1. How Madina Electrical’s traditional product costing system distorts the product costs of the SM, DM and HDMs and prices. Note: You are required to calculate per unit cost and target price.
Page 8 of 8 Assessment Details and Submission Guidelines School Business Course Name Master of Professional Accounting Unit Code GA/MA515 Unit Title Managerial Accounting Trimester Trimester 2, 2020 Assessment Author Dr Mohobbot Ali Assessment Type Report and Presentation Assessment Title Assessment Task 4 and 5 – Assignment [Group] Unit Learning Outcomes covered in this assessment The purpose of this assignment is to assess the following Learning Outcomes: c) Produce business reports that present critical analysis and evaluation of financial solutions to management issues in writing. d) Apply knowledge to critically review and analyse problems and generate adaptable, flexible, and ethical approaches to problem solving and decision making. Weight Report - 25% Presentation - 5% Total Marks Report - 75 marks Presentation - 25 marks Word limit Report - 1500-2000 Presentation - 5-8 PowerPoint slides Release Date Week 6 Due Date Report - Week 11 (Friday) Presentation – Week 11 (Friday) Submission Guidelines · Group size: This assignment should be completed in groups of Five. · All work must be submitted on Moodle by the due date along with a completed Assignment Cover Page. · The assignment must be in MS Word format, 1.5 spacing, 11-pt Calibri (Body) font and 2 cm margins on all four sides of your page with appropriate section headings. · Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using APA or IEEE referencing style for School of Business and School of Information Technology and Engineering respectively. Extension · In the case of serious illness, loss or bereavement, hardship or trauma students may be granted special consideration. Your completed Application for Special Consideration and supporting documentation must be submitted directly to the School's Administration Officer via your MIT AMS login [https://online.mit.edu.au/ams/default.aspx?ReturnUrl=%2fams%2f]. You must submit this application no later than three working days after the due date of the specific piece of assessment or the examination for which you are seeking Special Consideration. Further information is available at: · http://www.mit.edu.au/about-mit/institute-publications/policies-procedures-and-guidelines/specialconsiderationdeferment Academic Misconduct · Academic Misconduct is a serious offence. Depending on the seriousness of the case, penalties can vary from a written warning or zero marks to exclusion from the course or rescinding the degree. Students should make themselves familiar with the full policy and procedure available at: http://www.mit.edu.au/about-mit/institute-publications/policies-procedures-and-guidelines/Plagiarism-Academic-Misconduct-Policy-Procedure. For further information, please refer to the Academic Integrity Section in your Unit Description. Assessment Cover Sheet Student ID Number/s: Student Last name/s: Student First name/s: Course: School: Unit code: Unit title: Due date: Date submitted: Campus: Lecturer’s Name: Tutor: Student Declaration I/We declare and certify that: 1. the work contained in this assessment is my/our own work/group work, except where acknowledgement of sources is made; 1. this assessment has not been submitted previously for academic credit in this or any other course; 1. I/we have read MIT’s Plagiarism and Academic Misconduct Policy and Procedure, and I/we understand the consequences of engaging in plagiarism, collusion and contract cheating; 1. a copy of the original assignment is retained by me/us and that I/we may be required to submit the original assignment to the Lecturer and/or Unit Co-ordinator upon request; I/we have not plagiarised the work of others or participated in unauthorised collaboration or contract cheating when preparing this assessment. MIT ID Signature Date Assignment Description Madina Electrical Corporation manufactures electric motors for commercial use. The company produces three models called SM, DM and HDM. The company uses a job costing system with manufacturing overhead applied on the basis of direct labour hours. The system has been in place with little change for 30 years. Product costs and annual sales data are as follows: SM DM HDM Annual sales (units) 42500 1700 20000 Product costs: Raw material $27.50 $47.75 $73.00 Direct labour $20.00 $35.00 $35.00 Manufacturing overhead $240.00 $350.00 $350.00 For the past 13 years, the company’s pricing formula has been to set each product’s budgeted price at 110 per cent of its full product cost. Recently, however, the SM motor has come under increasing price pressure from offshore competitors. As a result, the price on the SM has been lowered to $210. The company CEO recently asked the financial controller, ‘Why can’t we compete with these other companies? They’re selling motors just like our SM for $290. That’s only $2.50 more than our production cost. Are we really that inefficient?’ The financial controller responded by saying, ‘I think this is due to an outmoded product costing system. As you may remember, I raised a red flag about our system when I came on board last year. But the decision was to keep our current system in place. In my opinion, our product costing system is distorting our product costs. Let me run a few numbers to demonstrate what I mean’. Getting the CEO’s go-ahead, the financial controller compiled the basic data needed to implement an Activity-Based Costing system. These data are displayed in the following tables. The percentages are the proportion of each activity driver consumed by each product line. Product lines Activity Activity driver SM DM HDM Depreciation, machinery Machine time 40% 13% 47% Maintenance, machinery Machine time 40% 13% 47% Engineering Engineering hours 47% 6% 47% Inspection and repair of defects Engineering hours 47% 6% 47% Purchasing, receiving and shipping Material handling Number of material orders 47% 8% 45% Depreciation, taxes and insurance for factory Miscellaneous manufacturing overhead Factory space usage 42% 15% 43% Activity Costs Activity Estimated costs ($) Depreciation, machinery 2675000 Maintenance, machinery 175000 Engineering 650000 Inspection and repair of defects 475200 Purchasing, receiving and shipping 389600 Material handling 500000 Depreciation, taxes and insurance for factory 600000 Miscellaneous manufacturing overhead 742500 Required Read the above scenario and write a report to the managing director discussing the following key areas: 1. How Madina Electrical’s traditional product costing system distorts the product costs of the SM, DM and HDMs and prices. Note: You are required to calculate per unit cost and target price. To achieve this task, you are required to: · review journal articles to discuss traditional product costing systems and articles to discuss the appropriateness of the contemporary approaches to cost allocations (e.g. ABC approach) to resolve the issues of costing. Marking criteria: Detailed Description of the Criteria Marks Criterion 1 Structure and Clarity of the Report/Assignment · introductory paragraph 5 · logical flow of clarity and structure of ideas and arguments · appropriate use of paragraph and headings to explain and discuss ideas 2 · appropriate concluding paragraph and recommendations 3 Total marks for criterion 1 10 Criterion 2 Body/contents · Calculate product costs using traditional volume-based costing systems · Calculate target selling price for each product line 5 · Discuss general problems associated with Madina Electrical’s traditional costing system · Discuss any indicators that the current costing system is outdated and flawed. 5 · Calculate per unit cost and target price for each product line using Activity-Based Costing (ABC) system. 13 · Discuss costs and benefits of adopting Activity Based Costing 5 · Analyse and explain the differences in the product costs and target prices for each product line between the two alternative costing systems. · Discuss likely implications for Madina Electrical Corporation. 7 Total marks for criterion 2 35 Criterion 3 Investigation and Analysis (8-10 references must be cited) · completeness of investigation, accuracy and depth of analysis 5 · quality of information sources, appropriate use of in- text and end text referencing, appropriate number of references used 5 Total marks for criterion 3 10 Criterion 4 Contribution in group work · Each member of the group must write a brief statement explaining his/her contribution to this assignment and attach at the end of the assignment. (This section is assessed individually. Read below note) 10 Total marks for criterion 4 10 Criterion 5 Presentation · layout 3 · formatting 3 · spelling/grammar 4 Total marks for criterion 5 10 Total 75 Note: Contribution in group work · Group members must write a brief statement explaining their contribution to this assignment, and provide it as an attachment to the report. · Any member did not submit his/her statement will not receive marks allocated for this criterion. · If a student completed this assignment as an individual assignment, he/she will not receive marks allocated for this criterion. · Use below template to report on individual participant’s contribution to the group assignment. · Report any issues relating to group members immediately to your lecturer via email (e.g. unable to contact group member/s, not cooperating/contributing to group assignment etc.). Name Tasks completed Part 2 – Oral Presentation Students present on the outcomes of the business report. Required · Submit PowerPoints via Assignment [Presentation] Submission link on Moodle · Number of PowerPoint slides 5-8 · Participants are required to wear business attire · All group members must participate in the presentation Part 2 marking criteria: Assessment Criteria Marks · Power-points are original, include appropriate content and have systematic flow 10 · Ability to communicate clearly [Assess individually] 5 · Capture audience attention and ability to interact with audience [Assess individually] 5 · Demonstrated group cooperation, coordination and collaboration 5 Total marks 25 Using Technology for Assessment Rationale Activities Technological tools selected · Industry knowledge & skills · reflection on learning · feedback on performance · practice of critical thinking · team work · check for plagiarism · problem-based learning · assessment of team work · collaborative writing · online forum on Moodle · Turnitin Group AssignmentBA216 MANAGEMENT ACCOUNTING FOR PLANNING AND CONTROLTrimester 1, Year 2020 Group AssignmentMA515 MANAGERIAL ACCOUNTINGTrimester 2, Year 2020