Cost and Management Accounting

BUACC5933 – Cost and Management Accounting
Semester 2, 2020
Group Assignment
This assignment is worth 25% of your total mark.
Submission is due at 11:50pm on October 4th 2020.
Part A: Assignment General Information
Assignment Description / Requirements
• This is a group assignment. Each group must be completed in a group of 2 to 3
members. It is the students’ responsibility to form/ join a group using the grouping
facility in Moodle and to ensure that the group dynamics work. Please make sure that
names and ID numbers of all group members are stated on the cover sheet of your
• The assignment has three questions. The assignment requires development of a
model using a spreadsheet and a word document. Both excel spreadsheet and word
document have to be submitted to the assignment submission link. Only one
submission is required for each group.
• Students must fully reference the source(s) of all materials, even if you have reexpressed the ideas, facts or descriptions; acknowledge all direct quotations; and not
submit their work that has been researched and written by another person.Plagiarism
is heavily penalised.
• Please monitor Moodle regularly for any further instructions or announcements.
Submission Instruction:
This assignment is to be submitted online only. (You are not required to submit a hard
The completed assignment must be submitted into the allocated area, Assignment Dropbox,
on Moodle on or before the due date. Only one submission per group is required, i.e. only
one student submits on behalf of all other group members.
Please do not attempt to submit multiple versions of your assignment work as this will cause
high similarity in Turnitin report and may affect your final score.
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 Turtnitin for the purposes of detecting collusion
and/or plagiarism.
Marking Rubric, Dispute Resolution and Free Riders:
Marking Rubric is available in Moodle as a formal guidelines for the expected outcomes of
the assignment requirements below.
The marking will be done for the group as a whole not on individual basis. Each group
member is awarded the same mark.
Working in groups hasits pros and cons. It is beneficial that you can learn a lot by discussing
the issues with your fellow students. Invariably different group members bring different
skills to a project; it is up to you to make the best of it. If you find your group members are
“not pulling their weight” or there are problems with any member’s commitment, please try
to resolve those issues amongst yourselves. Open and honest communication always helps.
If you are unable to resolve these issues, you are most welcome to see your lecturer and tutor.
We will try to sort out the problemstogether. Do this assoon as possible and certainly before
the due date. In case of any dispute among the group members or if there are any free riders
identified in the group, members should report to your lecturer in writing.
Assessment Feedback:
Students who submit their work by the due date will receive their marks and feedback on
Moodle within 15 working days of the assignment submission due date.
• There is a discussion forum on Moodle titled ‘Q&A Forum for Group Assignment’.
This forum is for you to discuss any assignment-related issues. It is also an area for
students to help each other.
• To search and read academic journal articles, you are strongly recommended to use the
University library’s website: You may like to key in some
key words relating to your research interests in the QuickSearch’s search box.
• The assignment is to comply with the University’s General Guide to Writing and Study
Skills, General Guide to Referencing, and Assignment Layout and Appearance
Guidelines, via the links below: data/assets/pdf_file/0018/190044/General-Guide-to-Writingand-Study-Skills.pdf data/assets/pdf_file/0020/313328/FedUni-General-Guide-toReferencing-2016ed.pdf data/assets/pdf_file/0017/190043/General-Guide-to-Layoutand-Appearance.pdf
• Penalties for late submission: The 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 calendar day up to five days, and work that is submitted
more than five days after the due date will not be marked. Requests for extension of
time must be made with the lecturer concerned and based on Special Consideration
guidelines. For further information on Discretionary Assessment Extensions and
Special Consideration, including access to the policy, procedures or associated forms,
• 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 university
policy for more information. support-services/student-advisoryservice/misconduct/accused-of-plagiarism-or- misconduct
• Turnitin: Students are strongly recommended to check originality through Turnitin,
prior to submitting the final assessment. For more information about Turnitin and how
to check for originality, refer to the following useful links:
Part B: Assignment Requirements
Question 1
BigD Limited is a manufacturer with a large variety of products. One of the most popular
products is Product D. In many years, BigD estimates production cost of product D based on
the traditional costing method in which the manufacturing overhead costs are allocated using
direct labour cost as the single cost driver. Recently, top managers have been very concerned
about declining profitability despite a healthy increase in sales volume of Product D. The
declining profitability of Product D was not expected as the company has installed new
machine and applied new automation technology to increase production efficiency.
As a new management accountant of the firm, you are required to evaluate the costing of
Product D. Given that the company also incurs a substantial amount of manufacturing
overhead, you have undertaken an Activity-based analysis. You have determined that the
company’s total manufacturing overhead can be identified with the following activities:
Activity (activity driver) Budgeted
Total quantity
of activity
Purchasing (number of purchase orders) $1,042,200 1737
Material handling (number of setups) $1,296,000 2700
Quality control (number of batches) $259,200 1080
Processing time (number of processing
hours) $1,729,800 144150
Assembling time (number of assessbling
hours) $604,800 50400
Packaging time (number of packaging hours) $468,000 39000
Direct labour cost of the company is estimated at $1,500,000 for the coming year.
Other production/sales information regarding one of its popular products is as follows:
Estimated production volume (units) 3000
Direct material cost (per unit) $8.00
Direct labour cost (per unit) $0.60
Number of purchase orders 5
Number of batches 4
Number of Setups (per batch) 4
Processing time (hour per 100 units) 1.5
Assembling time (hour per 100 units) 0.75
Packaging time (hour per 100 units) 0.5
a. Estimate the unit cost of Product D at the estimated production volume using both the
traditional costing and the Activity-based costing (ABC) methods.
b. You are advised that selling price of Product D is based on the estimated product cost
plus a fixed margin (around 40% of the production cost per unit). Given your estimation
results in the requirement 1, is Product D over-costed or over-costed using the current costing
method? If there is a cost distortion, is it significant and what would you like to recommend
the company to do to improve the Product D’s profitability? Please keep in mind that changes
in selling price may affect the customers’ behaviour substantially.
c. ‘Conventional costing will always distort product costs.’ Discuss the validity of this
(15 + 10 + 5= 30 marks)
Question 2
You are required to prepare a proposal on the potential benefits and costs of implementing an
Activity-based costing (ABC) system to determine customer profitability for a local bank,
Kangaroo Commercial Bank Limited. The bank currently uses a traditional costing system.
The clients of Kangaroo Commercial Bank are regional residents in North Australia. The
banks considers extending its operation across some metropolitans, such Sydney and
Melbourne, to serve the retail banking and investment demands of its clients.
a. ABC system requires a setting of operational activities and activity drivers. In
identifying activity driver which mainly causes costs to be incurred at an activity level, what
important factors should be considered? Explain to management why you consider these
b. Using at least two academic research articles to support your background research,
write a minor report (in 500-600 words) to advise the management of Kangaroo Commercial
Bank on the potential benefits and costs associated with implementing an ABC system.
(20 + 20 = 40 marks)
Question 3
MaxiReturn Limited is a fintech company providing accounting solution and financial
advice based on Artificial Intelligience technology. The company is one of the first Fintech
pioneers in Australia. MaxiReturn has experienced steadily increased sales figures over the
last ten years. The company size has also increased to 100 employees currently. Most of
them are software engineers and accounting and financial professionals.
Adrian Daniels joined MaxiReturn approximately nine months ago as financial controller.
His major duties include supervision of the company’s accounting team and preparation of
the company’s financial statements. He has noticed that, in the past six months, the
company’s sales have actually dropped. This unexpected downturn has resulted in cash
shortages. In addition, MaxiReturn has had to postpone the introduction of a new accounting
software because one of its business partner, PrintSolution Limited , has not yet delivered
the instruction manuals for the new product.
Most of MaxiReturn’s printing documents are made by PrintSolution, a small printing
company owned by Darren Abbott. Darren has dedicated a major portion of his printing
capacity to MaxiReturn’s requirements, because its contracts represent approximately 50 per
cent of PrintSolution’s business. Adrian has known Darren for many years, and it was
Darren who first told Adrian that MaxiReturn needed a new financial controller.
While preparing the company’s most recent financial statements, Adrian became concerned
about its ability to maintain timely payments to its suppliers. He estimated that payments to
all suppliers, which were usually made within 45 days, were now exceeding 90 days.
Benjamin is particularly concerned about payments to PrintSolution. He knows that
MaxiReturn has recently placed a large order with PrintSoltuion for printing the new
product instruction manuals, and that PrintSoltuion will soon be placing an order with its
suppliers for the special paper needed for this new job. Adrian is considering telling Darren
about the cash problems of MaxiReturn, although he is aware that a delay in the printing of
the documentation would jeopardise his company’s new product.
In 500-600 words, describe Adrian Daniel’s ethical responsibilities in this situation. Support
and analyse your answer with any standard or guidelines you consider relevant.
(30 marks)
End of Document