MAA 262 – Management accounting

Deakin’s Bachelor of Commerce and MBA are internationally EPAS accredited.
Deakin Business School is accredited by AACSB.
MAA 262 – Management accounting
Trimester 1, 2017
Assessment – Group Assignment Part 1

DUE DATE AND TIME:	Week 7, Sunday 30 April at 11:59 PM (online group submission via CloudDeakin) 10% (10 marks) of your total marks for the unit.
PERCENTAGE OF FINAL GRADE:

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 and reflection; demonstrate the use of excel in the analysis, and word Microsoft programs to prepare the assignment.
ULO 6: Demonstrate a student-oriented approach to learning and teamwork and collaboration skills.	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 4, Activity-based costing to complete this part of your
assignment.
The assignment has to be completed in a group of three (3) individuals from any class and/or cloud
(online) students. It is the students’ responsibility to form/ join a group and to ensure that the group
dynamics work.
Part A of the assignment requires development of a model using a Spreadsheet and Part B has to be
completed in 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.
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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. Only one submission per group is required. i.e. only one
student submits on behalf of all the three group members.
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 MAA 262
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.
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Assignment Part 1
This assignment has two parts; part A and part B.
Part A:
Browns Electronics Company is a manufacturer of small screen television models. The company
produces three models called High definition (HD) televisions, LED-LCD televisions and Smart
curved televisions. 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 not much change for the past 10
years.
Brown Electronics Company’s product costs and annual sales data are as follows:

High-definition model	LED-LCD model	Smart-curved model
Annual sales (units)	30 000	1 500	15 000
Product costs:
Raw material	$15.00	$37.50	$63.00
Direct labour	$15.00 (0.5hour @ $30)	$30.00 (1 hour @ $30)	$30.00 (1 hour @ $30)
Manufacturing overhead *	$127.50	$255.00	$255.00
Total product cost	$157.50	$322.50	$348.00

*Calculation of predetermined overhead rate:
Manufacturing overhead budget:

Depreciation, machinery	$ 2 220 000
Maintenance, machinery	180 000
Depreciation, taxes and insurance for factory	450 000
Engineering	525 000
Purchasing, receiving and shipping	375 000
Inspection and repair of defects	562 500
Material handling	600 000
Miscellaneous manufacturing overhead costs	442 500
Total	$ 5 355 000

Direct labour budget:

High definition (HD) model	10 000 hours
LED-LCD model	1 000 hours
Smart curved model	10 000 hours
Total	21 000 hours

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Predetermined overhead rate:
Budgeted overhead = $ 5 355 000 = $255 per hour
Budgeted direct labour hours 21 000 hours
For the past 10 years, Brown Electronics Company’s pricing formula has been to set each product’s
budgeted prices at 115 percent of its full product cost. Lately, however, the high-definition model has
come under increasing price pressure from overseas competitors. As a result of this increased
competition, the price on the High-definition model has been lowered to $175.00.
Brown Electronics Company’s CEO recently asked the financial controller, ‘Why can’t we compete
with these other companies? They are selling their high definition televisions for $165.00. That is only
a few dollars more than our production cost. Are we really that inefficient?’
The financial controller responded by saying, ‘I think this is owing to an outdated product costing
system. As you may remember, I raised a red flag about our existing product costing system last year.
In my opinion, our product costing system is distorting and misrepresenting our product costs. Let me
run a few numbers to demonstrate what I mean.’
After getting the approval of the CEO, the financial controller compiled the basic data needed to
implement an activity based costing system.
These data are displayed in the following table. The percentages given are the proportion of each
activity driver consumed by each product line.
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Product lines
Activity	Activity driver	High definition (HD) model	LED-LCD model	Smart curved model
Depreciation, machinery Maintenance, machinery	Machine time	40%	13%	47%
Engineering 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 costs	Factory space usage	42%	15%	43%

Required:
1. Calculate the budgeted prices for the three models, based on the traditional product costing
system. (6 Marks)
2. Construct an excel spreadsheet showing new product costs for the three models, based on the
new data collected by the financial controller. Round to the nearest cent. (10 marks)
3. Calculate a new budgeted price for the three products, based on the activity based costing
system. Compare the new budgeted target price with the current actual selling price for the
High-definition model. (8 marks)
4. Refer to the product costs developed in requirement 2 above. Prepare a table showing how
Browns Electronics Company’s traditional product costing system distorts the product costs of
the three television models. (6 marks)
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Part B:
You have been asked to analyze the operations of an ‘Art, craft and music school’ for young children,
in order to determine the ways and means that you can improve the quality of the service provided
while reducing the costs.
You have resolved to analyze the activities provided by the school and use an Activity Based Costing
system to assign costs to activities.
The list below contains potential activities from which to choose.

	Art and craft activities: These activities are conducted daily as a part of the school routine. The aim of these activities to enhance the creativity of the students involved.

 Music activities: This activity is conducted weekly and it aims to encourage the student’s
interest in music and dancing.
 Learning activities: These are conducted as a part of the daily routine of the school, where the
students are listening to stories and following directions as a part of games, play or other
interactive activities.
 Meal activities: Snacks and light meals are provided by the teachers and one food-service
employee. From time to time, the students are given the opportunity to prepare their own
snacks.
 Free play activities: The school has allocated a time for the students to play. This can be
indoors or outdoors and a few teachers observe them playing.
 Miscellaneous: These miscellaneous activities include greeting the students when they are
coming in and leaving the school, helping them with any of their requirements and interacting
with the parents of the students.
 Conferencing with the parents: This is a quarterly activity. The head teacher of the school
meets and has a discussion with each student’s parents for about half an hour about the progress
of the students and anything else that needs to be discussed.
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Required:
1. You are required to choose several activities to use for cost pools and identify cost drivers for
those cost pools. Explain your choices.
(4 marks)
2. You are required to discuss the potential benefits and costs of implementing an Activity Based
Costing (ABC) system for an institution like above, using at least two academic research
articles as your background research. (800 words) (6 marks)
Total of 40 marks, scaled down to 10 marks.