Accounts 18

incredulity One(25 mark) establish on mental faculty 7 Budgeting Retail fall outlets buy snowboards from Slopes Ltd. , by dint ofout the year. However, in anticipation of late summer and early crepuscule purchases, outlets ramp up inventories from January through May. Outlets be billed when boards be ordered. Invoices atomic number 18 payable within 60 years. From past experience, Slopes accountant projects 20% of invoices are paid in the calendar calendar month invoiced, 50% are paid in the following month, and 30% of invoices are paid two months after the month of invoice. The intermediate selling terms per snowboard is $450.To meet demand, Slopes increases production from December through action, beca social function the snowboards are produced a month prior to their projected sale. cultivate materials are purchased in the month of production and are paid for during the following month (terms are payment in full within 30 twenty-four arcminute periods of the in voice date). Direct manufacturing labour and manufacturing overhead are paid monthly. inconsistent manufacturing overhead is incurred at the rate of $7 per direct manufacturing labour-hour. variable quantity merchandise be are driven by the number of sales visits. However, at that place are no sales visits during the months studied.Slopes, also incurred indomitable manufacturing overhead be of $5,500 per month and fixed non-manufacturing overhead approach of $2,500 per month. Projected gross sales January80 unitsApril carbon units February120 unitsMay60 units March two hundred unitsJune40 units Direct Materials and Direct Manufacturing Labour Utilisation and Cost Unit per BoardPrice per UnitUnit Wood5$30Board feet Fiberglass6 5Yard Direct manufacturing labour5 25Hour The reservoir cash balance for March, 2010, is $10,000. On June 1, 2009 Slopes had a cash crunch and borrowed $30,000 on a 6% yearly observation with interest payable monthly.The note is due June 1, 2010. Usi ng the culture provided, you ordain need to determine whether Slopes pull up stakes be in a position to pay off this short debt on June 1, 2010. Required a. Prepare a cash budget for the months of March through May 2010. Show controling schedules for the calculation of receivable and payables. b. forget Slopes be in a position to pay off the $30,000 virtuoso-year note that is due on June 1, 2010? If not, what actions would you recommend to Slopes management? c. Suppose Slopes is interest in maintaining a minimum cash balance of $10,000.Will the keep company be able to maintain such a balance during altogether three months analysed? If not, suggest a suitable cash management strategy. fall guy Criteria Application of budgeting to headway 1a 18 marks Application of budgeting to promontory 1b 3 marks Application of budgeting to question 1c 4 marks Question Two(25 marks) Based on faculty 8 CVP Analysis invest Inc manufactures and sells baby cots. For its 2011 budget, goo dwill Inc. estimated the following Selling price $600 Net income after tax $650 000 Variable equal per cot $300 Income tax rate 30% one-year fixed be $150 000 Unfortunately sales were not group meeting expectations. Only 525 units had been sold in the first four months of the year at the established price and cost structure. The net income projection for 2011 would not be r apieceed unless some action is taken. A management committee presented the following inversely exclusive alternatives to the CEO. (a) Reduce the selling price by $60. The sales governance forecasts that at this signifi dissolvetly bring down price, 4050 units can be sold during the oddment of the year. integrality fixed costs and variable cost per unit will stay as budgeted. b) Lower variable cost per unit by $15 through the use of less expensive direct materials and more or less modified manufacturing techniques. The selling price will also be reduced by $45, and sales of 3300 units are expected for th e remainder of the year. (c) Reduce fixed costs by $15 000 and lower the selling price by 5%. Variable cost per unit will be unchanged. Sales of 3000 units are expected for the remainder of the year. Required (a) Determine the number of units that Grace Inc must sell (a) to break even and (b) to achieve its income objective employ the current price and cost structure. b) Determine which alternative Grace Inc should subscribe to maximise net income. Show your calculations. Marking Criteria Application of CVP to question 2a 9 marks Application and interpretation of CVP to question 2b 16 marks Question Three Based on module 8 Costing in an entity(25 marks) Alexs Fine Art Studio is a company oblation art services. The owner Alex Touch has been contacted by the manager of Ruthven Cars Company who complained somewhat the price charged for some art work. On the same day Alex was also contacted by the manager of Books Galore who was delighted with the work and the price charged.Alex u ses a cost-based approach to pricing (billing) each traffic. Currently it uses a hit direct-cost category (professional labour hours) and a iodin confirmative-cost pool (general support). Indirect costs are allocated to gambols on the basis of professional labour-hours per job. Professional labour costs at Alexs Fine Art Studio are $70 an hour. Indirect costs are allocated to jobs at $105 an hour. Total collateral costs in the most recent period were $21 000. The job files show the following Professional Labour Ruthven Cars Company 104 hours Books Galore 96 hours Assume these two jobs were the only jobs completed in this period. ) Required (a) compute the costs of the Ruthven Cars Company and Books Galore jobs using Alexs existing job- be establishment. (b) Alex asks his assistant to collect details on those costs in the $21 000 indirect cost pool that can be traced to each individual job. afterwards analysis, Alex is able to reclassify $14 000 of the $21 000 as direct cos ts Other Direct Costs Ruthven Cars Company Books Galore Research support labour $1600 $3400 Computer time 500 1300 Travel and allowances 600 4400Telephone/faxes 200 1000 Photocopying 250 750 Total $3150 $10 850 Recalculate for Alex the costs of each job using the six direct-cost pools and a single indirect cost pool. The single indirect cost pool would kick in $7000 of costs and would be allocated to each job using the professional-labour hours base. (c) Alexs Fine Art Studio has two classifications of professional staff artists and apprentices. Alex asks her assistant to examine the relative use of artists and apprentices on the recent Ruthven Cars Company and Books Galore jobs.The Ruthven Car Company job apply 24 artist-hours and 80 apprentice-hours. The Books Galore job used 56 artist-hours and 40 apprentice-hours. Alex is curious as to how each job would have been costed if using abstract direct cost rates for artists and apprentices and using separate indirect cost pools for artists and apprentices. For direct costs, the cost per artist hour is $100 and per apprentice hour is $50. For indirect costs, from the total indirect cost pool of $7000, $4600 is ascribable to the activities of artists, and $2400 is attributable to the activities of apprentices.You are mandatory to satisfy Alexs curiosity by reason the costs for each job under this more refined costing system. (d) Complete a comparison of costing under the existing system and that of the more refined system. Which is better and why? Marking Criteria Application of cost tryst principles to question 3a 6 marks Application of cost allocation principles to question 3b 8 marks Application of cost allocation principles to question 3c 8 marks Application of cost allocation principles to question 3d 3 marks Question Four(25 marks) Based on module 10 Performance managementPart A Managers should be rewarded only on the basis of their accomplishment measures, They should be paid no salary. Do you equ alize? Explain. Part B Bobs Cellular Phone Company uses ROI to measure divisional performance. Annual ROI calculations for each division have traditionally employed the finale amount of invested capital along with annual operating income and net revenue. The Dupont regularity is generally used. The companys Phone Accessories Division had the following results for the last two years 2010 ROI = ($2,000,000/$20,000,000) ? ($20,000,000/$10,000,000) = 0. 0 2011 ROI = ($2,400,000/$25,000,000) ? ($25,000,000/$15,000,000) = 0. 16 Corporate management was disappointed in the performance of the division for 2011, since it had made an additional investment in the division that was budgeted for a 23% ROI. Required a. Discuss some factors that may have contributed to the reducing in ROI for 2011. b. Would there have been any substantial difference if average capital had been used? Marking Criteria Discussion and explanation regarding the extent of use of performance measures. 10 marks Discuss ion of performance as demand in Part B a. 10 marksExplanation required in Part B b. 5 marks General Requirements 1. abandoned the nature of the questions there is not specified work limit. However, you are boost to present your work in a clear and concise manner. You should check out that you answer the question fully while giving enough information to ensure that the marker can ascertain your objective in your calculations to modify part marks to be given if necessary. 2. Place references for all questions at the end of the appointee not at the end of each question. 3. You can use dot points or tables to help present your answer if you wish. . denomination extensions will be granted if needed due to medical, work or personal reasons. However, extensions will not be granted for more than one week. This is because I cannot post back marked concessions and solutions until all assignments have been received. It is partial on other students to delay the return of their marked a ssignments unduly. 5. You should note that the assignment is based on modules 7-10. I would recommend completing the relevant question each week as it relates to each module. This approach would mean that the assignment would be completed by the due date.Therefore reasons for needing an extension should be extreme. (Sources withheld Questions for this assignment are taken from other sources. Details of this source have been withheld for assessment purposes. This material is reproduced under the provisions of the Section 200 (1) (b) of the copyright Amendment Act 1980. ) ACC5502 Accounting for Managers Assignment Two Description Marks out of Wtg(%) Due date Based on modules 710 100 20% 2012 1. Question Criteria MarksAvailable Question One Application and understanding of module 7 25 marks Application of budgeting to 1a) 19 marks1b) 3 marks1c) 3 marks Question Two Application and understanding of module 9 25 marks Application of CVP principles to a practical situation. 2a) 10 marks2b) 15 marks Question Three Application and understanding of module 10 Use of costing principles3a) 6 marks3b) 8 marks3c) 8 marks3d) 3 marks 25 marks Question Four Application and understanding of module 11 Discussion and application of performance measurementPart A 10 marksPart B a) 10 marksPart B b) 5 marks 25 marks Total 100 marks