Managing accounting problem
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Assessment
Assessment Type: Case study – 2000 + 10% word report and analysis - Individual Assignment.
Purpose: This assessment is designed to allow students to demonstrate their ability to analyse given financial information relating to a management accounting problem, similar to real world problems, and present their findings and conduct analysis of this information as it applies to accounting concepts.
Topic: Management Accounting Problem (Case Study).
Connectta Ltd manufactures furniture for computer work stations. Connectta uses a job costing system. The work in process inventory on 30 November consisted of the following jobs.
Job. No. Description Units Total cost
CC723 Computer caddy 20 000 900 000
CH291 Chair 15 000 431 000
PS812 Printer stand 25 000 250 000
T otal $1 581 000
On 30 November, the company’s finished goods inventory consisted of four items.
item Quantity and unit cost Total costComputer caddy 7 500 units @ $64 each $ 480 000
Chair 9 400 units @ $35 each 679 000
printer stand 21 000 units @ $55 each 1 155 000
Desk 11 200 units @ $102 each 1 142 400
T otal $3 456 400
At the end of November, the balance in Connectta’s materials inventory account, which includes both raw materials and purchased parts, was $668 000. Additions to and requisitions from the materials inventory during December included the following.
Additions and requisitions Raw materials Purchased parts
Additions $242 000 $396 000
Requisitions:
Job CC723 51 000 104 000
Job CH291 3 000 10 800
Job PS812 124 000 87 000
Job DS444(5000 desks) 65 000 187 000
Connectta applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totalled $4 500 000. The company planned to use 900 000 machine hours during this period, which is the firm’s estimated practical capacity. Through the first 11 months of the year, a total of 830 000 machine hours were used, and actual manufacturing overhead amounted to $4 140 000.
During December, machine hours and labour hours consisted of the following:
Account Machine hours Labour hours Labour cost
CC723 12 000 11 600 $122 400
CH291 4 400 3 600 43 200
PS812 19 500 14 300 200 500
DS444 14 000 12 500 138 000
Indirect labour - 3 000 29 400
Supervision - - 57 600
T otal 49 900 45 000 $591 100
The jobs completed in December and the unit sales for that month are as follows:
Job No. Production items Quantity completed items Quantity shipped
CC723 Computer caddy 20 000 Computer caddy 17 500
CH291 Chair 15 000 Chair 21 000
DS444 Desk 5 000 Printer stand 18 000
Desk 6 000
Required:
1. Describe when it is appropriate for a company to use a job costing system.
2. Calculate the balance in Connectta’s work in process inventory account as at 31 December.
3. Calculate the cost of the chairs in Connectta’s finished goods inventory as at 31 December.
4. Actual manufacturing overhead incurred in December amounted to $252 000. Calculate Connectta’s overapplied or underapplied overhead for the year.
5. Explain two alternative accounting treatments for overapplied or underpaid overhead balances when using job costing system.
6. Explain how activity-based costing could overcome the deficiencies inherent in the existing costing system.
Task details: Students are to analyse the given information, make calculations where relevant and draw relevant, supported conclusions and make justified recommendations. Responses are to be formatted into a professional report for each part of each question, as would be expected of someone working in a modern accountant’s office. The report should include: title page, executive summary, table of contents, introduction, body, conclusion and reference list.
Research requirements: Students need to support their analyses with references from the text and a minimum of six (6) suitable, reliable and academically acceptable sources. Check with your tutor if you are unsure of the validity of sources. Students seeking Credit or above grades should support their analysis with increased number of reference sources comparable to the grade they are seeking.
Marking Guide:
Marks awarded will be based on the following criteria;
1. Analyses-relevant to task specification 25%
2. Costing techniques applied and evaluated 25%
3. Presentation 25%
4. Research 25%
Marks will be scaled to a mark out of 20.
- 4 years ago
- 20
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