Cash Disbursements for Materials
  10. Cash Budget
  11. Budgeted Income Statement
  12. Budgeted Balance Sheet*
  13. Review the cash budget for Rosy Hearts. Comment on the company’s cash position in the coming year,

and provide one recommendation to resolve one issue you have raised.

*For the balance sheet as at June 30th, there will be a difference between the final totals. This is due to calculations based on rounded off amounts. To balance the totals, simply close off this difference to the Retained Earnings account.


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