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Microsoft Word - SEMESTER 1 Assessment BAHBSM2 Management Accounting Nov 21 Page 1 of 4 National College of Ireland BA (Honours) in Business Management – Part-Time – Stage 2 Semester One Assessment – 2021/2022 [Due 24th November 2021 (Cut off: 12 pm] Management Accounting Dr Gillian Barrett Tara Cheevers Assessment percentage of overall grade for module: 100% This Assessment requires a mandatory pass to complete this module: Yes STUDENT INSTRUCTIONS AND RELEVANT GUIDELINES: All Sections of the assessment should be completed. Students can use Work, Excel or submit a Handwritten Assessment Please check your submission and ensure the FULL assessment is being submitted in ONE document. DO NOT upload several individual photos, the submission must be ONE document. If your assessment is handwritten take clear full-size photos of each handwritten page and insert the photos into one word document, photos must be clear and visible, save the document and upload as a word document or a pdf document. DO NOT upload links to files in your submission, an actual document containing the assessment must be uploaded. Student Name & Student Number must be on EVERY page that is submitted. If using Excel, please ensure you use PRINT PREVIEW option and keep your workings to an A4 page in portrait or landscape format. For printing purposes your exam must be kept to the A4 layout/format. Page 2 of 4 Question 1 – Total Marks 40 You are a newly qualified management accountant recently appointed by JMP Limited. JMP is a long- established manufacturing company. The company manufactures and sells three products, Product 1, Product 2 & Product 3. Product 3 has been attracting additional business with overheads increasing however Product 2 has been losing market share. JMP have approached you with a view to introducing a new costing system. Since its creation JMP have been using a single direct labour cost percentage to assign overhead costs to products. A team lead by the senior management accountant have spent several weeks collecting data for the different activities and products. For the accounting period 31st December 2020, the following data relates to the three product lines for JMP. Product 1 Product 2 Product 3 Production Volumes 7,600 12,600 4,100 Selling Price per unit €48.00 €81.00 €70.00 Material Cost per unit €19.00 €25.50 €16.75 Direct Labour Cost per unit €4.20 €8.10 €6.50 Additional Information Materials Movements 8 50 100 Machine Hours per unit 0.6 0.6 0.3 Set‐ups (in total) 2 10 10 Orders packed (in total) 2 14 22 Proportion of Engineering work 35% 25% 40% Cost Pools Overhead Cost Packaging €60,000 Engineering €110,000 Set‐up Labour €19,650 Machine Maintenance & Depreciation €400,000 Materials Receiving & Handling €155,000 Total €744,650 (a) Calculate the overhead rate and the product unit costs for each product under the existing costing system. (8 Marks) (b) Identify the appropriate cost driver for each overhead activity, calculate the overhead absorption rate for each cost pool. (15 Marks) (c) Calculate the product unit costs for each product using an activity based costing system. (6 Marks) (d) Comment on the results of each costing system in particular the profits for each product. (11 Marks) Page 3 of 4 Question 2 – Total Marks 30 EFT Limited is a manufacturing company manufacturing specialised tables. The following information is available for the company for the year ended 30th December 2020. Trial Balance extract for EFT Limited for the year ended 30th December 2020 € € Revenue 350,000 Returns inwards 4,200 Returns outwards 7,100 Carriage inwards 2,100 Carriage outwards 1,900 Manufacturing machinery at cost 60,000 Rent 54,000 Inventory of raw materials at 1 Jan 2020 18,200 Inventory of raw materials at 31 December 2020 21,500 Manufacturing royalties 15,200 Factory wages 66,500 Other factory overheads 35,000 Purchase of raw materials 68,500 Administration salaries 17,000 Sales department wages 30,000 Additional information: 1. Rent is to be charged 75% to the factory and 25% to the office. 2. Depreciation has not yet been charged for manufacturing machinery. EFT uses straight line depreciation for machinery at a rate of 25%. 3. Factory wages are 80% direct labour with the balance being indirect labour costs. 4. Work in progress inventory was as follows: 1 January 2020 €12,100 31 December 2020 €14,300 5. Finished Goods inventory was as follows: 1 January 2020 €26,100 31 December 2020 €28,700 a) Prepare the manufacturing account for the year ending 31st December 2020. (15.5 Marks) b) Prepare the income statement for the year ending 31st December 2020. (11.5 Marks) c) Prepare the extract from the Statement of Financial Position as at 31st December 2020. (4 Marks) Page 4 of 4 Question 3 – Total Marks 30 EXCEL Ltd manufactures 3 types of cabinet, the standard, the modern and the premium. The budgeted standard costs for each product are as follows: Standard Modern Premium € € € Direct Material Sq Mtr 3.00 3.50 5.00 Direct Materials €30.00 €35.00 €50.00 Direct Labour €12.00 €15.00 €12.00 Variable Overhead €10.00 €9.00 €13.00 Fixed Overhead €12.00 €15.00 €14.00 €64.00 €74.00 €89.00 Sales Price €105.00 €122.00 €118.00 Quarterly Budgeted Volume 1,575 2,310 500 Sales Mix % 36% 53% 11% The following information has also been provided: Direct materials are a specialist rose wood which is priced at €10 per Sq Mtr No stocks are being maintained and production volumes are the same as sales volumes Fixed overhead costs are absorbed on the basis of production units Due to recent forest fires in the area where the wood supplier is based the supply of rose wood will be limited to 13,000 Sq Mtr in the coming quarter. (a) Calculate the total breakeven point in units for the quarter. (6 Marks) (b) Advise Excel on the optimum production plan detailing the mix of products they should produce during the next quarter to maximise their profits; calculations must be included in your advice note setting out optimum profit. (12 Marks) (c) List Four are the assumptions of Cost Volume Profit Analysis? (4 Marks) (d) List Four limitations of Cost Volume Profit Analysis? (4 Marks) (e) The purchasing manager has advised that a management accountant would be of great benefit to the business, the managing director has asked you to provide details on the role of the management accountant. Four key points will be sufficient. (4 Marks)