MAA262 Management Accounting

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MAA262 Management Accounting

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MAA262 Management Accounting

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Course Code: MAA262
University: Deakin University

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Country: Australia

Question:

Weight ( total mark for the unit): This assignment is marked out of 100 and is worth 15% of your final grade. The final examination is the only hurdle requirement for this unit. If you choose not to submit this assignment, you will score zero for this assignment.
What will early feedback student get, how and when? Feedback will be provided via CloudDeakin during the study period (after week 11). Referencing style: Use the Harvard style of referencing. More information regarding referencing styles at
Researching for your assignment: There is no such a thing as a minimum or maximum amount of references to be used in this assignment, and references should be used only when required. If a question requires research for answering, check the guidelines available on the academic skills study support page:

ULO3: Prepare and explain alternate product costing.
ULO6: Demonstrate a student-oriented approach to learning.
GLO2: Communication.
GLO5: Problem-solving.

Queries: Please peruse the discussion forum as you may find the information you are looking for. If you are unable to find the information regarding the individual assignment you are looking for, please contact the teaching team preferably using the discussion forum on CloudDeakin or via email.
Q2.1 – Considering four cost pool activities (operating the BBQ, inflating balloons, cashier, and greeting customers) prepare a table with labour cost per friend and total labour costs (use Exhibit 7-6 as a model).
Q2.2 – Calculate the activity rate for each of the labour cost pool activities (use Exhibit 7-7 as a model).
Q2.3 – Which of the four cost pool activities is most expensive and why?
Q2.4 – Prepare an activity-based costing product margin for the sales of barbecues and balloons (use Exhibit 7-11 as a model). For the sake of simplicity, consider the manufacturing overhead and sales and administrative tasks as untraceable expenses and do not include them.
After crunching all the numbers the time has come to divide the enterprise’s income between the four friends. Paul argued he and John should split between themselves the income because they did all the hard work while Ringo and George spent most of their time counting money or talking to people. Ringo replied by arguing that selling balloons was the worst idea ever.
Q4.1 – Explain whether Paul is correct or not in his statement about his friends not contributing to the enterprise. Justify your answer.
Q4.2 – Explain whether Ringo is correct or not in his statement about selling balloons being a bad idea. Justify your answer.

Answer:

Part 1
Question 1.1
The requisite calculations for income statement are furnished below.
Net sales
Barbeque selling price = $2.00 per unit
Number of barbeque sold = 2,000
Balloon selling price =$1.00 per unit
Number of balloon sold =1,000
Thus,
Net sales
Cost of goods sold
Barbeque cost = $0.2 per unit
Number of barbeque sold = 2,000
Balloon cost =$0.05 per unit
Number of balloon sold =1,000
Each partner will get an amount = $400
Number of partners (friends) =4
Thus,
Direct material cost
Further,
Direct labour cost
The other expenses such as expense incurred in the production process will be paid by the friends. The sum of expenses will be manufacturing overhead.
Leasing a BBQ = $200
Balloon pump = $50
Manufacturing overhead = $50 +$200 =$250
Selling and Administrative Expenses
There are two expenses related to the sales and administrative tasks that are highlighted below.
Leasing a gazebo = $50
Getting permit for setting up shop = $250
Income Statement
Part 
Question 2.1
Four cost pool activities

Operating BBQ
Inflating balloons
Cashier
Greeting customers

The relevant data information is shown below
The requisite table for representing the four cost pool activities is highlighted below (Drury, 2016).
‘I’ cell in the table represent the value 400 which is the labour cost. It indicates that the amount received by every friend is $400.  Therefore, the table represents labour cost for per pool activity. The conclusion can be drawn that operating cost for BBQ is $320 and the cost for inflating balloons is $480.
Question 2.2
Activity rate for each labour cost pool activities is shown below.
Detailed computation tables
Question 2.3
It can be seen from the above shown activity rate table that highest activity rate has been observed for ‘inflating balloons’ with a value of $0.48 per balloon. The reason behind the high value of inflating balloon is due to the significant high amount of energy and time which is essential aspect of this task. Further, it is also evident from the fact that time and energy requirement in other tasks is comparatively lesser which amounts to low activity rate. For example, time and energy required to greet a customer or working a cashier is less time and energy consuming and hence, inflating balloon would be most expensive activity.
Question 2.4
Activity based costing product margin for the sale of barbeque and balloon is shown blow.
The assigning of costs above is in accordance with the product for which they are incurred. However, in case of common costs such as cashier, the costs are allocated between the two products in accordance with the number of items sold which is activity driver (Bhimani et. al., 2016).
Part 3
Question 3.1
Activity based costing product margin (Barbaque)
The cost with respect to leasing BBQ would purely be assigned to Barbeque only. However, the common expenses such as administrative and sale expenses would be assigned to both the products which are barbeque and balloon (Heisinger, 2014).
Question 3.2
Activity based costing product margin (Balloons)
The cost with respect to balloon pump would purely be assigned to balloon only. However, the common expenses such as administrative and sale expenses would be assigned to both the products which are barbeque and balloon.
Part 4
Question 4.1
The argument of Paul with regards to divide the enterprise income between him and John is not correct as it cannot be concluded that all the hard work has been done by him and John only. However, it can be said that John and Paul have played an imperative role in the operation process of barbeque and inflating balloon but this aspect does not state that other work conducted by Ringo and George is not essential for running the business. Further, customer service, collecting payments and maintaining the records of the transactions are equally important tasks. It is evident from the fact that without these services, business could not be sustained and would not make significant proceeds from sale. Further, Paul was involved in inflating balloon work most of his time but the profit contribution from sale of balloon is not significant. Further, Ringo and George were associated in cashier work and customer inviting process which definitely contributed in the profit derived from sale of barbeque. Therefore, the claim of Paul is totally wrong and unfair and therefore, the profit derived from barbeque and balloon is from the contribution of all friends and not from an isolated work of an individual.
Question 4.2
It can be said that idea of selling balloon is not a good idea. The evidence of this aspect can be seen from the table highlighted in Q 3(2). The table represents that profit derived from balloon sale was merely $3 which is very insignificant as compared to the profit derived from sale of barbeque which is about $2,400.  Hence, it would have been beneficial if they would have selected some different product which requires low costs, time and energy and would result in high profit margin. Further, it can also be seen that selling of balloon did not make any loss which is a positive factor as selection of any wrong product that would result in losses would be a serious issue (Petty et. al., 2015). Therefore, it can be said that due to insignificant profit derived from balloon, it is not a good idea but it is not a worst idea considering that it does not cause losses.
References
Bhimani, A., Horngren, C.T., Datar, S.M. and Foster, G. (2016), Management and Cost Accounting 4th ed. Harlow: Prentice Hall/Financial Times
Drury, C. (2016) Cost and Management Accounting: An Introduction. 6th ed. New York: Cengage Learning
Heisinger, K.(2014) Essentials of Managerial Accounting 4th ed. London: Cengage Learning.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin J.D. and Burrow, M. (2015), Financial Management: Principles and Applications 6th ed. Sydney: Pearson Australia

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