RECENT ASSIGNMENT

Assessment Information
Subject Code: GB519
Subject Name: Measurement and Decision Making
Assessment Title: Written Assignment 1
Weighting: 20% (Assessable value)
Total Marks: 75
Due Date: Monday of week 8 i.e. 18 January 2016 by 11:59 PM (AEDT).
Adelaide and Brisbane students please allow for time difference.
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Assessment Description
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Submission:
The assignment will need to be submitted electronically through the student portal – use the link under “Assessments overview and submission” to submit the information. The portal will close at 11:59 PM (AEST). Adelaide and Brisbane students please allow for time difference.
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.Requirement:
You are required to answer the following three questions. The assignment must be completed individually and submitted before the due date to avoid any late penalties. Please make sure you follow the guidelines noted in your subject outline especially those relating to presentation of written work, late policy and academic integrity.
CASE STUDY 1 (30 marks)
Perfect Spuds (PS) operates at capacity and processes potatoes into potato cuts at its highly automated plant. It sells potatoes to the retail consumer market and to the institutional market, which includes hospitals, cafeterias and university dormitories.
PS’s simple costing system has a single direct cost category (direct materials, which are the raw potatoes) and a single indirect cost pool (production support). Support costs are allocated on the basis of kilograms of potato cuts processed. Support costs include packaging materials. The 2013 total actual costs for producing 1 000 000 kilograms of potato cuts (900 000 for the retail market and 100 000 for the institutional market) are:
• Direct materials used $150 000
• Production support $983 000
The simple costing system does not distinguish between potato cuts produced for the retail and the institutional markets. At the end of 2013, PS unsuccessfully bid for a large institutional contract. Its bid was reported to be 30% above the winning bid. This feedback came as a shock because PS included only a minimum profit margin on its bid.
Moreover, its plant was acknowledged as the most efficient in the industry. As a result of its review process of the lost contract bid, PS decided to explore ways to refine its costing system.
First, it identified that $188 000 of the $983 000 total production support costs related to packaging materials and could be traced to individual jobs ($180 000 for retail and $8 000 for institutional). These costs will now be classified as direct materials. The $150 000 of direct materials used were classified as $135 000 for retail and $15 000 for institutional.
Second, it used ABC to examine how the two products (retail potato cuts and institutional potato cuts) used indirect support resources. The finding was that three activity areas could be distinguished:
• Cleaning activity area: PS uses 1 200 000 kilograms of raw potatoes to yield 1 000 000 kilograms of potato cuts. The cost- allocation base is kilograms of raw potatoes cleaned. Costs in the cleaning activity area are $120000.
• Cutting activity area. PS processes raw potatoes for the retail market independently of those processed for the institutional market. The production line produces:
i. 250 kilograms of retail potato cuts per cutting-hour and
ii. 400 kilograms of institutional potato cuts per cutting-hour. The cost-allocation base is cutting-hours on the production line. Costs in the cutting activity area are $231 000.
• Packaging activity area. PS packages potato cuts for the retail market independently of those packaged for the institutional market. The packaging line packages: (a) 15 kilograms of retail potato cuts per packaging-hour and (b) 50 kilograms of institutional potato cuts per packaginghour. The cost-allocation base is packaging-hours on the production line. Costs in the packaging activity area are $444 000.
REQUIRED:
A. Using the simple costing system, what is the cost per kilogram of potato cuts produced by PS?
B. Calculate the cost rate per unit of the cost driver in:
i. cleaning, ii. cutting and iii. packaging activity areas.
C. Suppose PS uses information from its activity cost rates to calculate costs incurred on retail potato cuts and institutional potato cuts. Using the ABC system, what is the cost per kilogram of: i. retail potato cuts and ii. institutional potato cuts?
D. Comment on the cost differences between the two costing systems in 1 and 3. How might PS use the information in requirement 3 to make better decisions?
CASE STUDY 2 (10 marks)
William Bill is the production manager for Cheetah Motors Ltd and is responsible for preparing the production budget for the Cheetah car that the company manufactures. During the previous year, new robots were installed on the production line that significantly increased fixed factory overheads but reduced the amount of labour involved in production and the amount of material wasted due to improved efficiency.
In preparing the production budget for the next year, William decided to ‘cut himself a bit of slack’. Because the cost structure of the production line had changed so much as a result of the new robots, William decided that in the first year of their introduction he would set a production budget that was easy to meet and management would not be able to recognise this as they couldn’t compare it with previous production budgets.
William received a bonus if positive production variances were greater than 10%. By not reducing the amount of labour or materials costs in the budget by the amount that the new robots should save, William believed he was in for an easy year with a guaranteed bonus at the end.
REQUIRED:
A. Who are the stakeholders affected by William’s budget?
B. What are the ethical issues involved, if any?
C. How could the company stop its managers padding their budgets?
CASE STUDY 3 (20 marks)
Stafford Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct materials costs, direct manufacturing labour costs and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead costs). Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labour-hours per suit. For June 2015, each suit is budgeted to take 4 labour-hours. Budgeted variable manufacturing overhead cost per labour-hour is $12. The budgeted number of suits to be manufactured in June 2015 is 1 040.
Actual variable manufacturing overhead costs in June 2015 were $52 164 for 1 080 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labour-hours for June were 4 536.
Stafford Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labour-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2015 are budgeted, $62 400, and actual, $63 916.
REQUIRED:
A. Calculate the flexible-budget variance, the spending variance and the efficiency variance for variable manufacturing overhead.
B. Calculate the spending and production-volume variance for fixed manufacturing overhead.
C. Comments on the above results
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Course code and name GB519 – Measurement and Decision Making
Assessment Assignment 1 (individual) Marking Sheet
Total marks 75 marks
Weight 20%
Due date Monday of week 8 i.e. 18 January 2016 by 11:59 PM
(AEDT). Adelaide and Brisbane students please allow for time difference.
Student ID
Student name
Campus
Question Requirement Weight Marks awarded
Question 1 Traditional and Activity based costing 30 marks
Question 2 Ethics and governance 10 marks
Question 3 Calculation and discussion of variances 20 marks
Total Technical Marks 60 marks
Total Presentation Marks 15 marks
TOTAL MARKS (Raw) 75 marks
Weighted down mark – Assessable value 20 marks
Late penalty (if any)
Total assessable value 20 marks
Marker name
Date marked
Campus
Assessment Marking Rubric
Criteria HD (High Distinction) 85%-100% DN (Distinction)
75%-84% CR (Credit) 74%-65% P (Pass)
50%-64% NN (Fail)
0%-49% Score
Case studies Technical content including supporting information
60% Solutions to scenarios outlined in the case studies provide clear correct and decisive answers displaying an outstanding understanding of each of the technical issues
raised, where
applicable.
Calculations given clearly support the overall advice given in response to the scenario in an outstanding manner Solutions to scenarios outlined in the case studies provide clear correct and decisive answers where applicable displaying a good understanding of each of the technical issues raised.
Calculations given provide good support to the overall advice given in response to the scenario Solutions to scenarios outlined in the case studies provide reasonably clear correct and decisive answers where applicable displaying a reasonable understanding of each of the technical issues raised.
Calculations given provide reasonable support to the overall advice given in response to the scenario Solutions to scenarios outlined in the case studies clearly identify and address some of the technical issues providing fairly clear but not always correct and decisive answers. It displays a reasonable understanding of some of the technical issues raised
Calculations given do not always support the overall advice given in response to the scenarios Solutions to scenarios outlined in the case studies do not clearly identify and/or address the technical issues raised.
The solutions provided display a lack of understanding of some or most of the technical
issues raised.
Little or no calculations given to support the response to the scenarios
Case Studies Presentation of information including language
15% Vocabulary is professional, appropriate and extensive. Grammar, spelling and punctuation are flawless, which allows the reader to
focus on the message.
Sentences and paragraphs are well structured and clear so the reader can focus on
what is written.
Vocabulary is
comprehensive
Sentences and paragraphs are mainly well structured
Few errors in grammar, spelling and punctuation
Document
professionally presented in terms of KBS guidelines with Vocabulary is sound Some errors in grammar, spelling and punctuation
Sentences and paragraphs are generally well
structured
Document presented in terms of KBS guidelines with few exceptions
Sentences and paragraphs are readable but with
grammatical errors
Vocabulary is limited Substantial errors in grammar, spelling and punctuation
Document presented in terms of KBS guidelines
with some exceptions
In-text referencing and reference list format Meaning is unclear -
Comments are poorly
structured and unclear
Many grammatical, vocabulary and spelling errors
The main points and new technical terms are
not explained, or are
ambiguous
Document poorly presented and does not
COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969
This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B.
Document
professionally presented in terms of KBS guidelines
In-text referencing and reference list format correct
No plagiarism few exceptions In-text referencing and reference list format correct with minor errors
No plagiarism In-text referencing and reference list format correct with some errors
No plagiarism contains significant errors
No apparent incidents of plagiarism comply with KBS guidelines
In-text referencing and reference list format incorrect or omitted Evidence of plagiarism
Comments:
Assignment Mark/Grade: Total score
COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969
This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B.