FN506 Management Accounting Assignment

FN506 Management Accounting Assignment

FN506 Management Accounting Assignment

Task 1

Knowledge Question

Part 1

1. Define cost behavior and explain how managers use this concept in the management cycle. (180-230 words)

2.Identify and describe the three main types of costs. (200-250 words)

3.What is a cost accounting system? Why is it important to have a cost accounting system in an organization? (80-130 words)

4.What are the common accounting systems that are used in organizations? Briefly explain their features. (100-150 words)

5. Provide a definition of the following costs:

   Direct cost
   Indirect cost (25-50 words each)

Part 2

1.Describe the principles of double-entry bookkeeping and accrual-based accounting. (200-300 words)

2. Explain how data in a cost accounting system can be recorded and securely stored. (50-100 words)

Part 3

1. In terms of a cost accounting system, what information does management requirements in order to make informed decisions? (80-130 words)

2. Explain the relevance of “Australian Standard: Record Management” to maintaining management accounting information. (170-220 words)

3. A costing system can maintain its integrity when policies and procedures are applied systematically when allocating data. The result is that accurate data and reports can be produced. How does this affect our reliability on variance analysis techniques? (180-230 words)

4. Describe the reconciliation process for matching invoices and purchase orders in a financial system. (30-80 words)

5. Describe how variance analysis assists with reviewing the quality and effectiveness of the cost assignment process. (40-80 words)

Part 4

1.Describe the role and purpose of budgets in an organization. (40-80 words)

2. List at least three (3) objectives of budgets. (20-40 words)

3. While preparing budgets, list at least three (3) sources that you can use to gather information. (25-50 words)

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Task 2

Practical tasks including Simulated

Part 1

You will be provided a workplace scenario, in which you have navigated the accounting software.

1. After consulting with them, and considering theirs and your own ideas, draft the content of an email that you would write to your manager that presents the issues and identifies proposed solutions. For example, should a new system be established? Why or why not? (150-200 words)

2. .2 Classify the below costs are being “Direct,” “Overhead” or “Indirect”.

Cost

Type

Electricity

 

Maintenance of production machinery

 

Holiday pay for factory operator

 

Insurance

 

Tools for the plant workshop

 

Raw materials to be used in manufacturing

 

Council rates

 

Wages for a machinist who performs repairs and maintenance

 

in the factory

 

Rent paid for factory premise

 

Packaging costs for product

 

3. Clearview Glass purchases the necessary raw materials to manufacture glass. It then sells the glass it manufactures to companies who produce various types of windows. The process of turning the raw materials into glass involves a lot of heat and moulding. The raw materials follow the following path:

Chart of accounts (extract)

 

Account Name

Account Number

Raw Material Control

230

Work in Progress

235

Labour Control

545

Finished Goods

240

Accounts Payable

300

Cash at bank

100

Factory Overhead Control

510

Cost of Goods Sold

500

Entry

particulars

A/C no

Debit

Credit

1.

Purchased raw materials from various suppliers on account

 

 

 

2.

Transferred raw materials to production

 

 

 

3.

Transferred glass to finish goods

 

 

 

4.

Sold the glass to finished goods

 

 

 

Part 2

2.1 Analyse the data below and identify variable costs and fixed costs.

For the month of March 201X

Three (3) sales reps sold $30,000 worth of stock. Each rep sold $10,000 each. Their commission rate was 5% each.

Rent cost $15,000 each month

Telephone line rental was $400

Materials cost is $0.50 per unit. Total number of units produced was 20,000 Equipment

Analyse the data below and identify variable costs and fixed costs.

For the month of March 201X

Three (3) sales reps sold $30,000 worth of stock. Each rep sold $10,000 each. Their commission rate was 5% each.

Rent cost $15,000 each month

Fixed Cost

Variable cost

 

 

 

 

 

 

2.2 Kohla Limited, a manufacturer of cola flavoured drinks, had the following inventory balances at the beginning and at the end of the 2015/16 financial year:

Inventory

July 1, 2015

June 30, 2016

Classification

 

 

Raw Materials

$100,000

$120,000

Work In process

$200,000

$230,000

Finished Goods

$240,000

$270,000

During the year, Kohla’s manufacturing overhead costs were as follows

Indirect Materials

$20,000

Indirect Labour

$40,000

Direct Labour

$190,000

Depreciation and Plant Equipment

$40,000

Utilities and Others

$50,000

Prepare a Cost of Goods Manufactured schedule for Kohla Limited.

Task 3

Practical tasks and report

Part 1

Analyse the data given below and calculate the contribution margin volume variance.

Budgeted

Actual

Product A: Price $30

Product A: Price $30

Volume sold 1500

Volume sold: 1200

Variable cost per product A: $9

Variable cost per product A: $9

Product B: Price: $40

Product B: Price: $40

Volume sold 800

Volume sold 950

Variable cost per product B: $20

Variable cost per product B: $20

Budgeted contribution margin

Sales:

Product A

Sales

Product B

Total

($30x1500 )

 

($40x800)

 

 

Less Variable expenses

 

 

 

 

[A=($9), B=($20)]

 

 

 

 

Contribution Margin

 

 

 

 

Actual contribution margin

Sales:

Product A

Sales

Total

($30x 1200 )

 

($40x950)

 

Less Variable

 

 

 

expenses

 

 

 

[A=($9), B=($20)]

 

 

 

Contribution

 

 

 

Margin

 

 

 

Contribution Margin Volume Variance

Product A:

Product B:

Total:

Part 2

Magic Lubricant makes two high-quality types of lubricant – an oil-based lubricant and a water-based lubricant. Magic Lubricant sell these wholesale to smaller hardware stores. Magic Lubricant has varied equipment in its factory and uses the same equipment to produce both types of lubricant. They generally produce them in set runs each week, making the oil-based lubricant on Monday, Tuesday, and Wednesday. Thursday and Friday are when they make the water-based lubricant. In-between these runs, they will thoroughly clean the equipment.

After analyzing the operation, Magic Lubricant’s management has identified the different activities engaged in to produce the lubricant and have calculated some data as follows:

Following further analysis by Magic Lubricant’s accountant, they had identified the drivers for the activity’s costs, and their budgeted use by both the oil-based and water-based lubricant and the various activities were presented as below:

Activity

Estimated

 

overhead

Procurement

$300,000

Processing

$1,500,000

Packaging

$550,000

Testing

$260,000

Storage

$185,000

Cleaning equipment

$605,000

Total annual budgeted overhead

$3,400,000

 

 

 

Activity

Cost driver

Expected

Expected use of drivers

 

 

cost drivers

per product

 

 

per activity

Oil-

Water-

 

 

 

Based

Based

Procurement

Purchase

2,000 orders

900

1,100

 

orders

 

 

 

Processing

Litres

1,875,000

875,000

1,000,000

 

processed

Litres

 

 

Packaging

Tins filled

343,750 tins

93,750

250,000

Testing

Number of

5,000 tests

2,800

2,200

 

tests

 

 

 

Storage

Avg. litres

20,000 litres

9,600

10,400

 

on hand

 

 

 

Cleaning

Number of

1100 runs

400

700

 

runs

 

 

 

Magic Lubricant has budgeted 875,000 litres of oil-based lubricant and 1,000,000 litres of water-based lubricant for production during the following year.

Required

1. Prepare a schedule detailing the allocation of overheads per activity.

2. Prepare a schedule assigning each activity’s overhead cost to both the oil-based lubricant and water-based lubricant.

3. Calculate the overhead cost per unit for both the oil-based lubricant and water-based lubricant.

Classify each activity cost as value-added or non-value-added

Part 3

As you have been employed in U-Beaut Ltd as a Trainee Management Accountant. It is a rainy Monday morning toward the end of winter, which has made going to work even more difficult. And of all days, the finance manager of U-Beaut Ltd (your Trainer & Assessor playing the role of Finance Manager) comes to you and tells you that the company is going to start using a flexible budget that will be based on direct labour hours. You are now starting to think that you should have called in sick this morning. However, you are there, you have just been told and all you can say is, “Great! Tell me more.”

The Finance Manager tells you to check your email, as they have already provided you with the information you will need to start working through.

In your email is an attachment, titled 2016 Overhead Budget. You wonder if the content will fly over your head.

It is a spreadsheet with numbers as presented below which are all based on a normal capacity of 240,000 direct labor hours.

After having read through the email which had the attached spreadsheet populated with data, you replied to his email request for a meeting in order to seek clarification & justification on the figures provided.

The Finance Manager accepted your request for discussion (Simulated Workplace Scenario) to address your concerns. You are to prepare the necessary questions which need to be addressed in the meeting such as:

Direct Labour hours Fixed costs

Variable costs

The accuracy of historical figures provided Considerations and market conditions Realistic and reasonable assumptions

Confirmation that information has been received from all the departments pertaining to the budget

The Finance Manager (your Trainer and Assessor) will provide explanation justifying each of the questions, of which you need to be attentive by documenting the same in order for you to elicit a response.

Fixed Costs:

Managerial Supervision: $72,000

Motor Vehicle Depreciation: $36,000

Council Rates and Other Taxes: $24,000

Insurance: $11,400

Variable Costs:

Indirect Labour: $420,000 Supplies: $240,000 Maintenance: $348,000 Electricity: $98,400

During the month of August, 23,000 direct labor hours were worked when 20,000 hours were expected to be worked.

The business incurred the following variable costs in July: indirect labour - $38,600, supplies - $21,400, maintenance - $36,200 and electricity $9,000. Actual fixed overhead costs remained unchanged.

Required

1. Prepare a flexible budget report for the month of August 2016.

2. Identify some actions you can perform to ensure budgets and other reports you prepare are accurate, comprehensive and compliant.

Various challenges students may face while completing this assessment:

Students may face several problems while attempting FN506 Management Accounting such as prepare budget report and appropriate references, etc. by taking help and guidance in their assessments from our experienced and professional experts, students can achieve best grades and excel their academic career.