Assessment Task – Tutorial Questions Assignment 2

Unit Code: HA2011

Unit Name: Management Accounting

Assignment: Tutorial Questions Assignment 2

Due: 11:30pm 26th June 2020

Weighting: 25%

Total Marks: 50 Marks

Purpose:

This assignment is designed to assess your level of knowledge of the key topics covered in this
unit.

Unit Learning Outcomes Assessed:

2. Calculate fixed and variable costs, contribution margin, contribution margin ratio,
break-even point in sales dollars and units, and target sales volume in dollars and units
3. Appraise how pricing decisions are made.
4. Calculate both return on investment and residual income and explain how each
method is used
6. Apply the concept of costs to various costing systems including justification of cost
and system choices
7. Implement systems to plan and control business operations

Description:

Each week students were provided with three tutorial questions of varying degrees of
difficulty. These tutorial questions are available in the Tutorial Folder for each week on
Blackboard. The Interactive Tutorials are designed to assist students with the process, skills
and knowledge to answer the provided tutorial questions. Your task is to answer a selection
of tutorial questions for weeks 7 to 11 (topics 6-10) inclusive and submit these answers in a
single document.

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The questions to be answered are:

(Note - All questions are provided in your pre-recorded tutorials)

Week 7 (Topic 6) (10 marks)

Hi Tech Products manufactures three (3) types of CD players: Cheap, Econo and Deluxe. Hi
Tech uses an activity-based product costing system. The company has identified five (5)
activities. Each activity, its cost and related activity driver are identified below:

Activity Activity Cost Activity Driver

Material handling $225 000 Number of parts
Material insertion $2 475 000 Number of parts
Automated machinery $840 000 Machine hours
Finishing $170 000 Labour hours
Packaging $170 000 Orders shipped
Total manufacturing cost $3 880 000

The following information pertains to each product line of CD players:

Cheap Econo Deluxe

Units to be produced 10 000 5000 2000
Orders to be shipped 1000 500 200
Number of parts per unit 10 15 25
Machine hours per unit 1 3 5
Labour hours per unit 2 2 2

Under an activity-based product costing system, what is the cost per unit of Cheap?

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Week 8 (Topic 7) (10 marks)

Assume for a firm that budgeted production for July and August is 180 000 and 200 000 units
respectively. It takes half a kilogram of direct material to make one unit of finished product.
Materials inventory is maintained at 10 per cent of the next month's budgeted production
needs. If the 30 June inventory of materials was 5000 kg, how many kilograms of direct
material should be purchased during July?

Week 9 (Topic 8) (10 marks)

Cultco Company Ltd has set the following direct material standards per unit of product: 2.5
kg @ $3.00 per kg; $7.50 per unit. During April, actual direct material purchased and used
amounted to 8000 kg at a cost of $3.10 per kg. Actual production amounted to 3000 units.
Determine the total material variance.

Week 10 (Topic 9) (10 marks)

a. Fragrance Pty Ltd has two (2) divisions: the Cologne Division and the Bottle Division. The
company is de-centralised and each division is evaluated as a profit centre.

The Bottle Division produces bottles that can be used by the Cologne Division. The Bottle
Division's variable manufacturing cost per unit is $2.00 and shipping costs are $0.10 per
unit. The Bottle Division's external sales price is $3.00 per unit. No shipping costs are
incurred on sales to the Cologne Division. The Cologne Division can purchase similar
bottles in the external market for $2.50. The Bottle Division has sufficient capacity to meet
all external market demands in addition to meeting the demands of the Cologne Division.

Using the general rule, calculate the minimum transfer price from the Bottle Division to
the Cologne Division. Explain your answer (4 marks)

b. For the period just ended, Trek Corporation's Trailer Division reported profit of $54 million
and invested capital of $450 million. Assuming an imputed interest rate of 10 per cent,
calculate Trailer’s return on investment (ROI) and residual income. Explain what each
calculation of ROI and RI means for Trek. ( 6 marks)

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Week 11 (Topic 10) (10 marks)

Chelonia Ltd manufactures small robot toys. It plans to introduce two products, Speedie and
Spunkie. It is anticipated that the product mix will be 40% Speedie and 60% Spunkie. One unit
of Speedie will be sold for $100, with variable cost equals $40. For a unit of Spunkie, the selling
price will be $120 and the variable cost is $70. The fixed cost for producing the two products
is $108 000.

a. What is the break-even point in units for each product? ( 5 marks)

b. The company plans to include a safety margin of $20 000 before tax. Assuming a tax rate
of 30%, what should be the budgeted sales in units? ( 5 marks)

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Submission Directions:

The assignment has to be submitted via Blackboard. Each student will be permitted one
submission to Blackboard only. Each student needs to ensure that the document submitted
is the correct one.

Academic Integrity

Academic honesty is highly valued at Holmes Institute. Students must always submit work
that represents their original words or ideas. If any words or ideas used in a class posting or
assignment submission do not represent the student’s original words or ideas, the student
must cite all relevant sources and make clear the extent to which such sources were used.
Written assignments that include material similar to course reading materials or other
sources should include a citation including source, author, and page number.

In addition, written assignments that are similar or identical to those of another student in
the class is also a violation of the Holmes Institute’s Academic Conduct and Integrity Policy.
The consequence for a violation of this policy can incur a range of penalties varying from a
50% penalty through to suspension of enrolment. The penalty would be dependent on the
extent of academic misconduct and the student’s history of academic misconduct issues.

All assessments will be automatically submitted to Safe-Assign to assess their originality.

Further Information:

For further information and additional learning resources, students should refer to their
Discussion Board for the unit.