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SEPTEMBER SEMESTER 2012 BMAC5203 – ACCOUNTING FOR DECISION MAKING ASSIGNMENT OBJECTIVE: To assess students ability to ethically use accounting information for costing, decision making, planning and control.
INSTRUCTIONS: The assignment consists of four (4) unrelated tasks. The details of the tasks are explained below: Task 1: Target Costing Target Co assembles and sells many types of radio. It is considering extending its product range to include digital radios. These radios produce a better sound quality than traditional radios and have a large number of potential additional features not possible with the previous technologies (station scanning, more choice, one touch tuning, station identification text and song identification text etc). A radio is produced by assembly workers assembling a variety of components. Production overheads are currently absorbed into product costs on an assembly labour hour basis. Target Co is considering a target costing approach for its new digital radio product. Required: (a) Write a report to the Managing Director, explaining the target costing process that Target Co should undertake. (5 marks) (b) Explain the benefits to Target Co of adopting a target costing approach at such an early stage in the product development process. (10 marks) (c) Assuming a cost gap was identified in the process, outline possible steps Target Co could take to reduce this gap. (10marks) (Total: 25 marks) (Marks would be allocated on clarity of argument and justification. Professional marks would be allocated for format and structure of presentation).
60 members. "Attendance was an all-time high.ASSIGNMENT – BMAC5203 Task 2A – Planning and Control The Marketing Club at the central branch of the Open University recently held an end-of-year dinner party." The treasurer presented the following performance report at the executive board's June meeting: Budget Attendance Revenue (RM) Food (RM) Beverages Disc jockey Facility rental Total costs Profit 45 members 1. of Felix Bhd decided to have a participative budgeting process which allows employees to have a say in projected sales targets for the upcoming period. A disc jockey was hired via a written contract at RM50 per hour. Food and beverage costs were anticipated to be RM15 and RM7 per attendee. One of the company’s Sales manager submitted 2 . respectively. These targets are reflected in a series of performance reports that compare actual sales achieved against targeted amounts. 340 RM 235 Actual 60 members 2. 2.205 870 480 175 200 RM1. Required: a) Comment on the treasurer's performance report.575 675 315 150 200 RM1. which the treasurer noted was a financial success. (5 marks) b) Using appropriate calculations. and the results were much better than expected. Forty-five members would attend at a fixed ticket price of RM35. (10 marks) Task 2B –Planning and Ethics c) James the Finance Manager. 3.725 RM 480 Variance 630F 195U 165U 25U ---RM385U RM245F The budget was based on the assumptions that: 1. explain whether the end-of-year party was as successful as originally reported.
In light of these standards. They are confident that importing quality ties and selling via a website will be successful and that the business will grow quickly. (5 marks) (Total: 20 marks) Task 3 – Performance Measurement Ramsey Sdn Bhd is a new business. It is not expected that marketing expenditure will continue to be as high in the future. Significant expenditure on marketing was incurred in the first two quarters to launch both the website and new products. The managers. patterns and colours of ties at different prices. All website development costs were written off as incurred in the internal management accounts that are shown below in table 1. selling high quality imported men’s ties via the internet. This is despite the well recognised fact that selling clothing is a very competitive business. even if anticipated sales and closures don’t materialize. The business’s trading results for the first two quarters of trade are shown below in table 1 3 . are young and inexperienced but they are prepared to take risks. confidentiality. has published standards that focus on competence. The Institute of Management Accountants (IMA). The owners are so convinced that growth will quickly follow that they have invested enough money in website server development to ensure that the server can handle the very high levels of predicted growth. "I always want to look good in terms of meeting targets. Customers can buy a variety of styles. who also own the company. as she confided in a colleague. and credibility. integrity." Many professions have adopted a series of ethical standards to provide guidance for their memberships. consider the case of the Sales Manager in Felix Bhd.ASSIGNMENT – BMAC5203 very low sales targets because. for example. They were prepared for a loss-making start and decided to pay themselves modest salaries (included in administration expenses in table 1 below) and pay no dividends for the foreseeable future.
400 Quarter 2 RM RM 680.500 20.600) –––––––– Gross Profit less expenses Website development Administration Distribution Launch marketing Other variable expenses 120.000 100.000 (201.000 –––––––– (394.800 80.763 60.760) –––––––– (55.263) –––––––– Loss for quarter (132.440) –––––––– 218. (10 marks) (Total: 30 marks) 90. assess the financial performance of the business during its first two quarters using only the data in table 1 above.000 (340.320 40.680) –––––––– 339.863) –––––––– Required: (a) Using appropriate calculations.000 –––––––– Total expenses (351. (20 marks) (b) Briefly consider whether the losses made by the business in the first two quarters are a true reflection of the current and likely future performance of the business.ASSIGNMENT – BMAC5203 Table 1 Quarter 1 RM Sales less Cost of Sales RM 420.000 50.000 150.320 4 .640 33.
c.000 of variable costs. If this order is accepted. b. Plagiarism is not acceptable. Notes: Assignments should be submitted according to the fixed date. Its installed capacity is 2000 chips per week.000 of fixed costs and RM80.ASSIGNMENT – BMAC5203 Task 4: Decision Making Rex Ltd manufactures chips used in Delco computers.english. Provide references. production will increase from 1600 chips at present to 1800 chips per week. Total costs of production this week at 80% of capacity level comprise RM75. Production this quarter is 1600 chips per week. References should use the American Psychological Association (APA) format References should be latest (year 2005 and onwards) 5 . Required: (a) At what level of activity will the plant break even? Explain your answer. The selling price is RM100 per chip. Should the company accept the order? Support your answer with calculations. If you are not sure what is meant by plagiarism.g. what is the reported cost per unit? (5 marks) (d) Suppose that a new customer offers RM80 per chip for an order of 200 chips per week for delivery beginning this quarter. owl. (5 marks) (e) What qualitative considerations are relevant in a make or buy decision? (5 marks) (Total: 25 marks) [TOTAL: 100 MARKS] Assignment Format: a.purdue.edu/handouts. Use double space and 12-point of Times New Roman font. (5 marks) (b) What will the plant's profit be if it operates at full capacity? (5 marks) (c) If the plant's accounting system reports fixed cost per unit using its installed capacity level as the base. refer to the various websites which discuss this matter. e.
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