Reference no: EM132308873 , Length: word count:2000

Assessment Type: Case study report and analysis

Purpose: This assessment is designed to allow students to demonstrate their ability to analyse given financial information relating to a management accounting problem, similar to real world problems, and present their findings and conduct analysis of this information as it applies to accounting concepts. It relates to learning outcomes a, b, c and d.

Topic: Management Accounting Problem (Case Study).

Connectta Ltd manufactures furniture for computer work stations. Connectta uses a job costing system. The work in process inventory on 30 November consisted of the following jobs.

On 30 November, the company's finished goods inventory consisted of four items.

At the end of November, the balance in Connectta's materials inventory account, which includes both raw materials and purchased parts, was $668 000. Additions to and requisitions from the materials inventory during December included the following.

Connectta applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totalled $4 500 000. The company planned to use 900 000 machine hours during this period, which is the firm's estimated practical capacity. Through the first 11 months of the year, a total of 830 000 machine hours were used, and actual manufacturing overhead amounted to $4 140 000.

During December, machine hours and labour hours consisted of the following:

The jobs completed in December and the unit sales for that month are as follows:

Requirements:

1. Describe when it is appropriate for a company to use a job costing system.

2. Calculate the balance in Connectta's work in process inventory account as at 31 December.

3. Calculate the cost of the chairs in Connectta's finished goods inventory as at 31 December.

4. Actual manufacturing overhead incurred in December amounted to $252 000. Calculate Connectta's overapplied or underapplied overhead for the year.

5. Explain two alternative accounting treatments for overapplied or underapplied overhead balances when using job costing system.

6. Explain how activity-based costing could overcome the deficiencies inherent in the existing costing system.

Task details: Students are to analyse the given information, make calculations where relevant and draw relevant, supported conclusions and make justified recommendations.

Responses are to be formatted into a professional report for each part of each question, as would be expected of someone working in a modern accountant's office. The report should include: title page, executive summary, table of contents, introduction, body, conclusion and reference list.

Research requirements: Students need to support their analyses with references from the text and a minimum of six (6) suitable, reliable and academically acceptable sources. Check with your tutor if you are unsure of the validity of sources. Students seeking Credit or above grades should support their analysis with increased number of reference sources comparable to the grade they are seeking.