Managerial Accounting

Assessment Task – Tutorial Questions
Unit Code: HI5017
Unit Name: Managerial Accounting
Assignment: Tutorial Questions 1
Due: 11:30pm 15th May 2020
Weighting: 25%
Total Assignment Marks: 50 marks
Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in
this unit
Unit Learning Outcomes Assessed:
1. Critically evaluate the various approaches to performance measurement and control in various
types of organisations, and devise and evaluate indicators of performance;
2. Demonstrate the need for a balance between financial and non-financial information in decision
making, control and performance evaluation applications of management accounting;
3. Analyse a company’s financial statements and/or management reports and identify the strengths
and weaknesses of the company and articulate these to the various stakeholders.
Description: Each week students were provided with three tutorial questions of varying degrees of
difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard.
The Interactive Tutorials are designed to assist students with the process, skills and knowledge to
answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for
weeks 1 to 5 inclusive and submit these answers in a single document.
The questions to be answered are:
Week 1
The following data refer to Nani’s Fashions for the current year:
Sales Revenues $475,000
Work in process inventory, 31 December 15,000
Work in process inventory, 1 January 20,000
Selling and administrative expenses 75,000
Income tax expense 45,000
Purchase of raw materials 90,000
Raw materials inventory, 31 December 12,500
Raw material inventory. 1 January 20,000
Direct labour 100,000
Electricity: plant 20,000
Depreciation plant and equipment 30,000
Finished goods inventory, 31 December 25,000
Finished goods inventory, 1 January 10,000
Indirect material 5,000
Indirect labour 7,500
Other manufacturing overhead 40,000
Required:
a) Prepare the schedule of cost of goods manufactured for Nani’s fashion. (3 marks)
b) Prepare the schedule of cost of goods sold for Nani’s Fashions and explain the information
provided by the schedule of cost of goods sold. (4 marks)
c) Prepare an income statement for the current year. (3 marks)
Week 2
Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month.
The electricity costs and hours of operation for past six months is listed below:
Month Total hours of operation Total electricity cost
January 650 $ 4,240
February 700 $ 4,400
March 800 $ 4,800
April 600 $ 4,200
May 550 $ 3,700
June 500 $ 3,600
Required:
a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,
assuming that the variable costs vary in proportion to the hours of operation. Express the total
cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of
operation? (5 marks)
b) During July, the complex will open for 570 hours. Predict the complex’s total electricity costs for
July using the cost estimation method employed in above requirement a). (3marks)
c) What is the main drawback of the high-low method of cost estimation? (2 marks, maximum 150
words)
Week 3
Toys World started and finished job number A26, a batch of 1,000 cuddly koalas, during March 2020.
The job required $4,850 of direct material and 32 hours of direct labour at $20 per hour. The
predetermined overhead rate is $10.50 per direct labour hour. On 31st March, 900 of the cuddly
koalas were shipped to a local toy shop.
Required:
a) Prepare journal entries to record the incurrence of production costs, completion of job number
A26 and the shipment of 900 cuddly koalas to local toy shop. (5 marks)
b) Calculate the cost per cuddly koala for job number A26. (2 marks)
c) How might the managers at Toys World use this information? (3 marks, maximum 150 words)
Week 4
Rigby Ltd accumulates costs for its single product using process costing. Direct material is added at the
beginning of the production process, and conversion activity occurs uniformly throughout the process.
The following is a partially completed production report for May.
Production report, May
Physical
units
Percentage of
completion with
respect
to conversion
Equivalent units
Direct
materials
Conversion
Work in process, 1 May 25,000 40%
Units started during May 30,000
55,000
Units completed and
transferred out during May
35,000 35,000 35,000
Work in process, 31 May 20,000 80% 20,000 16,000
Total units accounted for 55,000
Direct material Conversion Total
Work in process, 1 May $143,000 $474,700 $617,700
Costs incurred during May $165,000 $2,009,000 $2,174,000
Total costs to account for $308,000 $2,483,700 $2,791,700
Required:
a) Complete the following process costing steps using the weighted average method:
i Calculation of equivalent units. (3 marks)
ii Calculation of unit costs. (3 marks)
iii Analysis of total costs. (3 marks)
b) Prepare a journal entry to record the transfer of the cost of goods completed and transferred out
during May. (1 mark)
Week 5
Mel Snow is the manager of a firm, Taxation Matters, which specialises in the preparation of income
tax returns. The firm offers two basic products: the preparation of income tax returns for wage and
salary earners, and the preparation of income tax returns for small businesses. Any clients requiring
more complex services are referred to Snow’s brother Roger, who is a partner in a large firm of
chartered accountants.
The processing of wage and salary tax returns is quite straightforward, and the firm uses a software
package to process data and print the return. A software package is also used to prepare returns for
small businesses, although more information is required, particularly about business expenses.
Snow has only recently joined Taxation Matters and he is concerned about the firm’s pricing policy,
which sets flat fees of $60 per return for wage and salary clients and $300 for small businesses. He
decides to use activity-based costing to estimate the costs of providing each of these services.
At the end of the year, Snow reviewed the firm’s total costs and activities, resulting in the following
list:
Activity Activity cost Activity driver Quantity of activity driver
Interview salaried client $ 60,000 No. of salaried clients 8,000
Interview business client 75,000 No. of business clients 2,000
Obtain missing data 600,000 No. of follow-up calls 8,000
Input data 120,000 No. of data entries 400,000
Print return 90,000 No. of returns 10,000
Verify return with client 180,000 No. of hours 6,000
Rectify errors 90,000 No. of errors 6,000
Submit return 30,000 No. of returns 10,000
Total costs $1 245,000
In identifying the activities required for each type of return, Snow noted the following:
Clients are interviewed only once per return.
 All follow-up calls to obtain missing data relate to business returns; on average, each business tax
return requires four follow-up calls.
 Processing a wage and salary tax return requires 20 data entries, whereas a business return
requires 120 data entries.
 On average, it takes 22.5 minutes to verify a wage and salary tax return, whereas it takes one and
a half hours to verify a business return.
 All errors relate to business returns; on average, there are 3 errors per business return.
Required:
a) Use activity-based costing to estimate the cost of preparing:
i A wage and salary tax return. (3 marks)
ii A business tax return. (4 marks)
b) In the light of your answers to requirement 1, evaluate the firm’s pricing policy. (3 marks,
maximum 150 words)
Submission Directions:
The assignment has to be submitted via Blackboard. Each student will be permitted one
submission to Blackboard only. Each student needs to ensure that the document submitted
is the correct one.
Academic Integrity
Academic honesty is highly valued at Holmes Institute. Students must always submit work
that represents their original words or ideas. If any words or ideas used in a class posting or
assignment submission do not represent the student’s original words or ideas, the student
must cite all relevant sources and make clear the extent to which such sources were used.
Written assignments that include material similar to course reading materials or other
sources should include a citation including source, author, and page number.
In addition, written assignments that are similar or identical to those of another student in
the class is also a violation of the Holmes Institute’s Academic Conduct and Integrity Policy.
The consequence for a violation of this policy can incur a range of penalties varying from a
50% penalty through to suspension of enrolment. The penalty would be dependent on the
extent of academic misconduct and the student’s history of academic misconduct issues.
All assessments will be automatically submitted to SafeAssign to assess their originality.
Further Information:
For further information and additional learning resources, students should refer to their Discussion
Board for the unit.