Faculty of Business & Informatics ACCT19060 Management Accounting What is this course about? What are the expected outcomes of the course? This course builds on the concepts of managerial accounting introduced in first-year accounting. The course commences with a recap of some of the basic concepts previously covered, such as the contribution margin, CVP analysis and cost pools. For the first time, students will look at accounting in terms of the value chain. More specifically, students will look at some of the alternative accounting systems - operations costing and backflush costing. Other topics covered include absorption costing, variable costing, cost behaviour and cost allocation. This course also introduces the additional purposes of management accounting - provision of information for decision- making and the evaluation of past decisions. Budgeting concepts previously studied form the basis for extensive work in the area of variance analysis. Students will look at both the application and interpretation of variances. Course learning outcomes On successful completion of this course, you should be able to: 1. be aware of the role of the management accountant in decision-making and control 2. recognise appropriate techniques for product costing and be able to apply each of these 3. be aware of the types of decisions which management need to make with respect to efficient operations, be able to identify the relevant information for such decisions, and be able to analyse such information to indicate if and when problems exist 4. manipulate spreadsheet data to support decision analyses 5. logically analyse both programmed and non-programmed problems, be aware that the management accountant must work as an effective member of a management team assessment 6. be aware that the management accountant must work as an effective member of a management team. When is it offered? Where is it offered? How is it assessed? What textbooks do I need to obtain? 2008 Term Two For those of you taking the course on campus, the schedule will be published at http://timetabling.cqu.edu.au Brisbane, Gold Coast, Melbourne, New Zealand, Sydney Approved assessment for this course is: Examination 70% Other 30% Prescribed Elednburg L.G., Brooks A., Oliver J., Vesty G. and Wolcott S. 2008, Contemporary Management Accounting, John Wiley and Sons, Milton, Brisbane. 1
Who do I contact? Coordinator: Graham Ivers Email: g.ivers@cqu.edu.au Phone: +61 07 4923 2782 Additional contact details may be found at: http://lecturer.cqu.edu.au/lecturer.jsp?term=2082&course=acct19060 Copyright CQU, 2008 Study Schedule Information for Students for this Offering Week Begin Date Module/Topic Chapter Events and submissions 1 07 Jul 08 The role of management accounting in the organisation; cost terminology 1, 2 2 14 Jul 08 Cost accounting systems 3,4 3 21 Jul 08 Activity based costing and customer profitability analysis 5, 14 4 28 Jul 08 Variance analysis 7 5 04 Aug 08 Variance analysis 8, 14 6 11 Aug 08 Inventory costing 9 7 25 Aug 08 Cost behaviour 10 Assessment item 1 All Students Assignment 1 Due: 28 Aug 08 8 01 Sep 08 Managerial decision making and pricing decisions 11, 12 9 08 Sep 08 Cost allocation: Allocating costs of service departments 10 15 Sep 08 Cost allocation: Costing joint products and byproducts 11 22 Sep 08 Process costing: Weighted average approach and firstin-first-out approach 12 29 Sep 08 Process costing: Spoilage, scrap and reworked products 14, 15 16 17 18 2
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Other Important Dates Program Review: 6 8 October 2008 Examinations: 9 24 October 2008 Note: A recess is held during term. Please consult the CQU handbook for specific dates and other information at: http://handbook.cqu.edu.au Additional contact details A directory of assistance containing important telephone numbers and other information for both oncampus and off-campus students will be provided on the web, before term starts, at: http://fbi.cqu.edu.au/fcwviewer/view.do?page=7 If you are unable to access the web for this information please telephone the relevant School Administration Officer by telephone on (07) 4930 9637, (07) 4930 9866, (07) 4923 2788 or (07) 4930 6828 and a copy will be provided. Course presentation Web mail The university allocates every student an individual email address, the format of which is studentnumber@student.cqu.edu.au (e.g. S00011123@student.cqu.edu.au). This is the official email address that the university will use for all email correspondence. Student emails can be accessed through http://webmail.cqu.edu.au or http://mycqu.cqu.edu.au. Students are expected to check their official email address on a frequent and consistent basis (at least once weekly). Students are encouraged to review the new university policy relating to email communication at http://policy.cqu.edu.au/policy/policy.jsp?policyid=642 which has been introduced to ensure all course and program updates are received. ALL students The presentation for all students, in addition to this Course Profile, comprises: Study Guide Course website is required. This is provided using the Learning Management System which can be accessed through the MyCQU Student Portal: http://mycqu.cqu.edu.au/portal/dt. If you have difficulty logging in, please contact Helpdesk on (07) 4930 9233. Regular student access to email is required for this course Regular student access to the Internet is required for this course. Students are expected to follow a self-directed study schedule which meets the required deadlines. 4
Required resources Guide for Students Students should refer to the referencing style set out in Chapter 2 of the Faculty of Business and Informatics, Guide for Students, http://fbi.cqu.edu.au/fcwviewer/view.do?page=492 Course website You should check the course website weekly as additional materials will be made available throughout the term. The materials available will include: links to useful websites, lecture slides, practice multiple choice questions, and discussion lists and email. The discussion lists allow students to openly discuss the course contents with each other. Please use the discussion list to communicate with other students enrolled in the course. The Course Coordinator will contribute to the discussion list as required throughout the term. Computer (including software) requirements You must have access to the following computer resources: Regular student access to a computer is required with access to word processing, spreadsheets, email and the World Wide Web. Recommended references Hansen D, Mowen M & Guan L 2006, Cost management accounting & control, 6th edn, Thomson Learning, Singapore. Bhimani, A, Horngren, C, Datar, S & Foster, G 2008, Management and cost accounting, 4th edn, Prentice Hall, London. Garrison, R, Noreen, E & Brewer P 2006, Managerial accounting, 11th edn, McGraw Hill, Boston. Horngren, C, Datar, S & Foster G 2006, Cost accounting a managerial emphasis, 12th edn, Prentice Hall, Upper Saddle River, NJ. Langfield-Smith, K, Thorne, H & Hilton, RW 2006, Management accounting: information for managing and creating value, 4th edn, McGraw Hill, Sydney. Mowen M et al, 2007, Management accounting, Thompson, Australia. Assessment Continuous assessment/examination 5
To pass this course you must complete all the required assessment items outline in this Course Profile, and you must obtain an overall mark of 50% or higher for the course. Assignment submission For Off-campus students, hard copy, signed assignments for this course should be submitted using the Division of Teaching and Learning Services assignment submission system. On-campus students should submit hard copy, signed assignments through their particular campus submission system. Note on assignment extensions If you request an extension for your final assignment, there is no guarantee that you will receive your assignment back before the final examination. Policies and procedures for assessment Students must familiarise themselves with the following policies and procedures: Assessment and examination policy and procedures Assignment preparation and presentation Referencing style Assignment submission Applying for extensions Assignment grading Plagiarism policy Plagiarism detailed explanation University Assessment of Coursework Policy http://policy.cqu.edu.au Chapter 1 Guide for Students http://fbi.cqu.edu.au/fcwviewer/view.do?page=492 Detailed information: Chapter 2 Guide for Students http://fbi.cqu.edu.au/fcwviewer/view.do?page=492 Chapter 1 Guide for Students http://fbi.cqu.edu.au/fcwviewer/view.do?page=492 http://fbi.cqu.edu.au/fcwviewer/view.do?page=7 http://policy.cqu.edu.au/policy/policy_file.do?policyid=437 http://policy.cqu.edu.au/policy/policy.jsp?policyid=198 Chapter 2 Guide for Students http://fbi.cqu.edu.au/fcwviewer/view.do?page=492 6
Assessment details for ALL students Assessment item 1 Assignment Due date: Thursday, 28 August 2008 (Week 7) ASSESSMENT Weighting: 30% 1 This assessment item is for ACCT19060 Term 2, 2008 Objectives This assessment item relates to the course learning outcomes 2, 3 & 4 as stated on Page 1. Details of the Assignment In this assignment there are two parts, each with a number of questions. The first relates to Good Tasting Coffee Ltd and the second to Top Jobs Ltd. The assignment requires for a significant part of the work to be done in a spreadsheet. I have not nominated any particular vendor or any particular version. The choice is up to you, but you must ensure that you do the work where required in a spreadsheet. Any student who does not do the work required in a spreadsheet will be deemed to have attempted to have circumvented the assignment and therefore will receive no marks for the assignment. I reserve the right to require you to show the spreadsheet to your lecturer and to then explain how it works. As a suggestion you could consider doing the assignment by hand so you get to know what you are doing from an accounting perspective. Then you can go ahead and incorporate that into the spreadsheet abiding by the requirements of the assignment. If you are unsure of the spreadsheet functions then there are help facilities within most spreadsheet software and there are also texts in most libraries. All calculation work for this assignment is to be done using a spreadsheet. In the spreadsheet, you are to use three sheets: Input Processing, and Output. All data that is to be used in the calculations is to be entered into the Input sheet. All calculations are to be performed in the Processing sheet. Note that all calculated values required in the Processing sheet must come from the Input sheet. In the Processing sheet, the result for any division must be held at four decimal places. The Output sheet is to allow you to choose the appropriate format in which to present your answers to the assignment. All values in the Output sheet must come from the Processing sheet. At the top of each page of the Input, Processing or Output sheet you are to show your student number, the name of the sheet and the name of the firm. 7
You are to design the spreadsheet so that the only numeric values that can be altered by staff are located in the Input sheet. All textual values must not be able to be altered. Part B of the assignment must start on a new page. For each sheet, you are to print a report from the spreadsheet that shows the rows and columns together with any formula that has been used in each cell of the sheet. You are to print a standard report of each sheet showing the value of all cells. In a word document, you are to explain the layout of the spreadsheet so that staff will be able to read and then use the spreadsheet. In a separate part of the word document, explain how you have secured the spreadsheet so that it can not easily be altered by staff. 8
Part A Good Tasting Coffee Ltd In recent years coffee has become very popular in Australia. One company trying to cash in on that market is Good Tasting Coffee Ltd. It buys coffee beans from around the world and roasts, blends, and packages them for resale. Whilst the major cost is the cost of the beans, there is a substantial cost overhead associated mainly with the automated roasting and packaging process. The company doe not use much direct labour. Understandably some coffees are very popular and sell in large volumes. Some of the new blends only sell in very low volumes. Good Tasting Coffee wants to make lots of sales so it prices its coffee at budgeted cost, including absorbed overhead, plus a mark up on cost of 30%. In 2008 the budget included manufacturing overhead of $4,500,000. This was allocated on the basis of each product s direct labour cost. The budgeted direct labour cost for 2008 was $900,000. The budgeted direct costs for one kilogram bags of two of the company s products are: Mauna Loa Malaysian Direct materials $6.30 $4.80 Direct labour.45.45 The Good Tasting Coffee controller does not think that the existing simple costing system provides the correct picture of the situation. She thinks activity based costing would be preferable, so she did an analysis of the situation and came up with the following: Activity Cost Driver Cost Driver Rate Purchasing Purchase orders $750 Materials handling Loads moved 600 Quality control Batches 360 Roasting Roasting Hours 15 Blending Blending hours 15 Packaging Packaging hours 15 She also looked at the projected 2008 production for both types of coffee. Mauna Loa Malaysian Expected sales 150,000 kg 3,000 kg Purchase orders 6 6 Batches 10 6 Loads moved 45 18 Roasting hours 1,500 30 Blending hours 750 15 Packaging hours 150 3 (Assume no beginning or ending inventory for either of the coffees.) 9
Question 1 (a) Under Good Tasting Coffee s simple costing system, determine the company s 2008 budgeted manufacturing overhead rate using the direct labour cost as the single allocation base. (b) Under Good Tasting Coffee s simple costing system, determine the company s 2008 budgeted costs and selling price of 1 kg Mauna Loa and also 1 kg of Malaysian coffee. (c) Use the controller s activity based approach to estimate the 2008 budget cost of 1 kg of (a) Mauna coffee and also (b) Malaysian coffee. In doing this allocate all costs to 150,000 kgs of Mauna Loa and the 3,000 kgs of Malaysian. (d) Review the calculations performed under the simple costing system and the ABC costing system. What does it reveal in regard to pricing and product mix strategy? 10
Part B Top Jobs Ltd On April 1, Top Jobs Ltd had work in process consisting of three jobs as follows: Job 60 Job 61 Job 62 Direct materials $3,200 $4,000 $1,700 Direct labour $3,800 $2,600 $1,800 Applied overhead $2,850 $1,950 $1,350 During April, four more jobs were started. Costs were added to the seven jobs during April as follows: Direct Materials Direct Labour Job 60 Job 61 Job 62 Job 63 Job 64 Job 65 Job 66 $1,600 $2,470 $7,100 $10,000 $600 $1,120 $160 $2,000 $2,800 $4,400 $3,600 $1,200 $1,760 $344 Before the end of April, Jobs 60, 62, 63 and 65 were fully completed. On 30 April, Jobs 62 and 65 were sold. Question 2 (a) (b) Calculate the predetermined overhead rate based on direct labour cost. Calculate the ending balance for each Job as of 30 April. (c) Calculate the ending Work in Process Inventory as of April 30. (d) (e) Calculate the Cost of Goods sold for April. Assuming Top Job Ltd prices its jobs at cost plus 25 percent, calculate the sales revenue of Top Job Ltd for the month of April. Top Job Ltd continued Assume that the marketing and administrative expenses for April were $4,800. Question 3 Prepare an income statement for Top Jobs Ltd for April. 11
Marking Criteria Sheet Spreadsheet Marks available Design of spreadsheet 15 Report with formulas 5 Report with calculated values 5 Explanation of Spreadsheet Layout 15 Security 10 Part A Good Tasting Coffee Question 1 Q1 (a) The budgeted manufacturing overhead rate. 5 Q1 (b) The budgeted costs of 1 kg Mauna Loa coffee. 15 Q1 (b) The budgeted costs of 1 kg of Malaysian coffee. 15 Q1 (b)the selling price of 1 kg Mauna Lo coffee 5 Q1 (b)the selling price of 1 kg of Malaysian coffee 5 Q1 (c) The activity based approach to estimate the 2008 budget cost of 1 kg of Mauna coffee Q1 (c) The activity based approach to estimate the 2008 budget cost of 1 kg of Malaysian coffee Q1 (d) Comparison of the simple and ABC. 20 30 30 Marks awarded Part B Top Jobs Ltd - Question 2 Q2 (a) Predetermined overhead rate 5 Q2 (b) Ending balance of each jobs 70 Q2 (c) Ending balance of Work in Process 10 Q2 (d) Cost of good sold 20 Q2 (e) Sales Revenue 5 Part B Top Jobs Ltd Question 3 Income Statement 15 Assignment Total 300 Assignment Total out of 30 (divide by 10) 30 Comments: 12
Examination Due date: During examination period (9-24 October) Weighting: 70% Length: Duration 3 hours Examination conditions The examination is closed book. Closed-book means you are not permitted to take any materials into the examination room with you unless specified. You may take a non-electronic, concise, direct translation-only dictionary into the examination room in accordance with CQU policy. Dictionary must not contain any notes or comments. You may take a non-programmable, no text retrieval, silent only calculator into the examination room in accordance with CQU policy. Perusal time: 15 minutes. View the University s policy on examination in the Assessment of Coursework Policy at: http://policy.cqu.edu.au View important examination information at: http://handbook.cqu.edu.au/handbook/information.jsp?id=126 The examination timetables will be made available later in the term. View the examination timetable at: http://www.cqu.edu.au/studinfo/admin/timetabling/index.htm Further information on the examination will be available on your course website later in the term and within your revision lecture. Students should also note that if Supplementary Assessment is granted, this will in many cases take the form of a Supplementary Examination as is required for professional body accreditations. NOTE: The examination information provided in this Course Profile also relates to Deferred Exams. No separate advice will be provided in the case of a deferred Assessment. 13