need to answer all the question
ACC8101 Assignment 2 ACC2113 Assignment (Due Date Monday 21st May 2018) – TOTAL MARKS 100 converted to a mark of 20 (weighting 20%) You should make use of the materials from Modules 1-9 to help answer this assignment. Submission is via studydesk. QUESTION 1 (20 marks) Maasai Trails generates average revenue of $8,000 per person on its five-day (and 5 nights) package tours to the Maasai Mara National Reserve, Kenya. Tours average 4 people per tour. The business has the following expenses: Insurance costs per annum $25,000 Airfares per person on tours $980 Accommodation costs per person per night $200 Total costs per person for 5 days’ meals $80 Salary of tour managers $30,000 per annum Ground transportation per person for tour $400 Park tickets and costs per person for the 5 days $140 Casual staff hire per tour $400 Other fixed costs per annum $15,000 The current expected number of bookings for the 5 day tours are 200 tours per annum. Required a) Calculate the number of package tours that must be sold for the business to break even. (8 marks) b) Calculate the current annual expected profit. (3 marks) c) Calculate the amount of revenue necessary to make a post-tax annual profit of $60,000, given a tax rate of 20%. (3 marks) d) Maasai Trails is considering hiring another tour manager (at an annual salary $15,000) which would mean fewer casual staff are needed and would therefore reduce the cost of casual staff hire to $100 per tour. Is this worthwhile for the business at its current expected number of bookings? (Justify your answer showing calculations.) (6 marks) QUESTION 2 (30 marks) Custom Tables Pty Ltd makes unique dining tables from various native Australian woods. They use normal costing in their job costing system (i.e. a pre-determined overhead rate to apply overhead costs to jobs). The following are partially completed T-accounts representing the General Ledger Accounts. Direct Materials Inventory Work-In-Process Inventory 1.1.2017 30,000 380,000 1.1.2017 20,000 400,000 Dir. Manuf. Labour 360,000 31.12.2017 31.12.2017 Finished Goods Inventory 1.1.2017 10,000 900,000 940,000 31.12.2017 Manufacturing Overhead Control Manufacturing Overhead Allocated 540,000 Cost of Goods Sold Sales Revenue Profit & Loss Summary ADDITIONAL INFORMATION 1. The direct manufacturing labour wage rate was $15 per hour 2. Budgeted manufacturing overheads were $520,000 for the year 3. Manufacturing overheads are allocated based on direct labour hours. Budgeted labour hours were 26,000 hours. 4. During the year sales revenue was $1,290,000 and marketing and distribution costs were $140,000 Required Complete the General Ledger T-accounts (4 marks) in order to answer the following: a) What was the amount of direct materials issued to production in 2017? (1 mark) b) What was the amount of allocated overhead issued to jobs in 2017? (3 marks) c) What was the total cost of jobs completed during 2017? (3 marks) d) What was the balance of Work-In-Process Inventory at 31st December 2017? (2 marks) e) What was the cost of goods sold BEFORE proration of under or over allocated overhead? (2 marks) f) What was the under or over allocated overhead in 2017? (3 marks) g) Write off the under or over allocated overhead in 2017 to Cost of Goods Sold (2 marks) h) Calculate the operating income for 2017 (2 marks) i) Assume the business decided to change its method of writing off under or over allocated overhead to a proration basis based on ending balances of Work-In- Process Inventory, Finished Goods Inventory and Cost of Goods Sold (before proration). Calculate the revised ending balances for Work-In-Process Inventory, Finished Goods Inventory and calculate revised Cost of Goods Sold and Profit for 2017. (6 marks) j) Which method for accounting for the under or over allocated overhead would you recommend in this instance? State the reasons for your choice. (2 marks) Note: Show all workings QUESTION 3 (50 marks) Rocklea Furniture (RF) makes one type of settee/sofa – the Queen. In 2017 the average monthly sales figures were: Units Selling Price Queen 100 $1,200 RF intends lowering the selling price per unit for the Queen beds due to increased competition to $1,000 per unit. It is hoped that this will increase sales in January by 20% compared to the December 2017 level and again by a further 20% from January to February 2018 and then remain at that level for the rest of the year. 80% of sales are on credit, and the remainder cash. RF offer a 2% discount for credit customers who pay within the month and 10% of customers do so. Another 70% pay in the month following the sale and the remaining customers pay 2 months following the sale. RF do not have any problem with bad debts. Each unit requires the following materials: Queen Cost Fabric 5 m2 $10 per m2 Wood 10 m $2 per m Filler 3 m2 $3 per m2 Springs 600 $0.02 each Materials are paid for in the month after purchase. The amount of accounts payable at 31 December 2017 was $18,266. Direct Labour required (at $15 per hour) Queen Labour hours 2 Labour is paid for as incurred (in the month when the work is done). Opening materials inventories: Fabric 100 m2 Wood 10 m Filler 20 m2 Springs 600 The desired materials ending inventory is 50% of that required for the next month’s production. Opening finished goods inventories: Queen Finished sofas 20 For 2018 the desired ending finished goods inventory is equal to the 50% of following month’s sales in units. Variable manufacturing overheads are expected to be $22 per unit manufactured in a month. These are paid for as incurred. Fixed manufacturing overheads are expected to be $13,000 per month (including $500 for depreciation). These are paid for as incurred. Other expenses are estimated at $50,000 per month, also paid as incurred. A $20,000 loan will be repaid in February. A $6,000 tax expenses will be paid in March. Interest received on an investment is due to be paid into the business bank account in January, totalling $300. The cash at bank balance at 31st December was a credit balance (overdraft) of $40,000. Required: a) Prepare a sales budget in units and dollars for the 3 months and the total quarter for the Queen sofas. (2 marks) b) Prepare a production budget in units for the 3 months and the total quarter for the Queen sofas. (10 marks) c) Prepare a materials usage budget in units for each of the four materials (separate budgets) and calculate the dollar purchases for each, showing the 3 months and the total quarter for the Queen sofas. (14 marks) d) Calculate the total value of materials purchases each month. (1 mark) e) Prepare a direct labour budget. (3 marks) f) Prepare a schedule of collection of sales. (10 marks) g) Prepare a cash budget showing each month and the quarter total. (10 marks) NOTES ON ASSIGNMENT SUBMISSION Submission is electronic via the link on studydesk. Students must submit ONE file ONLY. Acceptable file types are office Word documents or excel spreadsheets. All workings should be shown.. Please ensure that you include your last name and your student number in naming your file and that you include a header or footer within your document giving you full name and student number. If you have questions regarding the assignment please ask these in the studydesk assignment discussion forum provided unless they are of a personal nature, in which case please contact your lecturer or course examiner directly (preferably via email). Email:
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