Part A: Assignment General Information
Assignment Description / Requirements
1.This is a group assignment. Each group must be completed in a group of 2 to 3 members. It is the students’ responsibility to form/ join a group using the grouping facility for Brisbane students in Moodle and to ensure that the group dynamics work. Please make sure that names and ID numbers of all group members are stated on the cover sheet of your submission.
2.The assignment has three questions. The assignment requires development of a model using a spreadsheet and a word document. Both excel spreadsheet and word document have to be submitted to the assignment submission link. Only one submission is required for each group.
3.Students must fully reference the source(s) of all materials, even if you have re-expressed the ideas, facts or descriptions; acknowledge all direct quotations; and not submit their work that has been researched and written by another person.Plagiarism is heavily penalised.
4.Please monitor Moodle regularly for any further instructions or announcements.
BUACC5933 Cost And Management Accounting Assignment-Federation University Australia.
Submission Instruction:
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, Assignment Dropbox,on Moodle on or before the due date. Only one submission per group is required, i.e. only one student submits on behalf of all other group members.
Please do not attempt to submit multiple versions of your assignment work as this will cause high similarity in Turnitin report and may affect your final score.
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 Turtnitin for the purposes of detecting collusion and/or plagiarism.
Marking Rubric, Dispute Resolution and Free Riders:
Marking Rubric is available in Moodle as a formal guidelines for the expected outcomes of the assignment requirements below.
The marking will be done for the group as a whole not on individual basis. Each group member is awarded the same mark.
Working in groups has its pros and cons. It is beneficial that you can learn a lot by discussing the issues with your fellow students. Invariably different group members bring different skills to a project; it is up to you to make the best of it. If you find your group members are“not pulling their weight” or there are problems with any member’s commitment, please try to resolve those issues amongst yourselves. Open and honest communication always helps.
If you are unable to resolve these issues, you are most welcome to see your lecturer and tutor.We will try to sort out the problems together. Do this as soon as possible and certainly before the due date. In case of any dispute among the group members or if there are any free riders identified in the group, members should report to your lecturer in writing.
BUACC5933 Cost And Management Accounting Assignment-Federation University Australia.
Part B: Assignment Requirements
Question 1
Hercules Limited is a manufacturer with a large variety of products. One of the most popular products is Product H. In many years, Hercules estimates production cost of product H based on the traditional costing method in which the manufacturing overhead costs are allocated using direct labour cost as the single cost driver. Recently, top managers have been very concerned about declining profitability despite a healthy increase in sales volume of Product H. The declining profitability of Product H was not expected as the company has installed new machine and applied new automation technology to increase production efficiency.As a new management accountant of the firm, you are required to evaluate the costing of Product H. Given that the company also incurs a substantial amount of manufacturing overhead, you have undertaken an Activity-based analysis. You have determined that the company’s total manufacturing overhead can be identified with the following activities:
Direct labour cost of the company is estimated at $3,000,000 for the coming year.Other production/sales information regarding one of its popular products is as follows:
Required:
a. Estimate the unit cost of Product H at the estimated production volume using both the traditional costing and the Activity-based costing (ABC) methods.
b. You are advised that selling price of Product H is based on the estimated product cost plus a fixed margin (around 20% of the production cost per unit). Given your estimation results in the requirement 1, is Product H over-costed or over-costed using the current costing method? If there is a cost distortion, is it significant and what would you like to recommend the company to do to improve the Product H’s profitability? Please keep in mind that changes in selling price may affect the customers’ behaviour substantially.
c.‘Conventional costing will always distort product costs.’ Discuss the validity of this statement.
Question 2
You are required to prepare a proposal on the potential benefits and costs of implementing an Activity-based costing (ABC) system to determine customer profitability for a local bank, Kangaroo Commercial Bank Limited. The bank currently uses a traditional costing system.The clients of Kangaroo Commercial Bank are regional residents in North Australia. The banks considers extending its operation across some metropolitans, such Sydney and Melbourne, to serve the retail banking and investment demands of its clients.
Required:
a. ABC system requires a setting of operational activities and activity drivers. In identifying activity driver which mainly causes costs to be incurred at an activity level, what important factors should be considered? Explain to management why you consider these important.
b. Using at least two academic research articles to support your background research,write a minor report (in 500-600 words) to advise the management of Kangaroo Commercial Bank on the potential benefits and costs associated with implementing an ABC system.
Question 3
Maxi Return Limited is a fintech company providing accounting solution and financial advice based on Artificial Intelligience technology. The company is one of the first Fintech pioneers in Australia. Maxi Return has experienced steadily increased sales figures over the last ten years. The company size has also increased to 100 employees currently. Most of them are software engineers and accounting and financial professionals.
Adrian Daniels joined Maxi Return approximately nine months ago as financial controller.His major duties include supervision of the company’s accounting team and preparation of the company’s financial statements. He has noticed that, in the past six months, the company’s sales have actually dropped. This unexpected downturn has resulted in cash shortages. In addition, Maxi Return has had to postpone the introduction of a new accounting software because one of its business partner, Print Solution Limited , has not yet delivered the instruction manuals for the new product.
Most of Maxi Return’s printing documents are made by PrintSolution, a small printing company owned by Darren Abbott. Darren has dedicated a major portion of his printing capacity to Maxi Return’s requirements, because its contracts represent approximately 50 percent of Print Solution’s business. Adrian has known Darren for many years, and it was Darren who first told Adrian that Maxi Return needed a new financial controller.
BUACC5933 Cost And Management Accounting Assignment-Federation University Australia.
While preparing the company’s most recent financial statements, Adrian became concerned about its ability to maintain timely payments to its suppliers. He estimated that payments to all suppliers, which were usually made within 45 days, were now exceeding 90 days.Benjamin is particularly concerned about payments to Print Solution. He knows that Maxi Return has recently placed a large order with Print Solution for printing the new product instruction manuals, and that Print Solution will soon be placing an order with its suppliers for the special paper needed for this new job. Adrian is considering telling Darren about the cash problems of Maxi Return, although he is aware that a delay in the printing of the documentation would jeopardise his company’s new product.
Required:
In 500-600 words, describe Adrian Daniel’s ethical responsibilities in this situation. Support and analyse your answer with any standard or guidelines you consider relevant.
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