Reference no: EM132527886

ACC203 Management Accounting - Elite Educational Institute

Question 1 - Case Study

Adias Pty Ltd manufactures shower towels for two local football teams in Sydney. The towels are made from fabric with a logo designed by Bayswater Logo design company. The teams are as follows:

Vida Glow: with black towels and the Vida Glow logo Champion: with blue towels and the Champion logo
Also, the blue towels are slightly larger than the black towels.

The budgeted direct-cost inputs for each towel in 2019 are as follows:

	Vida Glow shower towel	Champion shower towel
Black fabric (yard)	5	----
Blue fabric(yard)	---	6
Logo patches for each towel	1	1
Direct manufacturing labor hours	4	5

Inventory at stock for Adias in March 2019 are as follows:

	Vida Glow shower towel		Champion shower towel
	01/03/2019	31/03/2019	01/03/2019	31/03/2019
Black fabric (yard)	40	30	---	---
Blue fabric(yard)	0	---	20	20
Logo patches for each towel	50	30	65	30

Unit cost data for direct-cost inputs pertaining to February 2019 and March 2019 are as follows:

	Feb2019 (actual)	March 2019 (budgeted)
Black fabric (per yard)	$10	$11
Blue fabric(per yard)	14	13
Logo patches for Vida Glow (Per patch)	8	8
Logo for Champion (Per patch)	7	9
Manufacturing labor cost per hour	27	28

Manufacturing overhead is allocated on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for March 2019 is $17 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2019 is $17,625. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods.

Finished-goods inventory for March 2019 are as following,

	Vida Glow shower towel	Champion shower towel
Beginning inventory in units	14	20
Beginning inventory in dollars	$1960	$ 2945
Target ending inventory in units	24	30

Budgeted sales for March 2019 are 150 units of the Vida Glow towels and 205 units of the Champion shower towel. The budgeted selling prices per unit in March 2019 are $315 for the Vida Glow towels and
$385 for the Champion towels. Assume the following in your answer:

• Work-in-process inventories are negligible and ignored.
• Direct materials inventory and finished-goods inventory are costed using the FIFO method.
• Unit costs of direct materials purchased and finished goods are constant in March 2017.

You need to:
1. Prepare the following budgets for March 2019:
a. Revenues budget
b. Production budget in units
c. Direct material usage budget and direct materials purchases budget
d. Direct manufacturing labor costs budget
e. Manufacturing overhead costs budget
f. Ending inventories budget (direct materials and finished goods)
g. Cost of goods sold budget

2. Suppose Adias Pty Ltd decides to incorporate continuous improvement into its budgeting process. Describe two areas where it could incorporate continuous improvement into the budget schedules in requirement 1.

Question 2 - Variance Analysis and report

Elite Sweet Pty Ltd is a company that only sells Halloween candies in Australia. Due to the delicate shapes of candies, this company employed a great deal of high skilled employees. The following information is generated from the company in June 2019. Note the candy was sold in a 12-piece box.

Actual
Boxes produced	1000
Direct materials used in production	21 500 g
Actual direct material cost	$6020
Actual direct manufacturing labor-hours	110
Actual direct manufacturing labor cost	$1265
Standards
Purchase price of direct materials	$0.03/g
Materials per box	200 g
Wage rate	$18 per hour
Boxes per hour	10

As the company management accountant, you are required to write a report on the company's standard costing system for the month of June. In your report,
• please provided a detailed analysis on the variances for direct material and direct labor and present all the data in an appropriate diagram.
• Discuss possible causes for each of the variances that you calculated. Consider each variance separately. Also, consider possible interactions between variances.
• Recommend for the future improvements on the unfavorable variances calculated.

Question 3 - Case Study

Elite Consulting Ltd offers a range of immigration consulting services. The company's service costing system estimates the cost of each consulting job by accumulating costs of the professional labour that works on the job plus a charge for overhead.
The cost of professional labour is charged to jobs using the following three rates:

Cost per hour

Charge out rate for billing system

Visa application	$300 per hour	$630 per hour
Visa extension	$75 per hour	$350 per hour
AAT appeal	$225 per hour	$1000 per hour

The predetermined overhead rate is based on professional labour costs, which are budgeted to be $663600 for the current year. The estimated overhead costs for the current year are budgeted to be:

Management salaries	$850,000
Salaries of administration staff	$285,000
Depreciation on IT hardware and software	$240,000
Office supplies	$2,250
Telecommunications	$3,150
Insurance	$150,000
Depreciation on office fixtures and fittings	$11,250
Rent	$100,000
Electricity	$45,000
Council rates	$23,300

During June the company provided three services, which consumed the following quantities of professional labour (in hours):

Client	Visa application	Visa Extension	AAT Appeal
Alfa	50	100	10
Beta	20	150	15
Gama	60	90	25

Required:

1) Calculate the predetermined overhead rate to be used at Elite Consulting Ltd.
2) Calculate the cost of the three services.
3) Assume Elite Consulting Ltd uses a billing system with the charge out rates shown above. Calculate the client fees for each of the three services.

Question 4 - Analytical Question

Choose two large Australian organisations and access their most recent annual reports or stand-alone sustainability reports online. For each organisation, provide a summary of the nature and type of sustainability information disclosed in the report.

Attachment:- Management Accounting.rar