INTRODUCTION TO MANAGEMENT ACCOUNTING

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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 :
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