Page 1 of 5 MAA 262 – Management accounting Trimester 1, 2018 Assessment –Individual Assignment Part 2 DUE DATE AND TIME: Week 9, Wednesday 9th May at 11:59 PM (online submission via CloudDeakin)...

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Page 1 of 5 MAA 262 – Management accounting Trimester 1, 2018 Assessment –Individual Assignment Part 2 DUE DATE AND TIME: Week 9, Wednesday 9th May at 11:59 PM (online submission via CloudDeakin) PERCENTAGE OF FINAL GRADE: 20% (20 marks) of your total marks for the unit. Learning Outcome Details Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO) ULO 3: Prepare and explain alternate product costing using job costing, variable and absorption costing, and activity based costing systems. Prepare an analysis; demonstrate the use of Excel in the analysis, and Microsoft word programs to prepare the assignment. GLO 2 & 5: Problem solving and communication. Assessment Feedback: Students who submit their work by the due date will receive their marks and feedback on CloudDeakin within 15 working days of the assignment submission due date. Description / Requirements You will need to have completed topic 5 to complete this part of your assignment. The assignment must be completed individually. The assignment requires development of a model using a spreadsheet and a word document. Both excel spreadsheet and word document have to be submitted to the assignment folder. Please monitor CloudDeakin regularly for any further instructions or announcements. Deakin's Bachelor of Commerce and MBA are internationally EPAS accredite d . Deakin Business School is accredited by AACS B . https://www.efmd.org/index.php/accreditation-main/epas https://www.efmd.org/index.php/accreditation-main/epas https://www.efmd.org/index.php/accreditation-main/epas http://www.aacsb.edu/ http://www.aacsb.edu/ http://www.aacsb.edu/ Page 2 of 5 Submission Instructions This assignment is to be submitted online only. (You are not required to submit a hard copy) The completed assignment must be submitted into the allocated area on CloudDeakin under the drop-box folder on or before the due date. Once submitted, you cannot retract your assignment but you can submit another version. Only the most recent version submitted will be marked. You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy. Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism. When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after uploading it, and check for, and keep, the email receipt for the submission. Notes • There is a discussion area on Cloud Deakin titled ‘Assignment discussion’. This area is for you to discuss the assignment. It is an area for students to help each other. • Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date without an approved extension: 5% will be deducted from available marks for each day up to five days, and work that is submitted more than five days after the due date will not be marked. 'Day' means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date. • The final examination is the only hurdle requirement for this unit. If you choose not to submit this assignment, you will score zero for this assignment. • Plagiarism and collusion are forms of cheating and are considered a serious academic misconduct, and severe penalties are associated with them. Please refer to the MAA262 unit guide for your responsibilities with regard to plagiarism and other academic offences. • For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in CloudDeakin unit site. Page 3 of 5 Assignment Part 2 Question 1 Wayco Leisure Pty Ltd assembles three types of caravan at the same factory in Geelong: the Getaway; the Relax and the Unwind. It sells the caravans throughout most of the world where there has been a big increase in demand for caravans and camper trailers catering to the growing number of retirees who wish to travel. In response to market pressures Wayco Leisure has invested heavily in new manufacturing technology in recent years and, as a result, has significantly reduced the size of its workforce. Historically, the company has allocated all overhead costs using total direct labour hours, but is now considering introducing activity-based costing (ABC). The accountant at Wayco Leisure has produced the following analysis. Annual Output (Units) Annual Direct labour hours Selling price ($ per unit) Raw material cost ($ per unit) Getaway 2000 50,000 4,000 400 Relax 1600 55,000 6,000 600 Unwind 400 20,000 8,000 900 The three cost drivers that generate overheads are: • Deliveries to retailers: the number of deliveries of caravans to retail showrooms • Set-ups: the number of times the assembly line process is re-set to accommodate a production run of a different type of caravan. • Purchase orders: the number of purchase orders. The annual cost driver volumes relating to each activity and for each type of caravan are as follows: Number of deliveries to retailers Number of set- ups Number of purchase orders Getaway 100 35 400 Relax 80 40 300 Unwind 70 25 100 Page 4 of 5 The annual overhead costs relating to these activities are as follows: Particulars Amount ($) Deliveries to retailers 2,400,000 Set-up costs 6,000,000 Purchase orders 3,600,000 All direct labour is paid at $20 per hour. The company holds no stocks. At a board meeting there was some concern over the introduction of activity-based costing. The finance director argued: “I very much doubt whether selling the Unwind model is viable but I am not convinced that activity-based costing would tell us any more than the use of labour hours in assessing the viability of each product”. The marketing director argued: “I am in the process of negotiating a major new contract with a caravan rental company for the Getaway model. For such a big order they will not pay our normal prices so we will need to ensure very competitive pricing, and therefore accurate costing. I am not convinced that activity-based costing would achieve this as it merely averages costs for our entire production”. The managing director argued: “I believe that activity-based costing would be an improvement but it still has its problems. For instance, if we carry out an activity many times surely, we get better at it, and costs fall rather than remain constant. Similarly, some costs are fixed and do not vary either with labour hours or any other cost driver”. The chairman argued: “I cannot see the problem. The overall profit for the company is the same no matter which method of allocating overheads we use. It seems to make no difference to me”. REQUIRED: (a) Calculate the product cost and profitability of each of Wayco Leisure’s three types of product using each of the following methods to attribute overheads: (I) The existing methods based upon labour hours. (II) Activity-based costing. You are required to use Excel for your calculations. You should design your spreadsheet appropriately such that is in a logical format and the reader can clearly follow your calculations. (15+25 = 40 marks) Page 5 of 5 (b) You, as the consultant management accountant, are required to write a report to the directors of Wayco Leisure. The report should: (I) Evaluate the labour hours and the activity-based costing methods in the circumstances of Wayco Leisure. (II) Examine the implications of activity-based costing for Wayco Leisure, and in so doing evaluate the issues raised by each of the directors. In drafting the report to directors, refer to your calculations in requirement (a) above where appropriate. (up to 500 words) (30 marks) Question 2 In a recent article published in The Australian newspaper, experts claimed that the benefits of activity based costing in universities would be significant. The additional cost information would enable much better allocation of resources and funding outcomes. You are required to undertake research to find two journal articles centred on the use of activity based costing in the service sector. Using these articles and what the authors’ findings, discuss how activity based costing could be used in a university. In your answer provide examples of cost pools that may be appropriate. (500-700 words) (30 marks) Total of 100 marks will be scaled to a mark of 20% .
Answered Same DayMay 06, 2020MAA262Deakin University

Answer To: Page 1 of 5 MAA 262 – Management accounting Trimester 1, 2018 Assessment –Individual Assignment Part...

Pulkit answered on May 09 2020
127 Votes
Report of the Board of Directors of Wayco Leisure-
Activity based costing is the most systematic form of cost
allocation to different products. Although using direct labor hours or direct labor costs as the basis of cost allocation is quite simpler but it is not that accurate as compared to Activity Based System.
The various amounts of overheads as allocated under these two methods are as under:
Under Direct Labor Hours-
    
    Getaway
    Relax
    Unwind
    Total Overhead Costs
     $ 4,800,000.00
     $ 5,280,000.00
     $ 1,920,000.00
Under Activity Based Costing-
    
    Getaway
    Relax
    Unwind
    Total Overhead Costs
     $ 4,860,000.00
     $ 4,518,000.00
     $ 2,622,000.00
The above computations state the differences in allocation of overhead costs amount in each product. The overhead costs allocated to Getaway are a bit higher in case of activity based costing as compared to direct labor hour’s basis. Whereas in case of Relax the costs allocated is higher in direct labor hour as compared to activity based costing. Now since the activity based costing allocates lesser costs to Relax the...
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