INTRODUCTION TO MANAGEMENT ACCOUNTING OVERHEAD ANALYSIS REASSESSMENTASSIGNMENT Module code FM 102 Module title Introduction to Management Accounting Module tutor Angela Lorenz Tutor with responsibility for this Assessment (this is your first point of contact) Assessment Weighting Angela Lorenz Rhian Dow Size and/or time limits for assessment Deadline of submission (your attention is drawn to the penalties for late submission; see UMS Handbook) Arrangements for submission Part 1 approx 750 words Part 2 approx 1250 words Overhead Analysis Assignment 50% of module mark Assignment hand in and collection point in TC 109 Students with Disabilities All requests for alternative assessment arrangements must be made directly to a Disability Adviser. There is a deadline for these requests: at least four weeks prior to the submission date of any coursework assessment / examination date and, by the latest, week 8 of the semester in which the module runs (first semester if module runs over more than one semester). Assessment Regulations All assessments are subject to the University Regulations for Assessment, and to the regulations of the Undergraduate Modular Scheme / Postgraduate Modular Scheme. These include regulations relating to Errors of Attribution and Assessment Offences. In exercising their judgement, Examiners may penalise any work where the standard of English, numeracy or presentation adversely affects the quality of the work, or where the work submitted exceeds the published size or time limits, or where the work fails to follow normal academic conventions for acknowledging sources The requirements for the assessment An analysis of the overheads and absorption costing in a manufacturing organisation. Special instructions This assignment must be completed in two phases. Please submit each phase with an assignment cover sheet. Learning Outcomes covered: Understand and construct a variety of costing statements as a basis for inventory valuation, profit and pricing for the long and short term; Skills Numerical communication and problem solving skills Return of Work Assignment hand in and collection point after the Assessment Criteria See table at end of assignment. Please also refer to the Business School generic grade descriptors Your attention is drawn to the University Regulations for Assessment Section 7 Careful referencing of sources is vital when making use of the work of others. You are expected to employ the referencing conventions recommended in the Field/Course. These conventions apply to information taken from internet sources, as well as books, journals and lectures. These are some of the points you should check before submitting your work: are all direct quotations, from both primary and secondary sources, suitably acknowledged (placed in quotation marks or indented)? have you provided full details of the source of the quotation, according to the referencing convention used in the Field/Course? have you acknowledged the source of ideas not your own, even if you are not quoting directly from the source? have you avoided close paraphrase from sources? (Check that you are not presenting other people’s words or phrasing as if they are your own.) if you have worked closely with others in preparing for this assessment, is the material you are presenting sufficiently your own? If you are unsure of the way to reference properly, seek advice from a member of staff before you submit the assessment. In submitting your work for assessment you are making a statement that it is your own work, it has not been submitted for any other assessment, and it does not infringe the ethical principles set out in the University’s Handbook for Research Ethics. Scenario and Requirements PART ONE You have recently been appointed as a management accounting trainee in a small manufacturing company called JK precision Ltd. JK Precision Ltd provide three types of microscope for use in the home and industrial markets. Products XJ 1000 is the basic home model with a standard lens XJ 2000 is the basic industrial model with a standard lens XJ 3000i is the advanced industrial model with a specialist lens All products are produced in the same factory the XJ 1000 and XJ 2000 in department A and the XJ 3000i in department B as this department contains hi-tech equipment used with the specialist lenses. You have been given the following list of costs relating to the factory area of the business: £ Direct wages – grade I Direct wages – grade II Direct materials Specialist lenses Standard lenses Quality control Factory supervisors salary Rent of factory Heating and lighting Machine Insurance Cleaning fluid – XJ 3000i Maintenance wages Depreciation of machinery 380000 560000 2000450 1490000 2360000 375000 100000 671000 382000 450000 74000 63000 107500 In addition you acquire the following information about the factory: Floor space No of grade I workers No of grade II workers No Inspections Volume Value of machinery Dept A 3000sqm 50 8 200 5000m3 £1200000 Dept B 2000sqm 20 12 350 2500m3 £3100000 Stores 1000sqm 10 Maintenance 1000sqm 1500m3 1500m3 £200000 Requisitions from stores Maintenance calls Machine hours Units produced 120000 100 2000000 550000 140000 150 1500000 280000 40000 Requirements (a) You have been asked to prepare an overhead analysis sheet (in table format) for the factory which clearly states the basis you have used to allocate or apportion the overhead costs. [HINT: Ensure that the service cost centres are reapportioned using a suitable basis.] (b) Calculate an overhead absorption rate for departments A and B, stating the reasons for your choice of absorption base. (c) Calculate the product cost of one XJ 3000i (d) Given that the actual overheads incurred in Department A were £950,280 and 2,000,155 Machine hours were worked, calculate the amount of over or under recovery of overheads. NB. MAKE ALL ANSWERS IN TASK (a) CORRECT TO THE NEAREST WHOLE NUMBER AND THE REMAINDER OF THE TASKS TO TWO DECIMAL PLACES. PART TWO The managing director is concerned A recession may be on the way and that the competitors for the T 500 are likely to reduce their prices. He has asked the accounting team to look at the alternative costing technique of Marginal Costing to see if it may help their position. Required: Produce a set of research based briefing notes for use by the Senior management accountant on Marginal Costing which covers the following areas: (i) (ii) (iii) (iv) A definition of Marginal Costing An example of how it works Its advantages and disadvantages Its Applicability to PQ Precision Ltd. Assessment Criteria for Part 1 Weight 20% Fail/Refer Fundamental errors in calculation. Service centres not reapportioned. No use of table 3rd Some errors in calculations service centres may not be apportioned. A table has been used. 2.2 Minor errors present. Table showing basis for choice. Service centres reapportioned. 2.1 Accurate calculations. Clear table used basis are all correct. Service centres reapportioned correctly. 10% Fundamental errors in calculation. No explanation. Some error in calculations. Weak explanation of basis. Minor errors present. Reasonable explanation of basis. Calculations accurate. Good explanation of basis. Task 3 10% Some error in calculations Error in the calculation of overheads Minor errors Production cost XJ 3000i Task 4 Fundamental errors in calculation. 10% Fundamental errors in calculation. Some error in calculations Minor error in the calculation Calculation Correct but wrong explanation of recovery No errors 2.1 Good attempt made all areas will be considered in reasonable depth and will be well researched Clear and logical links made to the wide-ranging literature and relating to company. Bibliography and referencing conform to Harvard system. Essay is well written with correct precise English. 1st Thorough analysis of ABC Excellent ability to link to extensive research. More innovate approach to writing style. Extensive correctly constructed and referenced bibliography. Task 1 Overhead table Task 2 Absorptio n rates Under/over recovery 1st Table is 100% accurate service centres reapportioned correctly. Excellent presentation of data in table format. No errors. Excellent presentation. Outstanding explanation of basis and reasoning No errors Assessment criteria for Part 2 Report Weight 50% Fail/Refer Little or no evaluation of the ABC. English weak. Little or no evidence of research. Sparse or ‘ghost’ bibliography. 3rd Some attempt to evaluate ABC not all areas covered. no linkage to company. English at minimum accepted level. Some research evidence. Bibliography limited not correctly constructed and/or cited in text. 2.2 Reasonable attempt to evaluate ABC. Reasonable style but fails to develop an argument. Appropriate use made of solid research. Bibliography & referencing is sound, some minor errors may be evident. PDP statement – to be submitted with your module assignment form Module: Student number: The things that I consider: - Are the best about this piece of work - I am most proud of are as follows: The things that I consider: - Are the weak points in this piece of work - I am least proud of, or - areas where I think I could have done better are as follows: Areas where I would most like feedback :