MAA262 Management Accounting
ASSIGNMENT PART 2 – TRIMESTER 2, 2016
Submission date and available mark
Due date: Sunday 25 September 2016 at 11:59 PM
Marks: This Assignment represents 10 % (10 marks) of the total marks in
your unit.
General instructions
1. Please monitor CloudDeakin regularly for any further
instructions/announcements.
2. You will need to have completed topic 4, Activity Based Costing to
complete this part of your assignment.
Submission instructions
1. This assignment is to be submitted ONLINE ONLY (You are NOT required to
submit a hard copy).
2. It is a group assignment, comprising three students from any tutorial group or
campus. It is the students’ responsibility to form or join a group and to ensure that
the group dynamics work.
The completed assignment must be submitted into the allocated area on
CloudDeakin under the Dropbox folder on or before the due date. Only one submission
per group, i.e., only one student submits on behalf of all the three group members.
3. You need to complete the Plagiarism declaration when you access the Dropbox.
4. Once submitted you cannot retract your assignment BUT you CAN SUBMIT
another version. Only the most recent version submitted will be marked.
A note on plagiarism and collusion
Plagiarism and collusion are forms of cheating and are considered a serious academic
misconduct, and severe penalties are associated with them. Please refer to the MAA262
unit guide for your responsibilities with regard to plagiarism and other academic offences.
Penalties applied in this assignment
1. Assignment submitted after the due date will attract a penalty of 1 mark per
day out of available 10 marks.
2. The final examination is the only hurdle requirement for the unit. If you
choose not to submit this assignment you will score zero for this assignment.
Discussion area for this assignment
There is a discussion area on CloudDeakin entitled ‘Assignment Discussion’.
This area is for you to discuss the assignment. It is an area for students to help
each other.
Receiving your mark and suggested solution
Your mark for the assignment will be available on CloudDeakin in the Grades section
within 15 working days from your assignment submission date.
MAA262 Assignment Part 2 Due Sunday 25 September, 11,59 pm online
submission via CloudDeakin
Regardless of your answers in Assignment Part 1, assume the following costs and
cost drivers for the Mixing Department of Brown’s Bakery (Note: some of the
cost drivers in this part are different to those used in Assignment part 1)
| Brown’s Bakery Mixing Department: Costs and Cost Drivers |
||
| Costs | Cost drivers | |
| Wages | $90 000 | Percentage of labour time |
| Building costs | 16 000 | Floor space occupied |
| Depreciation | 20 000 | Machine hours |
| Consumables | 10 000 | Percentage of labour time |
| Energy | 32 000 | Kilowatt hours |
| Other | 6 000 | Percentage of labour time |
| Total | $174 000 | |
MAA262 Management Accounting
ASSIGNMENT PART 2 – TRIMESTER 2, 2016
Submission date and available mark
Due date: Sunday 25 September 2016 at 11:59 PM
Marks: This Assignment represents 10 % (10 marks) of the total marks in
your unit.
General instructions
1. Please monitor CloudDeakin regularly for any further
instructions/announcements.
2. You will need to have completed topic 4, Activity Based Costing to
complete this part of your assignment.
Submission instructions
1. This assignment is to be submitted ONLINE ONLY (You are NOT required to
submit a hard copy).
2. It is a group assignment, comprising three students from any tutorial group or
campus. It is the students’ responsibility to form or join a group and to ensure that
the group dynamics work.
The completed assignment must be submitted into the allocated area on
CloudDeakin under the Dropbox folder on or before the due date. Only one submission
per group, i.e., only one student submits on behalf of all the three group members.
3. You need to complete the Plagiarism declaration when you access the Dropbox.
4. Once submitted you cannot retract your assignment BUT you CAN SUBMIT
another version. Only the most recent version submitted will be marked.
A note on plagiarism and collusion
Plagiarism and collusion are forms of cheating and are considered a serious academic
misconduct, and severe penalties are associated with them. Please refer to the MAA262
unit guide for your responsibilities with regard to plagiarism and other academic offences.
Penalties applied in this assignment
1. Assignment submitted after the due date will attract a penalty of 1 mark per
day out of available 10 marks.
2. The final examination is the only hurdle requirement for the unit. If you
choose not to submit this assignment you will score zero for this assignment.
Discussion area for this assignment
There is a discussion area on CloudDeakin entitled ‘Assignment Discussion’.
This area is for you to discuss the assignment. It is an area for students to help
each other.
Receiving your mark and suggested solution
Your mark for the assignment will be available on CloudDeakin in the Grades section
within 15 working days from your assignment submission date.
MAA262 Assignment Part 2 Due Sunday 25 September, 11,59 pm online
submission via CloudDeakin
Regardless of your answers in Assignment Part 1, assume the following costs and
cost drivers for the Mixing Department of Brown’s Bakery (Note: some of the
cost drivers in this part are different to those used in Assignment part 1)
| Brown’s Bakery Mixing Department: Costs and Cost Drivers |
||
| Costs | Cost drivers | |
| Wages | $90 000 | Percentage of labour time |
| Building costs | 16 000 | Floor space occupied |
| Depreciation | 20 000 | Machine hours |
| Consumables | 10 000 | Percentage of labour time |
| Energy | 32 000 | Kilowatt hours |
| Other | 6 000 | Percentage of labour time |
| Total | $174 000 | |
Brown’s Bakery management accountant, J.Knight has identified the following
activities that take place in the Mixing Department, and estimates that they use
the following percentage of labour time and floor space:
| Brown’s Bakery Mixing Department Activities and Cost Drivers Used |
||
| Activity | % of labour time | % of floor space |
| Set up scales | 20 | 5 |
| Weigh ingredients | 10 | 5 |
| Load mixers | 25 | 10 |
| Operate mixers | 30 | 50 |
| Clean mixers | 10 | 20 |
| Move mixture to filling | 5 | 10 |
| Total | 100% | 100% |
The only activity that makes significant use of machinery (and therefore
depreciation and energy) is ‘Operate mixers’.
Required:
1. In an Excel spreadsheet show the total cost of each activity performed in the
mixing department. You should also show each activity’s share of each cost
category (6 marks)
2. Explain how Knight would have collected the information necessary to
identify the activities and their cost driver consumption. (2 marks)
3. What steps can Knight take to ensure that this information is reliable?
(2 marks)
After much work, Knight produces a full list of all activities performed at
Brown’s Bakery and their annual costs. In addition, Knight identifies an
activity driver for each activity and the annual quantity of each driver. A partial
list of activity costs and annual quantities of activity drivers is shown below:
| Brown’s Bakery List of Activities |
|||
| Activity | Activity cost ($) | Activity driver (# = number) |
Annual quantity of activity driver |
| Process receivables |
30 000 | # of invoices | 5 000 invoices |
| Process payables | 50 000 | # of purchase orders |
2 500 purchase orders |
| Process sales orders |
80 000 | # of sales orders | 4 000 sales orders |
| Dispatch sales orders |
60 000 | # of dispatches | 2 500 dispatches |
| Load mixers | 28 100 | # of batches | 1 000 batches |
| Operate mixers | 91,800 | # of kilograms | 200 000 kilograms |
| Clean mixers | 13,800 | # of batches | 1 000 batches |
| Move mixture to filling |
6,900 | # of kilograms | 200 000 kilograms |
| Clean trays | 40 000 | # of trays | 16 000 trays |
| Fill trays | 32 000 | # of units | 800 000 units |
| Move to baking | 16 000 | # of trays | 16 000 trays |
| Set up ovens | 100 000 | # of batches | 1 000 batches |
| Baking | 260 000 | # of batches | 1 000 batches |
| Move to packing | 80 000 | # of trays | 16 000 trays |
| Packing | 160 000 | # of units | 800 000 units |
| Inspections | 5000 | # units | 50 000 units |
-
4. In an Excel spreadsheet show the cost per unit of the activity driver for the
activities listed above. (8 marks)
Use the following information to calculate the cost per activity and the cost
per unit (based on annual volume) for:
a) meat pie
b) vegetarian quiche (12 marks)
| Meat pie (Batch size 1000; Annual volume 100 000) | |
| Activities consumed | Annual quantity of activity driver |
| Process receivables | 500 invoices |
| Process payables | 200 purchase orders |
| Process sales orders | 400 sales orders |
| Load mixers | 100 batches |
| Operate mixers | 30 000 kg |
| Clean mixers | 100 batches |
| Move mixture to filling | 30 000 kg |
| Clean trays | 2 000 trays |
| Fill trays | 100 000 units |
| Move to baking | 2 000 trays |
| Set up ovens | 100 batches |
| Baking | 100 batches |
| Move to packing | 2 000 trays |
| Packing | 100 000 units |
| Dispatch sales order | 500 sales orders |
6
| Vegetarian quiche (Batch size 200; Annual volume 10 000) | |
| Activities consumed | Annual quantity of activity driver |
| Process receivables | 150 invoices |
| Process payables | 100 purchase orders |
| Process sales orders | 100 sales orders |
| Load mixers | 50 batches |
| Operate mixers | 4 000 kg |
| Clean mixers | 50 batches |
| Move mixture to filling | 4 000 kg |
| Clean trays | 400 trays |
| Fill trays | 10 000 units |
| Move to baking | 400 trays |
| Set up ovens | 50 batches |
| Baking | 50 batches |
| Inspections | 10 000 units |
| Move to packing | 400 trays |
| Packing | 10 000 units |
| Dispatch sales order | 150 sales orders |
-
What other costs must be added to calculate the product cost for meat pies and
vegetarian quiches? Explain your answer. (2 marks)
7. Why is the cost per vegetarian quiche much higher than the cost per m e a t
p i e ? Would this difference be reflected in the conventional costing system?
Explain your answers. (4
marks)
8. Knight, as management accountant for Brown’s Bakery, has recommended the
introduction of an activity-based costing system to improve the accuracy of the
company’s product costs. Knight is filled with enthusiasm, but the company’s
owner, B. Brown, is more cautious:
Your report outlines the benefits of ABC but it can’t be all positive. I
want you to rewrite your report but this time I want you to describe
the costs of ABC and its limitations, as well as the benefits.
Do the job that has been asked of Knight, i.e. prepare a brief report that outlines
the benefits, costs and limitations of activity-based costing. (To set your report
in the appropriate business context, you should refer to the information given in
Part 1).
(4 marks)
, J.Knight has identified the following
activities that take place in the Mixing Department, and estimates that they use
the following percentage of labour time and floor space:
| Brown’s Bakery Mixing Department Activities and Cost Drivers Used |
||
| Activity | % of labour time | % of floor space |
| Set up scales | 20 | 5 |
| Weigh ingredients | 10 | 5 |
| Load mixers | 25 | 10 |
| Operate mixers | 30 | 50 |
| Clean mixers | 10 | 20 |
| Move mixture to filling | 5 | 10 |
| Total | 100% | 100% |
The only activity that makes significant use of machinery (and therefore
depreciation and energy) is ‘Operate mixers’.
Required:
1. In an Excel spreadsheet show the total cost of each activity performed in the
mixing department. You should also show each activity’s share of each cost
category (6 marks)
2. Explain how Knight would have collected the information necessary to
identify the activities and their cost driver consumption. (2 marks)
3. What steps can Knight take to ensure that this information is reliable?
(2 marks)
After much work, Knight produces a full list of all activities performed at
Brown’s Bakery and their annual costs. In addition, Knight identifies an
activity driver for each activity and the annual quantity of each driver. A partial
list of activity costs and annual quantities of activity drivers is shown below:
| Brown’s Bakery List of Activities |
|||
| Activity | Activity cost ($) | Activity driver (# = number) |
Annual quantity of activity driver |
| Process receivables |
30 000 | # of invoices | 5 000 invoices |
| Process payables | 50 000 | # of purchase orders |
2 500 purchase orders |
| Process sales orders |
80 000 | # of sales orders | 4 000 sales orders |
| Dispatch sales orders |
60 000 | # of dispatches | 2 500 dispatches |
| Load mixers | 28 100 | # of batches | 1 000 batches |
| Operate mixers | 91,800 | # of kilograms | 200 000 kilograms |
| Clean mixers | 13,800 | # of batches | 1 000 batches |
| Move mixture to filling |
6,900 | # of kilograms | 200 000 kilograms |
| Clean trays | 40 000 | # of trays | 16 000 trays |
| Fill trays | 32 000 | # of units | 800 000 units |
| Move to baking | 16 000 | # of trays | 16 000 trays |
| Set up ovens | 100 000 | # of batches | 1 000 batches |
| Baking | 260 000 | # of batches | 1 000 batches |
| Move to packing | 80 000 | # of trays | 16 000 trays |
| Packing | 160 000 | # of units | 800 000 units |
| Inspections | 5000 | # units | 50 000 units |
-
4. In an Excel spreadsheet show the cost per unit of the activity driver for the
activities listed above. (8 marks)
Use the following information to calculate the cost per activity and the cost
per unit (based on annual volume) for:
a) meat pie
b) vegetarian quiche (12 marks)
| Meat pie (Batch size 1000; Annual volume 100 000) | |
| Activities consumed | Annual quantity of activity driver |
| Process receivables | 500 invoices |
| Process payables | 200 purchase orders |
| Process sales orders | 400 sales orders |
| Load mixers | 100 batches |
| Operate mixers | 30 000 kg |
| Clean mixers | 100 batches |
| Move mixture to filling | 30 000 kg |
| Clean trays | 2 000 trays |
| Fill trays | 100 000 units |
| Move to baking | 2 000 trays |
| Set up ovens | 100 batches |
| Baking | 100 batches |
| Move to packing | 2 000 trays |
| Packing | 100 000 units |
| Dispatch sales order | 500 sales orders |
6
| Vegetarian quiche (Batch size 200; Annual volume 10 000) | |
| Activities consumed | Annual quantity of activity driver |
| Process receivables | 150 invoices |
| Process payables | 100 purchase orders |
| Process sales orders | 100 sales orders |
| Load mixers | 50 batches |
| Operate mixers | 4 000 kg |
| Clean mixers | 50 batches |
| Move mixture to filling | 4 000 kg |
| Clean trays | 400 trays |
| Fill trays | 10 000 units |
| Move to baking | 400 trays |
| Set up ovens | 50 batches |
| Baking | 50 batches |
| Inspections | 10 000 units |
| Move to packing | 400 trays |
| Packing | 10 000 units |
| Dispatch sales order | 150 sales orders |
-
What other costs must be added to calculate the product cost for meat pies and
vegetarian quiches? Explain your answer. (2 marks)
7. Why is the cost per vegetarian quiche much higher than the cost per m e a t
p i e ? Would this difference be reflected in the conventional costing system?
Explain your answers. (4
marks)
8. Knight, as management accountant for Brown’s Bakery, has recommended the
introduction of an activity-based costing system to improve the accuracy of the
company’s product costs. Knight is filled with enthusiasm, but the company’s
owner, B. Brown, is more cautious:
Your report outlines the benefits of ABC but it can’t be all positive. I
want you to rewrite your report but this time I want you to describe
the costs of ABC and its limitations, as well as the benefits.
Do the job that has been asked of Knight, i.e. prepare a brief report that outlines
the benefits, costs and limitations of activity-based costing. (To set your report
in the appropriate business context, you should refer to the information given in
Part 1).
(4 marks)
