RECENT ASSIGNMENT

ACC 2613
Management Accounting 1
Semester 1, 2014
Assignment
Contribution to overall assessment: 25%

• This assignment has two equally weighted parts:
o Part 1 – Technical
o Part 2 – Essay ( 1500 – 1800 word)

• The assessment criteria are on p. 5.


PART 1:

George Ltd manufactures two types of coils used in electric motors. The two types are: C20 and D40. They both require plastic and metal. Information for the two products for the month of April is given in the following tables:

Input prices
Direct materials
Plastic $4 per kilogram
Metal $3 per kilogram
Direct manufacturing labour $10 per direct manufacturing labour hour


Input quantities per unit of output
C20 D40
Direct materials
Plastic 4 kilograms 6 kilograms
Metal 0.5 kilogram 1 kilogram
Direct manufacturing labour-hours (DMLH) 3 hours 5 hours
Machine-hours (MH) 10 MH 18MH


Inventory information, direct materials
Plastic Metal
Beginning inventory 250 kilograms 60 kilograms
Target ending inventory 380 kilograms 55 kilograms
Cost of beginning inventory $950 $180


The company accounts for direct materials using a FIFO cost flow assumption.

Sales and inventory information, finished goods
C20 D40
Expected sales in units 500 300
Selling price $160 $250
Target ending inventory in units 35 15
Beginning inventory in units 15 30
Beginning inventory in dollars $1500 $5580

The company uses:
• a FIFO cost flow assumption for finished goods inventory.
• an activity-based costing system and classifies overhead into three activity pools: Set-up, Processing and Inspection. Activity rates for these activities are $100 per set-up hour. $5 per machine-hour and $16 per inspection-hour, respectively.

Other information is as follows:
Cost driver information
C20 D40
Number of units per batch 20 15
Set-up time per batch 1.5 hours 1.75 hours
Inspection time per batch 0.5 hour 0.6 hour

Non-manufacturing fixed costs for March equal $36,000 of which half are salaries. Salaries are expected to increase by 5% in April. The only variable non-manufacturing cost is sales commission equal to 1% of sales revenue.

Required:
Prepare the following for April:
a. Sales budget
b. Production budget in units
c. Direct material usage budget and direct material purchases budget
d. Manufacturing overhead cost budgets for each of the three activities
e. Budgeted income statement (ignore income taxes)

PART 2:
Write a critical review of the above papers. Reading material is attached in the file.