FNSACC507A

Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

UNIT CODE: FNSACC507A UNIT NAME: Provide Management
Accounting Information

ASSESSMENT EVENT: 2 of 2 ASSESSMENT DATE: Flexible

STUDENT NUMBER: STUDENT NAME:

Performance measurement:
* For this unit, results will be reported as either competent or not yet competent.
* Students will be required to show competency in each element of the unit which means that questions
addressing each of the core elements within the assessment have to be attempted and 61% or more has to be
achieved for each.

Assessment conditions / instructions to students:

* Please write your answer to each question (either A, B, C or D) in the grid provided on PAGE 3.
* All questions must be attempted.
* You may use a calculator.
* Please make sure your writing is legible - answers that cannot be read won’t be marked.
* Please submit only PAGE 1, 2 and 3 of this assessment.
* Please SCAN and UPLOAD your completed assessment (i.e. pages 1, 2 and 3) via the SAKAI site for marking
as one file in either WORD or PDF format. Multiple files will not be
accepted.

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ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question Marks Allocated Marks Achieved

Q1: Matching activity 5

Q2: Manufacturing statement 20

Q3: High-low analysis 15

Q4: Factory overhead allocation 20

Q5: Overhead variance analysis 20

Q6: Cost-Volume-Profit analysis 20

Total 100

SATISFACTORY UNSATISFACTORY

PLAGIARISM DECLARATION:
I have read the Student Services Guide under Student Responsibilities to “…not engage in plagiarism, collusion
or cheating in any assessment event or examination”.
Please note: Your assessment will not be marked until you have signed

Student Signature:__________________________________________

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 1: Management Accounting Concepts
You are required to match each word or phrase in ‘column A’ with its corresponding description in ‘column
B’. Next to each word or phrase in ‘column A’, you need to write the corresponding letter from ‘column B’ in
the ‘ANSWER’ column.

COLUMN A ANSWER COLUMN B

1. Spending variance A. Is the result of production being below Normal Manufacturing

Capacity which results in fixed costs being under-absorbed (or under-
applied).

2. Unfavourable B. Refers to the sales volume or activity level at which the profit
capacity variance generated is equal to zero.

3. Favourable capacity C. Is the result of having spent more or less than was budgeted at the
variance activity level worked.

4. Operating leverage D. Is about providing information to users external to the organisation

e.g. gov’t authorities.

5. Break-even point E. Is used to disclose the cost of goods manufactured.

6. Management F. In the context of factory overhead, it refers to the activity that

Accounting causes overhead costs to be incurred. For example, the cost of running
a cafeteria may be allocated to the different departments within a
company based on the number of employees working in each
department.

7. Financial Accounting G. Includes wages earned for the period as well as any allowances (e.g.
overtime) and incentives (e.g. commission).

8. Cost driver H. Is the result of production being above Normal Manufacturing

Capacity which results in fixed costs being over-absorbed (or over-
applied).

9. Manufacturing I. Is about providing information to users within the organisation e.g.

statement Operations Manager.

10. Gross wages J. Refers to the percentage of fixed costs in an organisation’s total cost
structure. The higher this fixed cost percentage, the more the
organisation’s income will be affected by fluctuations in sales volume.
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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 2: Manufacturing & Trading Statements
The following information has been extracted from the accounting records of Jefferson Manufacturing. The
company accounts for all inventory using a periodic inventory system. Extracts from the accounting records
for the business for the six (6) months to 31 December 2012 show:
Balances on 1 July 2012: $
Inventories: - Raw materials (direct) 5,000 DR
- Factory supplies 11,000 DR
- Finished goods 25,000 DR
- Work-in-progress 14,000 DR

Prepayments: - Factory overhead 5,000 DR

Accruals: - Direct labour 5,000 CR

- Wages (general office staff) 3,000 CR
Balances on 31 December 2012: $
Factory land 100,000 DR

Factory buildings 240,000 DR

Accumulated depreciation – Factory buildngs 24,000 CR
(depreciation method: straight line; rate 5% per year)

Factory plant 360,000 DR

Accumulated depreciation – Factory plant 52,000 CR
(depreciation method: straight line; rate 10% per year)

Purchases: - Raw materials (direct) 255,000 DR

- Factory supplies 27,000 DR
- Finished goods 80,000 DR

Wages & salaries expense: - Direct wages 215,000 DR

- Indirect wages 50,000 DR
- Salaries paid to sales staff 75,000 DR
- Salary paid to factory manager 20,000 DR

Factory overhead expense 112,000 DR

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Balances on 31 December 2012: (continued) $
Inventories: - Raw materials (direct) 48,000 DR
- Factory supplies 14,000 DR
- Finished goods 27,000 DR
- Work-in-progress 18,000 DR

Prepayments: - Factory overhead 3,000 DR

Accruals: - Direct labour 4,000 CR

REQUIRED:

Prepare a properly formatted manufacturing statement for the six (6) months ended 31 December 2012.

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ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Jefferson Manufacturing
Manufacturing Statement for the six (6) months ended 31 December 2012

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ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 3: High-Low Analysis
The Lawson Distribution and Manufacturing Group makes and sells diagnostic medical equipment. For the
x-ray machine, it is reviewing the cost behaviour patterns of its indirect manufacturing costs in relation to
the number of units produced. Each x-ray machine requires 80 direct labour hours to manufacture.

Production volume and the associated indirect manufacturing cost for the past six (6) months are as follows:

Month Units Produced Overhead ($)

October 20 10,000

November 40 15,000

December 100 26,600

January 180 40,000

February 120 30,800

March 60 18,300

REQUIRED:

(a) Use the high-low method to calculate the variable cost per direct labour hour

(b) Use the high-low method to calculate the fixed cost per month.

(c) If in the coming month the firm has budgeted for total output equal to 3,600 direct labour hours,
what will be the estimate for indirect manufacturing costs. Please show estimates for fixed and
variable costs separately by using the cost equation (cost estimation formula).

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( a ) : (5 marks)

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ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( b ) : (6 marks)

Part ( c ): (4 marks)

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 4: Overhead Allocation
Jester Ltd is developing overhead factory overhead rates for the coming year. Budgeted overhead costs for
its four (4) factory departments are as follows:

Department Cost ($) Cost Driver

Production Dept. 1: 180,000 Machine hours

Cutting

Production Dept. 2: 138,000 Direct labour hours

Assembly

Service Dept. 1: 50,000 Machine hours

Maintenance

Service Dept 2: 32,000 Requisitions

Factory stores

Total $400,000

You are also provided with the following operating statistics for this year:

Cutting Assembly Maintenance Factory stores Total

Plant values $135,000 $40,000 $15,000 $10,000 $200,000

Floor space
(square metres) 500 300 100 200 1,100

Requisitions 60 40 100

No. of employees 45 35 15 5 100

Direct labour
hours 7,835 8,165 16,000

Machine hours 15,000 5,000 20,000

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

REQUIRED:

(a) Calculate a plant-wide overhead rate based on direct labour hours.

(b) Calculate departmental overhead rates (i.e. a separate overhead recovery rate for each
PRODUCTION DEPARTMENT) assuming support department costs are allocated to production
departments using the direct method. Use the table provided to allocate budgeted overhead costs to
service & production departments and re-distribute service department costs to producing
departments before working out a departmental overhead rate for each production department.

Part ( a ) : Plant-wide overhead recovery rate: (3 marks)

Part ( b ) : Departmental overhead recovery rates: (11 marks)

Total Cutting Assembly Maintenance Factory stores

Budgeted
costs

Maintenance

Factory stores

Total

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Departmental overhead rate for CUTTING department: (3 marks) (round to 2 decimal places)

Departmental overhead rate for ASSEMBLY department: (3 marks) (round to 2 decimal places)

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 5: Overhead Variance Analysis
Jigsaw Ltd manufactres and sells jigsaw puzzles. For its best-selling puzzle, you have been provided with the
following factory overhead cost and production data for the year ended 30 June 2012:

Budget Actual

Variable factory overhead cost $84,000

Fixed factory overhead cost $99,000

Total factory overhead cost $183,000 $175,000

Production (units) 30,000 units 29,000 units

Other information:

1. The factory overhead budget was based on a normal production capacity of 30,000 units.

2. Budgeted rates are used to apply factory overhead to production.

3. Factory overhead is applied to production using a predetermined rate based on units produced as the cost
driver.

REQUIRED:

For the year ended 30 June 2012;

(a) Calculate the total predetermined factory overhead recovery rate.

(b) Calculate the variable predetermined factory overhead recovery rate.

(c) Determine the amount of over or under-applied overhead. Your answer must clearly state whether
the calculated amount is over or under-applied.

(d) Further analyse the over- or under- applied overhead into a spending variance and a capacity
variance. Your answer must also clearly state whether each variance is either favourable or
unfavourable.

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( a ) : (2.5 marks)

Part ( b ) : (2.5 marks)

Part ( c ) : (5 marks)

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( d ) : (10 marks)

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ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Question 6: Cost-Volume-Profit Analysis
Deep Ocean Ltd specialises in sourcing, producing and selling a special type of glass used to make only very
large aquariums. You are provided with the following budgeted financial data for the year ended
31 December 2012:

Selling price per unit $750.00

Variable cost per unit $350.00

Annual fixed costs $1,100,000

REQUIRED:

(a) Calculate the sales (in units) required to:

i) break-even. (3 marks)

ii) earn a net profit before tax of $600,000. (3 marks)

iii) earn a net return of 15% on sales revenue. (6 marks)

(b) Calculate the sales (in units) required to break-even if the variable cost per unit decreased by 10%
(assuming no changes in total fixed costs). (5 marks)

(c) Calculate the margin of safety ratio if Deep Ocean Ltd sold 10,000 units (expressed as a
percentage). (3 marks) (do not round your answer)

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( a ) (i) : (3 marks)

Part ( a ) (ii) : (3 marks)

Part ( a ) (iii) : (6 marks)

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Provide Management Accounting Information

ASSESSMENT TASK – QUESTION & ANSWER BOOKLET

Part ( b ) : (5 marks)

Part ( c ) : (3 marks)

* * END OF ASSESSMENT 2 * *

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