UNIT CODE: ACT507 UNIT NAME: ACCOUNTING FOR MANAGERS
Assignment Two Information
Semester 2 2017
Assessment 40%
School of Law and Business
Semester 2, 2011 Page 1 of
Faculty of Law Business and Art
SUBMISSION REQUIREMENTS.
Due Date
This assignment may be submitted at or before 12 midnight on Sunday of Study Week 13 (22 October 2017).
Lodgement
• The Assignment must include a coversheet that shows the student full name, student number, campus, and lecturer’s name. Do not use the standard CDU Assignment Cover Sheet templates.
• Assignment must be lodged online via the ACT507 Learnline Assignment Lodgement link.
• Ensure your file is named using a file naming convention that allows the lecturer to identify to whom it belongs. Failure to use an acceptable file naming convention may result in your assignment lodgement being rejected. The file name should start with the name of your campus followed by your student number (Examples: SYDN990040, MELB990040, WFD990040, EXT990040)
• DO NOT LODGE VIA EMAIL or FAX - assignments lodged by email or fax will not be accepted.
• KEEP A COPY - Ensure you have a copy of the assignment lodged. If you have submitted assessment work electronically please make sure you have a backup copy.
• It is the students’ responsibility to ensure that submission of the assignment is successful.
University Plagiarism policy
Plagiarism is the unacknowledged use of material written or produced by others or a rework of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend. For more details please refer to ACT507 Learnline site.
Late Assignments and Extensions
LATE ASSIGNMENTS WILL GENERALLY NOT BE ACCEPTED.
Exceptions will only be made where assignments are late due to special circumstances that are supported by documentary evidence, and may be subject to a penalty of 5% of assignment marks per day. Partially completed assignments will be accepted with appropriate loss of marks for the incomplete portion.
Should students foresee potential difficulties with submission of assessment items, they should contact the lecturer immediately, to discuss suitable arrangements etc for the submission of those assessment times. An Application for Assignment Extension or Special Consideration should be completed and provided to the Head of School, School of Law and Business. This application form, explanation and instructions is available on the ACT507 CDU Learnline course site.
Summary of Assignment Related Documents
The following is a summary of documents associated with and/or provided for this Assignment.
• The Assignment Requirements Document (this document)
• Assignment Data in MS Excel format
School of Law and Business
Semester 2, 2011 Page 2 of
Faculty of Law Business and Art
REQUIREMENTS FOR ASSIGNMENT TWO:
There are four parts to this assignment.
Part A - Prepare a Master Budget (30% of the assignment assessment marks)
All that is required for this part is the Budget Schedules. They can be provided in MS Word, MS Excel or PDF format.(Word count for this part is not relevant)
Wittgenstein Pty Ltd produces propellers used in the production of wind-powered electricity generating equipment. The propellers are sold to various engineering companies that produce wind generators in Australia and Europe.
• Projected sales in units for the coming four months are provided in the assignment data sheet.
The following data pertain to production policies and manufacturing specifications followed by Wittgenstein Pty Ltd. The following details are provided in the assignment data sheet • Finished goods inventory on January 1.
• The full absorption cost of the opening finished goods inventory.
• The variable manufacturing cost of the opening finished goods inventory.
• The desired finished goods ending inventory for each month.
• The data on materials used.
• The amount of materials to be on hand at the beginning of the month
• This stipulated amount of materials to be on hand at the beginning of the month is exactly the amount of material on hand on January 1. (Assume that the material costs are the same as current quarter's production.)
• The direct labour used per unit of output.
• The average direct labour cost per hour.
Details of the Overheads for each month are provided in the data list. The Overheads are estimated using a flexible budget formula. (Activity is measured in direct labour hours.) You will have to determine the Maintenance cost and relevant statistical data necessary for you to do so is provided in the data List
Monthly selling and administrative overhead expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Finance charges and bad debts are included in the figures provided and do not need to be identified separately in the selling and administrative overhead expenses. Details are provided in the data list.
Other information provided the assignment data list are:
• The unit selling price of the propeller.
• The cost of land to be purchased in February. The company plans to purchase the land for future expansion.
• The value and timing of dividends paid to shareholders.
• Sales are on credit and the cash receipts pattern for each month is provided, as is the level of Accounts Receivable as at January 1.
• The payment for labour and purchases of materials and other costs are for cash and paid for in the month of acquisition. There is no Accounts Payable amount for this assignment.
• The cash balance on January 1.
If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage (including any interest payments due). Any cash borrowed is repaid one month later, as is the interest due. The annual interest rate is provided with the assignment data.
Required:
Prepare an operating budget for the first quarter (showing each month and totals for the quarter) with the following schedules: a. Sales budget
b. Production budget
c. Direct materials purchases budget
d. Direct labour budget
e. Manufacturing Overhead budget
f. Ending finished goods inventory budget
g. Cost of goods sold budget
h. Budgeted income statement (ignore income taxes and GST)
i. Cash budget
Note that whilst the Selling and Administration expenses must be included, there is no requirement to provide a Selling and Administration Expense budget schedule.
School of Law and Business
Semester 2, 2011 Page 3 of
Part B - Report on the impact of Cost Structures (20% of the assignment assessment marks)
You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF format (or combination). Using a Report style is recommended but not compulsory.
Rita Arthurs, the sales manager is discussing the possible outcome of the forthcoming election with Paulo Farmer, the production manager. She noted that if one of the major political parties wins the election and forms government, there is a strong possibility that alternative energy sources such as wind-generated electricity may no longer be as actively supported by the new government as is the case under the current government. Rita’s primary concern is that the current market for alternative power generation equipment is already volatile and subject to significant uncertainty. Paulo is also concerned about his plans to build the new highly automated manufacturing facility on the land to be purchased in February. This new manufacturing facility will enable him to manufacture, in-house, the major two parts he is now purchasing for assembly and to significantly automate the assembly process that is currently somewhat labour intensive. His projections for the new facility indicate a reduction in direct material and direct labour costs of 25% but that his fixed manufacturing overheads are likely to increase by 50%due to the increased investment in production capacity.
Required:
Write a brief report addressing Rita’s concerns, using some of the concepts covered in chapters (15, 16, 17, 20, 22, 23) in this unit, AND the information provided from the completion of Part A of this assignment, and any additional calculations using the existing data that you feel are relevant. Your report should also include a discussion of the impact of Paulo’s intended investment in new manufacturing capacity. Support your report with relevant calculations.
Note that you should restrict your report to those concepts specifically covered in chapters 16, 17, 20 and more generally in chapters 22 and 23 , and not discuss the current political situation, environmental issues, or the marketing of alternate energy sources etc. or other interesting but otherwise irrelevant issues.
Part C - Report on the Budgeted versus Actual Outcomes (20% of the assignment assessment marks)
You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF format (or combination). Using a Report style is recommended but not compulsory.
At the end of the budgeting period, Paulo Farmer, the production manager is reviewing the actual outcomes (in particular the direct materials and direct labour) and comparing these to the budget that was originally produced (in Part A).
The following data related to the actual results recorded after the end of the quarter by Wittgenstein Pty Ltd, and are provided in the assignment data sheet:
• Actual Sales Volume for the quarter.
• The actual volume of direct materials used during the quarter (for each part).
• The actual cost of the direct materials used during the quarter (for each part).
• The actual direct labour hours used during the quarter.
• The actual cost of direct labour used during the quarter.
Paulo is confused by the outcomes. He is aware that the budget that was created before the start of the quarter was a well-considered and constructed estimate, and he did not expect that the actual outcomes would be exactly as forecast. However he is finding it difficult to understand the reasons for the differences.
Required:
Prepare a brief report to assist Paulo determine what might have caused the differences between the original budget and the final actual outcomes. Speculations of the causes are sufficient, provided they are supported by relevant calculations taken from the data provided, and the budget produced in Part A,. These calculations should be included in, and referred to, in your report. Restrict your discussion to the changes related to direct materials and direct labour. As Paulo is aware that budget estimates may be inaccurate at the time of budget preparation, do not include this particular cause of difference in your report.
School of Law and Business
Semester 2, 2011 Page 4 of
Faculty of Law Business and Arts ACT507-assignment2-sem022017.docx7
Part D - Discussion on Participative Budgeting (20% of the assignment assessment marks)
You are required to provide an essay or report of approx 500 words or less (excluding attachments and references), accompanied by
relevant calculations, in MS Word orPDF format. The style of your essay or report is not important provided your ideas, arguments and/or
3 recommendations etc are clear and understandable and properly referenced using a accepted reference technique
An effective budget converts the goals and objectives of an organization into data. The budget serves as a blueprint for management's plans. The budget is also the basis for control. Management performance can be evaluated by comparing actual results with the budget.
Thus, creating the budget is essential for the successful operation of an organization.
Finding the resources to implement the budget - that is, moving from a starting point to the ultimate goal - requires the extensive use of human resources. How managers perceive their roles in the process of budgeting is important to the successful use of the budget as an effective tool for planning, communicating, and controlling.
Required:
Discuss the behavioural implications of planning and control when a company's management employs:
i. An imposed budgetary approach
ii. A participative budgetary approach
Illustrate your discussion with reference to your report to Paulo Farmer in Part C, discussing how Paulo might respond to the various outcomes of Part C if the budget had been imposed and contrast that with how he might respond (if differently) had the budget been prepared using a participative budgetary approach.
Assignment Preparation and Presentation (10% of the assignment assessment marks)
You are required to present and lodge your assignment in a manner that complies with the requirements set out in the Assignment Details and on Learnline. Requirements would include such elements as layout, grammar, referencing, and various lodgement details. Reports should be easy to read and understand, demonstrating good writing skills.
A word limit has been suggested for parts B, C and D The suggested length is provided so that you can gauge the extent of the work required. Marks will not be deducted if you exceed the recommended length, however essays that significantly exceed the recommended length will not be given any additional marks. A concise clear answer will attract more marks than a long rambling one.
3Any generally accepted referencing technique is acceptable however it should be used consistently throughout your paper
School of Law and Business
Semester 2, 2011 Page 5 of
Faculty of Law Business and Arts ACT507-assignment2-sem022017.docx7