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Unit: ACC203 – Management Accounting Submission Date: 12th August 2018 before 23.59 pm Weighting: The assignment is worth 40% of the total unit weight. Instructions: 1. Students are required to cover all stated requirements. 2. Your answer must be both uploaded to Moodle in word file and no hard copy needed. 3. You need to support your answers with appropriate Harvard style references where necessary. 4. Only include information in your appendixes that has been directly referred to in the body of your document. 5. Include a title/cover page containing the subject title and code and the name, student id numbers. 6. Please save the document as ACC203_B1_T1_firstname_Surname_Student Number Eg:ACC203_B1_T2_John_Smith_20180000 Question 1 (10 marks) Company XYZ operates a chain of bakeries in Canberra that specialises in supplying a range of cakes to restaurants and coffee shops. Major products include lamingtons, scones, and custard tarts. Until last year, sales levels fairly stable. However, sales have been decreasing for the last 18 months. John Brown, the marketing manager of Company XYZ, is worried, and has visited major customers to find out the reasons for their decreasing sales orders. The comments of the owner of one of the most popular Canberra Coffee shops sum up the general response: ‘John, your style of cakes is oldfashioned. They are not what people want any more. Our customers prefer lighter, tastier food. They want variety and are willing to pay more for high quality innovative creations’. At a recent meeting, Brown stated that the company should expand its product offerings, or there may be no future for the company. Specifically, he believes that there are untapped markets for gourmet pies. The managing director is uncertain; he states: ‘I really don’t think that we can afford to invest time and money into fads. We sell cakes, we are not a gourmet caterer!’ Brown points out that it is these new items that customers are asking for, so it makes sense from a strategic point of view to develop these products. However, the managing director is till uncertain: ‘I have no idea whether we are going to make a profit this year, and cash is always tight. We don’t need strategies, I prefer to just sell good products’. Slick understands why the managing director is resisting his plea to be more innovative with products-the bakery has been producing the same line of cakes for 30 years. Brown also knows that there has never been any formal planning undertaken within the company, or consideration of objective or strategies. Required: 1. John Brown has asked for your help. As the new management accountant, prepare a report for the managing director outlining the advantages of implementing process to determine organisational objectives, strategies and planning systems. 2. What types of information do you think may be of interest to Brown and the managing director? Consider both financial and non-financial. Question 2 (10 marks) Cost of Goods manufactured The following data refer to Maximus Manufacturing Ltd for the current year: $ SALES REVENUE 2526000 RAW MATERIAL INVENTORY, 1 JANUARY 106800 PURCHASES OF RAW MATERIAL 877200 RAW MATERIAL INVENTORY, 31 DECEMBER 70800 DIRECT LABOUR COST INCURRED 568800 SELLING AND ADMINISTRATIVE EXPENSES 322800 INDIRECT LABOUR COST INCURRED 180000 COUNCIL RATES 108000 DEPRECIATION ON FACTORY BUILDING 150000 INCOME TAX EXPENSE 30000 INDIRECT MATERIAL USED 54000 DEPRECIATION ON FACTORY EQUIPMENT 72000 INSURANCE ON FACTORY AND EQUIPMENT 48000 ELECTRICITY FOR FACTORY 84000 WORK IN PROCESS INVENTORY, 1 JANUARY 0 WORK IN PROCESS INVENTORY. 31 DECEMBER 48000 FINISHED GOODS INVENTORY, 1 JANUARY 42000 FINISHED GOODS INVENTORY, 31 DECEMBER 48000 Required: Prepare Maximus Manufacturing’s: 1. Schedule of cost of goods manufactured 2. Schedule of cost of goods sold 3. Income statement Question 3 (10 Marks) Cost per equivalent unit; Weighted average and FIFO Question 4 (10 marks) Service industry Woodchuck Timber Pty Ltd grows, harvest and processes timber for use in the building industry. The following date relate to the company’s sawmill during June: $ Work in Process, 1 June Direct material 130 000 Conversion 360 000 Cost incurred during June Direct material 850 000 Conversion 1 380 000 The equivalent units for June were as follows: $ $ Weighted average FIFO Direct material 14 000 8500 Conversion 3480 2000 Required: 1. Calculate the cost per equivalent for both direct material and conversion during June. Use weighted average process costing. 2. Repeat requirement 1 using the FIFO method. What are the distinguishing features of service organisations? Consider the extent to which these features are present in the following industries: (a) Electricity, gas and water supply (b) Information media and telecommunication (c) Education and training