HA2011 Management Accounting-calculate the effect on profit

 

This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.
    
There are 6 questions in the Tutorial Assignment. Once the assignment available, you will have 24 hours to finish and submit it. Each week students were provided with similar case studies and situational questions of varying degrees of difficulty. 

Question 1 

a) Cite and discuss two (2) types of information a management accountant can provide to assist management in a business that considers product quality to be of key strategic importance.

b) Interpret and explain what is meant by the phrase “different costs for different purposes.

Question 2 

The State Library of South Australia has incurred the following costs in its Loans Department over the last 6 months of Financial Year 2020-2021.  

Month    Number of Loans    Total Cost
Jan    4900    $ 76,200.00
Feb    5300    $ 87,000.00
Mar    6200    $ 90,000.00
Apr    4800    $ 78,100.00
May     5050    $ 80,700.00
Jun    3700    $ 75,000.00

 

a)  Estimate the monthly fixed cost and the variable cost per loan (up to 2 decimal places) using the high-low method. 
b)  State the cost equation for State Library of South Australia.  
c)  Estimate the cost for Dec if the forecasted loans is 4850.  
d)  Cite the advantage(s) of using the High Low Method. 
e)  Identify possible drawback(s) of using the High Low Method. 

Question 3  

a)  Ali and Johan are best friends who used their savings and all the monetary gifts they received during graduation to start their own business manufacturing different kinds of facemasks, given the high demand. “We don’t need a product costing system.  We are a small manufacturer with a just in time approach so our inventories are minimal. We have no influence over the product price; whatever the big manufacturers do, we follow. Our accountant only comes in during Fridays and she is already far too busy to bother with a product costing system.”  Is this a reasonable attitude?  Explain why.

b)  For each type of service organisation (Professional Service Firms, Service Shops, and Mass Service Entities): 
i)  Identify the key features and give an example of a service company most likely to fall in each category. 
ii) Describe the type of costing system that is most appropriate for each type of service organisation.

Question 4 

 

Hunter Cellars produces and sells bottles of wine. Ignoring income taxes, calculate the following:

1. What is Hunter Cellars’ break-even point in units?

2. What is the company’s break-even point in sales dollars?

3. If Hunter Cellars has a target profit of $570,000.00 how many bottles of wine would it have to sell? 

4. Calculate the company’s safety margin and interpret what that number means. 

 

Question 5

Harry’s Pies currently makes the crust in-house for the various pies it sells at its stores. It uses 60,000 crusts annually in the production of its bestselling pies.

A nearby bakery has offered to sell the crusts for $0.85 each to Harry’s Pies. If the crusts are purchased, 30% of the fixed overhead could be avoided. 

a) Calculate the relevant costs for Harry’s Pies if it continues to make its own pies.

b) Calculate the relevant costs for Harry’s Pies if it purchases from the nearby bakery. 

c) If Harry’s Pies accepts the offer, calculate the effect on profit.

d)  Should Harry’s Pies accept or reject the bakery’s offer? 

Question 6

Determine the standard material cost of a 10 litre container of the new paint for Boysen Industries.