ACC301 sem1

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Faculty of Business, Economics & Accounting

Department of Accounting and Finance

HELP Bachelor of Business (Hons) Year 3

INTERNAL SUBJECT DETAILS

Semester 1, 2016

Subject: ACC 301

Management Accounting 3

Subject Lecturer/Tutor: Mr SelvanadanTelephone: 603- 2716 2000Fax: 603- 2093 5311Email: [email protected]

Consultation: By appointment
mailto:[email protected]:[email protected]:[email protected]

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PRE-REQUISITE (S)

QBM101 BUSINESS STATISTICS &ACC201 MANAGEMENT ACCOUNTING 2

SYNOPSIS

The subject is concerned with the current issues in management accounting. We willbuild upon topics studied in ACC103 Management Accounting 1 and ACC201Management Accounting 2 by introducing more advance and detail topics in theframework of management accounting. The subject provides exposure to techniques andmethods used in management accounting application. We focus on evaluating existingcompetitive strategies, developing new strategies, and monitoring and assessing progresstowards chosen strategies. The subject seeks to assist those involved in organizationaldecision making by providing models which can be used in understanding, structuringand resolving problems.

OBJECTIVES

Upon completion of this subject, students should be able to:

explain how management accounting helps organizations meet their strategic goals;

design financial models to match strategic and operation decisions;

explain and estimate the relationship between costs and cost drivers;

understand the issues of transfer pricing and divisional performance evaluation;

analyze strategic problems and access factors involved in decision making generally,and strategic managerial decision making in particular;

demonstrate understanding of the process of strategic analysis and skill in usingrelevant techniques to analyze firm and competitor strategies;

analyze customer-related activities and profitability of customers and products;

use various financial and non-financial performance measures to evaluate

performance,

apply expectancy and agency approaches to motivation and evaluate thealternative features of compensation plan;

use linear programming to model decisions about the use of multiple scarceresources;

explain the importance of balanced scorecard for communication, motivationand evaluation, and discuss the internationalization of management accounting,including the nature and implications of global competitiveness, management

accounting in multinational organizations, and cultural impact of managementaccounting.

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TOPICS

TOPIC 1: Introduction: The management accounting framework

Development of Management Accounting

The Changing Business Environment

Primary Function Management Accounting System

Contemporary Management Accounting Practices

Total Quality Management, BPR and JIT Systems

Life Cycle Costing, Target Costing and Kaizen Costing

Activity Based Management and the Value Chain

Environmental Cost Management

Ethics in Management Accounting

TOPIC 2: Current Issues in Management Accounting Different Types of Controls

Harmful Side-effects of Controls

Measurement and Reward Process with imperfect measures

Advantages and Disadvantages of Different Types of Controls

Management Control Systems

Nature of Management Accounting Control Systems

The Controllability Principle

Accounting Information for Performance Evaluation

TOPIC 3: Strategic Management Accounting

What is Strategic Management Accounting?

Accounting in Relation to Strategic Positioning

Gaining Competitive Advantage through Value Chain

The Balance Scorecard

Benefits and Criticisms of Balance Scorecard

TOPIC 4: Capital Investment Decision

Capital Budgeting and its process

Cost of Capital, Risk and Return

Appraisal Techniques

Comparison of NPV and IRR

Capital Investment Decisions

Capital Rationing and ranking conflicts

Taxation and Investment Decisions

Dealing with Inflation

Impact of Inflation on Interest rates and Discount rates

Investment Appraisal and Inflation

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Risk Adjusted Discount Rates and Weighted Average Cost of Capital

Decision Trees for multi-stage decision problems

Sensitivity Analysis in decision modeling

Due Diligence Investigation and Ethical Issues

TOPIC 5: Product profitability and product mix strategies

Limiting Factor

More than one limiting factor

Linear Programming

Assumptions underlying Linear Programming

Graphical method and the mechanics of Simplex solutions

Shadow prices and its use

TOPIC 6: Managing customer profitability

Customer/Channel Profitability Analysis

Customer Revenues and Costs

Customer Cost Hierarchy

Factors in evaluating Customer Profitability such as customers and distribution

channels

Customer Profitability Analysis Illustrated

Sales VariancesMix, Quantity and Volume

Market Share and Market Size Variances

TOPIC 7: Strategy, Balance Scorecard and Strategic Profitability Analysis

What is Strategy?

Five Aspects of Industry Analysis

Basic Business Strategies

Implementation of Strategy

Balance Scorecard Perspectives

Strategy and Balance Scorecard

Evaluating Strategy

TOPIC 8: Cost Estimation and Predictions

Cost Estimation

Cost Estimation Methods

Criteria for using Past Data

Criteria to Evaluate and Choose Cost Data

Goodness of Fit

Statistical Significance Test

Nonlinearity and Cost Function

Learning and Experience Curves

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TOPIC 9: Network Analysis

Project Management

Issues that are addressed by CPM and PERT

Project Planning, Scheduling and Controlling

Steps common to CPM and PERT Advantages and Limitations of CPM and PERT

Drawing the Network

Steps in Project Crashing

PERT

TOPIC 10: Quality,Time and Theory of Constraints

Quality as a Competitive Tool

Two Aspects of Quality

Quality and Failure

Costs of Quality and Quality Reports

Control ChartsStatistical Quality Control Charts

Pareto Diagrams

Cause and Effect Diagrams

Time as a Competitive Tool

Two Operational Measures of Time

Time Drivers

Theory of Constraints

Steps in Managing Bottleneck Operations

Methods to relieve Bottlenecks

TOPIC 11: Transfer Pricing and Divisional Performance

Transfer Pricing and purposes

Alternative Transfer Pricing Methods

Transfer Pricing Conflicts and how to Resolve it

Dual Rate Transfer Pricing System

International Transfer Pricing

TOPIC 12: Incentive Systems and Performance Measurement

Fundamental Principle of Incentive and Compensation

Expectancy Theory View of Behavior

Designing Incentive Systems

Financial and Non-Financial Measures

Performance Measurement of Multinational Companies

Distinction and Tradeoffs

Moral Hazard and Intensity of Incentives

Preferred Performance Measures

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PRESCRIBED TEXTS

Drury, C. (2015). Management and Cost Accounting, 9th Ed. United Kingdom:Cengage Learning.

Fatseas, V. A., & Williams, J. F. (2009). Management Accounting Decisions. McGrawHill: Australia.

Horngren, C. T., Datar, S.M., & Rajan, M.V. (2013). Cost Accounting: A ManagerialEmphasis, 14thEd. England: Pearson Education.

RECOMMENDED REFERENCES

Atkinson, A.A., Banker, R.D., Kaplan, R.S., Matsumara, E.M. & Young, S.M. (2013)Management Accounting: Information for Decision Making and Strategy Execution 6thedition) Pearson Education.

Hilton, R.W., Maher, M.W. and Selto, F.H. (2012) Cost Management: Strategies forBusiness Decisions, International student edition. Boston: McGraw Hill.

Langfield-Smith, K., Thorne, H. & Hilton, R. (2014) Management Accounting:Information for Managing and Creating Value, 6thed.: McGraw-Hill.

Young, S. M. (2011).Readings in Management Accounting. 6thedition. Prentice Hall.

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Subject Outline / Teaching Plan

Department : Accounting & Finance Subject Code : ACC301Lecturer : M. Selvanadan Subject Title : Management Accounting 3

Week Topics References Tutorial Questions

1Introduction: The managementaccounting framework

Drury Ch 1 & 21 1-4,1-6,1-9,21-8,21-13

2 Management control systems Drury Ch 16 16-2, 16-8, 16-12, 16-15, 16-25

3Strategic management accounting Drury Ch 22 22-1,22-2,22-3,22-

17, 22-19

4Capital investment decisions Drury Ch 13 &i 14 13-17,13-18,13-

19, 14-15, 14-16

5Product profitability and

product mix strategiesFBW Ch10,Drury Ch 25

10-9,10-11,10-12,10-17, 10-20

6Managing customer profitability HDR Ch 14 14-6, 14-8, 14-19, 14-

20, 14-25

7 Mid Semester Test

8Strategy, balance scorecard andstrategic profitability analysis

HDR Ch 13 13-18, 13-19, 13-20, 13-21, 13-27

9Cost estimation and prediction Drury Ch 23 23-14,23-15,23-17,23-

19

10Transfer Pricing Drury Ch 20 20-15, 20-16, 20-

19, 20-21, 20-23

11Quality, time and the theory ofconstraints

HDR Ch 19 19-16, 19-22, 19-23, 19-24, 19-25

12Network Analysis FBW Ch 11 11-1, 11-6, 11-7,

11-8,11-11

13Incentive systems andperformance measurement

HDR Ch 23 23-11,23-20,23-24, 23-32, 23-33

1415 Final Examination

** Subject to change

Drury: Drury, C. (2012)FBW: Fatseas, V.A., & Williams, J. F. (2009)HDR: Horngren, C. T., Datar, S.M., & Rajan, M.V. (2013)

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ASSESSMENT

There are 3 assessment items for this subject.

Assessment Items Value Due Date

1. Assignment 15% 11 April, 2016

2. Mid Semester Test 15% Week 7Date TBC***

3. Final Examination (Closed Book) 70% Examination period: 23 April7 May 2016**

*** To be confirmed

REQUIREMENTS

To gain a pass in this subject, students must:

Achieve a passing grade in the final examination i.e. score a minimum of 35marks out of 70 marks if there is an examination for this subject.

Attempt ALL areas of assessment; and achieve a total result of 50% or better

overall.

** - Please check on the notice board and My Acel for the actual date. HELP

University reserves the right to make any changes to the above where appropriate.

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ASSIGNMENT QUESTION

Written Assignment

Value: 15%

Due Date: 11 April, 2016

QUESTION 1 (50 MARKS)

Lopten Industries is one of the largest, listed consumer durables manufacturers in theworld, making washing machines, tumble dryers and dishwashers. It has recentlyexpanded into Beeland which is a developing country where incomes have risen to the

point where demand is increasing for Loptens goods among the growing middle-classpopulation.

Lopten believes in the economies of scale of large manufacturing sites with dispersedselling branches in the markets in which it operates. Therefore, it has entered theBeeland market by setting up a local sales force and supporting them with a nationalmarketing campaign. The company is currently selling only two products in Beeland(both are types of washing machines):

a basic product (called Cheerful) with functions which are comparable withthe existing local competitors output and

a premium product (called Posh) which has functions and features similar toLoptens products in other developed countries.

Both products are manufactured and imported from its regional manufacturing hub,which is in the neighbouring country of Kayland.

The competitive environment in Beeland is changing rapidly. The washing machinemarket used to be dominated by two large local manufacturers who make simple, cheapand reliable machines. There are two other major international manufacturers apartfrom Lopten. One of these has already opened a factory in Beeland and is producingmachines similar to Cheerful to compete directly with the existing local producers. Thegovernment of Beeland has supported this new entrant with grants, as it is keen toencourage inward investment by foreign companies and the resulting expertise and

employment which they provide. The other international competitor is now consideringentering the Beeland market with more highly specified machines similar to LoptensPosh brand.

Loptens stated mission is to be the most successful manufacturer of its type ofproducts in the world. The board has set the following critical success factors (CSFs)for Loptens Beeland operations:1. to obtain a dominant market presence2. to maximise profits within acceptable risk3. to maintain the brand image of Lopten for above average quality products.

The board is considering using the following key performance indicators (KPIs) foreach product: total profit, average sales price per unit, contribution per unit, market

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share, margin of safety, return on capital employed (ROCE), total quality costs andconsumer awards won.

(Note: Margin of safety has been defined as [actual sales units breakeven salesunits]/actual sales units.)

The board has asked you as a consultant to assess its current performance measurementsystems. They want a report which calculates the various indicators suggested aboveand then assesses how the key performance indicators address issues in the externalenvironment. The report should assess the balance between planning and controllingrepresented by the KPIs as they want to ensure that these match what they should bedoing at the strategic level in Lopten. Also, it should evaluate how the KPIs fit with theCSFs which have been selected. The data given in Appendix 1 has been collated foryour use.

Finally, the board is considering two new marketing strategies going forward:

Plan A is to continue operations as at present allowing for 4% growth p.a. in volumesof both Cheerful and Posh.

Plan B is to dramatically reduce the marketing spend on Cheerful and to reallocateresources to focus the marketing on Posh. This is expected to lead to an anticipatedgrowth in volume of 15% p.a. for Posh and flat sales for Cheerful.

The target operating profit for the Beeland operation in two years time is set at $135mand the board wants an evaluation of these strategies in meeting that target.

Appendix 1

Beeland operations information for the most recent financial year

Cheerful Posh Total

Variable costs $ per unit $ per unit

Materials 90 120Labour 60 80Overheads 40 50Distribution costs 45 45Quality costs 20 30

Fixed costs $m $m $m

Administration costs 18 18 36Distribution costs 16 16 32Quality costs 6 6 12Marketing costs 80 80 160

Other data $m $m $m

Revenue 448 308 756Capital employed 326 250 576

Units Units Units

Total market size (millions) 933 133 1066Beeland operations sales (millions) 112 044 156

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Notes:

1. Cheerful has won one best buy award from the Beeland Consumer Association.2. Posh has won four best buy awards from the Beeland Consumer Association.3. The allocations of fixed costs are based on a recent activity-based costing exerciseand are considered to be valid.

Required:

Write a report to the board of Lopten which:

(i) calculates the key performance indicators (KPIs) suggested by the board for

the assessment of performance of the Beeland operations; (12 marks)

(ii) uses PEST analysis to identify issues in the companysexternal environment

and then evaluates the effectiveness of the suggested KPIs in addressing these

issues; (12 marks)

(iii) takes each critical success factor (CSF) in turn and evaluates how the

suggested KPIs fit to the CSFs given; (10 marks)

(iv) assesses the extent to which the suggested KPIs would be suitable for use in

planning rather than controlling; (6 marks)

(v) evaluates whether the two proposed marketing strategies result in a

performance gap. (10 marks)

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QUESTION2 (50 MARKS)

Landual Lamps (Landual) manufactures and delivers floor and table lamps for homesand offices in Beeland. The company sells through its website and uses commerciallogistics firms to deliver their products. The markets for its products are highly

competitive. The company has traditionally relied on the high quality of its designs todrive demand for its products.

The company is divided into two divisions (components and assembly), plus a headoffice that provides design, administrative and marketing support. The manufacturing

process involves:

1. the components division making the housing components and electrical componentsfor the lamp. This is an intricate process as it depends on the specific design of thelamp and so serves as a significant source of competitive advantage for Landual;

2. the assembly division assembling the various components into a finished lamp readyfor shipment. This is a simple process.

The finance director (FD) of Landual is currently overloaded with work due to changesin financial accounting policies that are being considered at board level. As a result, shehas been unable to look at certain management accounting aspects of the business andhas asked you to do a review of the transfer pricing policy between the components andassembly divisions.

The current transfer pricing policy at Landual is as follows:

(a) market prices for electrical components are used as these are generic componentsfor which there is a competitive external market; and

(b) prices for housing components based on total actual production costs to thecomponents division are used as there is no external market for these components sincethey are specially designed for Landuals products.

Currently, the components division produces only for the assembly division in order tomeet overall demand without the use of external suppliers for housing and electricalcomponents. If the components division were to sell its electrical components

externally, then additional costs of $269,000 would arise for transport, marketing andbad debts.

The FD is considering two separate changes within Landual: one to the transfer pricingpolicy and a second one to the divisional structure.

First, the transfer pricing policy for housing components would change to use variablecost to the components division. The FD wants to know the impact of the change intransfer pricing policy on the existing results of the two divisions and the company. (Nochange is proposed to the transfer price of the electrical components.)

Second, as can be seen from the divisional performance report below, the two divisionsare currently treated as profit centres. The FD is considering splitting the componentsdivision into two further separate divisions: an electrical components division and a

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housing components division. If the board agrees to this proposal, then the housingcomponents division will be treated as a cost centre only, charging its total productioncost to the assembly division. The electrical components and assembly divisions willremain as profit centres.

The FD needs to understand the impact of this proposed new divisional structure on

divisional performance assessment and on the company as a whole. She has asked that,in order to keep the discussion on the new divisional structure simple, you use theexisting transfer pricing policy to do illustrative calculations. She stated that she wouldreallocate head office costs to the two new components divisions in proportion to theircost of sales.

You are provided with the following financial and other information for Landual Lamps.

Actual data for Landual Lamps for the year ended 31 March 2013

Components Assembly Landual

Division Division Lamps$000 $000 $000

Sales Electrical 1,557Housing 8,204

sub-total 9,761 15,794 15,794

Cost of salesElectrical 804 1,557Housing 6,902 8,204

sub-total 7,706 9,761 7,706

Fixed production costs

Electrical 370Housing 1,302

sub-total 1,672 1,268 2,940

Allocated head office costs 461 2,046 2,507

Profit (78) 2,719 2,641

Note:

1 The components division has had problems meeting budgets recently, with an adverse

variance of $575,000 in the last year. This variance arises in relation to the cost of salesfor housing component production.

Required:

(a) Evaluate the current system of transfer pricing at Landual, using illustrative

calculations as appropriate. (15 marks)

(b) Advise the finance director (FD) on the impact of changing the transfer pricing

policy for housing components as suggested by the FD and comment on yourresults, using illustrative calculations as appropriate. (20 marks)

(c) Evaluate the impact of the change in proposed divisional structure on the

profit in the divisions and the company as directed by the FD. (15 marks)

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Assignment No.: __

Assignment Cover SheetStudent Information (For group assignment, please state names ofall members)

Grade/Marks

Name ID

Module/Subject InformationOffice

Acknowledgement

Module/Subject Code

Module/Subject Name

Lecturer/Tutor/Facilitator

Due Date

Assignment Title/Topic

Intake (where applicable)

Word Count Date/Time

Declaration

. I/We have read and understood the Programme Handbook that explains on plagiarism, and I/we

testify that, unless otherwise acknowledged, the work submitted herein is entirely my/our own.

. I/We declare that no part of this assignment has been written for me/us by any other person(s) except

where such collaboration has been authorized by the lecturer concerned.

. I/We authorize the University to test any work submitted by me/us, using text comparison software,

for instances of plagiarism. I/We understand this will involve the University or its contractors copying

my/our work and storing it on a database to be used in future to test work submitted by others.

Note:1) The attachment of this statement on any electronically submitted assignments will be deemed

to have the same authority as a signed statement.

2) The Group Leader signs the declaration on behalf of all members.

Signature: Date:mail:

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Feedback/Comments*

Main Strengths

Main Weaknesses

Suggestions for improvement

Student acknowledge feedback/comments

Graders signature Students signature:

Date: Date:

Note:

1)A soft and hard copy of the assignment shall be submitted.2)The signed copy of the assignment cover sheet shall be retained by the marker.3)If the Turnitin report is required, students have to submit it with the assignment. However, departments may allowstudents up to THREE(3) working days after submission of the assignment to submit the Turnitin report. Theassignment shall only be marked upon the submission of the Turnitin report. *Use additional sheets if required.

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ACADEMIC INTEGRITY

Honesty and Responsibility

Academic integrity is an important tenet for HELP University. In pursuit of the higheststandards of academic integrity, the Department of Accounting & Finance holds itstudents to the highest ethical standards defined by the Rules and Regulations sectionof the Academic Handbook. All students at the Department of Accounting & Financeare subjected to and are bound by the Student Academic Misconduct Rule to assureacademic honesty. Students are required to sign a pledge on the assignment cover sheet

before submitting your assignments to the Administration Office of the Faculty of

Business, Economics & Accounting.

What is Plagiarism?Plagiarism is academic dishonesty or academic theft, and it is a serious academicoffence. Plagiarism includes, but is not limited to, the followings:

1.

quote, paraphrase or summarize someone elses ideas, theories or data, in wholeor in part, without appropriate acknowledgement

2. borrow ideas, opinion or words, in whole or in part, from other sources withoutproperly crediting the author(s)

3. use any facts, statistics, diagrams or graphs, in whole or in part, withoutacknowledging the source clearly

4.

claim or imply original authorship of someone elses ideas, theories or data, inwhole or in part, as your own

5. employ or allow someone to help to revise, amend or write your work and passoff as your own original work

6. collaborate with or allow other students to copy your work7. draw on sources more than what you have acknowledged by citations

While a student is not discouraged to discuss an assignment with his/her friends orclassmates, the work he/she submits must be done by the student alone. If a studentshares his/her assignment with other students and they plagiarize it, the student is asguilty as those students who plagiarized his/her assignment. All parties to plagiarismare considered equally guilty. Under no circumstances should a student be involved incollusion with other students unless he/she is permitted to work on an assignment

jointly by the lecturer/tutor. If a student is unsure what constitutes plagiarism, he/she isobliged to consult the lecturer/tutor on the matter before submission of his/herassignment.

When and How to Reference?Knowing when and how to cite is a students responsibility. If he/she is in doubt orneed more help on this matter, the student may consult the lecturer/tutor. The followinglist comprises some of the sources a student will need to reference. The list is by no

means exhaustive, but simply consists of the most common sources used by students tocomplete their work.

1. Books

Department of Accounting &

Finance

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2.

Chapters in books3. Journal articles4. Conference papers5.

Newspaper articles6. Magazines7.

Websites

8.

Study guide

Students are advised to cite in the following cases[1]:1.

When he/she quotes two or more words verbatim, or even one word if it is usedin a way that is unique to the source

2. When he/she introduce facts that he/she have found in a source3. When he/she paraphrase or summarize ideas, interpretations, or conclusions that

he/she find in a source4.

When he/she introduce information that is not common knowledge or that maybe considered common knowledge in your field, but the reader may not know it

5. When he/sheborrow the plan or structure of a larger section of a sources

argument (for example, using a theory from a source and analyzing the samethree case studies that the source uses)

6.

When he/she build on anothers method found either in a source or fromcollaborative work in a lab

7.

When he/she build on anothers program in writing computer code or on a not-commonly-known algorithm

8.

When he/she collaborate with others in producing knowledge

In general, a referencing system requires two parts:1. In-text citations

This is information about a source within the text of an assignment.2.

List of referencesThis is a list of all sources a student has used to research his/her assignment. Itis alphabetically arranged by author surname and appears immediately after thelast page of an assignment.

Different faculties or departments may have different requirement on how referencingfor an assignment should be done. The various formats used for in-text citations and listof references are available in the following websites:

1. Harvard System (http://www.adelaide.edu.au/library/guide/gen/harvard.html)2. Chicago Style (http://www.chicagomanualofstyle.org/index.html)

3.

American Psychological Association or APA Style (http://www.apastyle.org)4.

Modern Language Association of America or MLA Style (http://www.mla.org)

Once a student has selected a referencing style for his/her assignment, he/she mustfollow the same style consistently throughout the assignment. We strongly suggest thatthe student consults the lecturer/tutor about which method to use before submission ofhis/her assignment.

1http://www.yale.edu/bass/writing/sources/plagiarism/warning.html,accessed May 18, 2008.
http://www.adelaide.edu.au/library/guide/gen/harvard.htmlhttp://www.adelaide.edu.au/library/guide/gen/harvard.htmlhttp://www.yale.edu/bass/writing/sources/plagiarism/warning.htmlhttp://www.yale.edu/bass/writing/sources/plagiarism/warning.htmlhttp://www.yale.edu/bass/writing/sources/plagiarism/warning.htmlhttp://www.yale.edu/bass/writing/sources/plagiarism/warning.htmlhttp://www.adelaide.edu.au/library/guide/gen/harvard.html

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What are the Procedures and Penalties for Plagiarism?When a lecturer/tutor encounters a possible case of plagiarism, the lecturer/tutor shallreport the matter to the Head of the Department, who then initiates an investigation onthe matter. The following procedures would be carried out:

1.

The lecturer/tutor shall provide evidence that substantiates an academic offence

has occurred. The following documentations must be ready prior to reporting ofalleged plagiarism:

a. Copy of the alleged plagiarized assignmentb.

Copy of the source material (e.g. articles, websites, newspaper, etc.)c. Report of plagiarismd. Any other information that would support the claim of plagiarism

2. If the evidence warrants an accusation of academic offence, the Head ofDepartment shall establish a Board of Inquiry comprising 3 academic staff. TheDepartment shall provide all necessary documentations, including report on

prior academic offences if applicable, to the Board of Inquiry.3. The Board of Inquiry shall put the matter to the student in writing and give

him/her an opportunity to respond to the accusation within 3 working days.4. The student will be required to attend a meeting with the Board of Inquiry.

After meeting the student, the Board of Inquiry shall decide whether or not thealleged plagiarism has occurred. The following documentations shall besubmitted to the Head of Department at the end of the meeting:

a. Findings of the investigationb.

Recommended action(s) to be taken or imposed5. The Head of Department shall review the Board of Inquirys report with

supporting evidence and shall decide on an appropriate action(s) based on therecommendation of the Board of Inquiry.

6. The decision of the Head of Department shall be put in writing to the student.Copies of all documentations will be retained in the Department.

7. If the student feels that he/she has been unfairly accused or treated, the studentmay appeal to the Head of Department within 5 working days.

8. The Head of Department shall review the appeal and the final decision will becommunicated to the student in writing and a copy will be kept with theDepartment. Once a determination of plagiarism and penalty has been made bythe Head of Department, the investigative process will be deemed to have endedand the student will not be allowed to appeal.

Possible penalties for plagiarism range from mark reduction for the assignment to

expulsion from the University. The student will not be allowed to make up theassignment. If plagiarism has been found to have occurred, the Department will takeaction(s) as determined by the forms of plagiarism implicated:

1. Complete plagiarism

Verbatim copying another persons work without acknowledgement1stoffence : A grade of F in the subject and a warning letter will be

issued2n offence : Expulsion from the University at the discretion of the Head of

Department

2. Substantial plagiarism

Near-verbatim copying another persons work by simply altering the order ofthe sentences or the format of presentation or by changing a few words or

phrases without acknowledgement.

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1stoffence : Zero mark on the assignment and a warning letter will beissued

2n offence : A grade of F in the subject and a warning letter will beissued

3r offence : Expulsion from the University at the discretion of the Head ofDepartment

3. Minimal plagiarismAcknowledgement is made but paraphrasing by changing and/or eliminatingsome words1stoffence : Deduction of 50% of available marks on the assignment and a

warning letter will be issued2n offence : A grade of F in the subject and a warning letter will be

issued3r offence : Expulsion from the University at the discretion of the Head of

Department

4. Unintentional plagiarism

Insufficient acknowledgement by not applying citation or quotation marks

correctly1stoffence : Deduction of up to 50% of available marks on the assignment

and a warning letter will be issued2n offence : A grade of F in the subject and a warning letter will be

issued3r offence : Expulsion from the University at the discretion of the Head of

DepartmentPleading ignorance or unintentional plagiarism does not constitute valid reasons for

plagiarism and will not avoid the penalties from being imposed. Excuses for acts ofplagiarism such as the following, but not limited to, will not be entertained:

1. I donthave time to do the assignment2.

I have too many assignments due on the same day3. I dont know, I really didnt do it4.

I am not aware5. I dont understand what plagiarism means6.

I have no intention to plagiarize7. I forgot to cite the reference8. I forgot to include the bibliography9. My English is not good10.My lecturer/tutor did not explain to me11.In my country, it is alright to copy someone elses work

12.

My friend copied my assignment when I let him/her to look at my assignment13.

My friend copied my assignment when I allow him/her to use my laptop14.I did my assignment in the computer lab, someone must have copied my work15.

I asked my friend to submit my assignment and he/she copied my work16.I discussed my assignment with my friends, so our answers are the same/similar17.Even though I do not have in-text citation but I have bibliography/reference list

Students should be reminded that it is their responsibilities to take due care throughouttheir written work to effectively reference or cite when they use others ideas from anysource.

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DEPARTMENT OF ACCOUNTING & FINANCE

SEMESTER X, 20XX

SAMPLE FINAL EXAMINATION

Subject Code : ACC301

Subject Name : MANAGEMENT ACCOUNTING 3

This examination carries 70% of the total assessment for this subject.

Examiner(s)

MR SELVANADAN MUNIAPPAN

Moderator(s)

Day :

Date :Time :

Time allowed : Reading10 MINUTES

Writing3 HOURS

INSTRUCTION(S):

1. This examination consists of FIVE (5)problem solving and discussion questions.

2. All questions are COMPULSORYand must be attempted.

3. Students are required to answer ALLquestions in the answer booklet provided.

4. This is a CLOSED BOOKexamination.

5. Students are NOTpermitted to retain this examination paper.

6. Students MUST pass this examination to pass the subject.

(Thi s question paper consists of 5 questions in XX pr inted pages, including cover page)

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Problem Solving and Discussion Question (100 marks)

All Five (5)questions are COMPULSORY and must be attempted. Please show detailsof all calculations. DO NOT round the figures unless stated otherwise.

Question 1 (30 marks)

A Civil Engineering Contractor is planning a major project. As a first step theproject has been broken down into a number of separate tasks identified by theletters A to J. It has been determined that the following relationships exist amongthese tasks:

A and B can be commenced at the same time.C and D can both be commenced as soon as A is completed.E cannot be commenced until C and D are completed.F can be commenced as soon as D is completed.G can be commenced as soon as F is completed.

H cannot be commenced until E and G are completed.I cannot be commenced until B and E are completed.J cannot be commenced until H and I are completed.

The following time and cost estimates for the tasks have been prepared.

Task Normal Time

(days)

Normal Cost

($)

Crash Time

(days)

Extra Cost per

Day Saved ($)

A 7 1000 5 100

B 34 3900 33 230

C 3 400 2 160

D 12 1800 12 -E 20 1600 15 200

F 9 1500 6 220

G 8 1800 6 300

H 11 1100 11 -

I 17 1500 15 140

J 16 3200 16 -

Required:(a) Draw a network diagram for the project showing the task letters on the

activity paths. (5 marks)(b) Identify the critical path, and, if the work is to be carried out at normal cost,calculate the minimum time for completion. (3 marks)

(c) Calculate the absolute minimum time in which the project could becompleted, and the minimum total cost at which that completion time could

be achieved. (10 marks)(d) Explain how a network diagram and the associated time and cost estimates

may be used for control purposes while a complex project is in progress. (5 marks)

(e) Assume that the project described in the question is nearing completion andthat the contract contains severe penalty provisions if the work is not

finished by the specified date. The only task not completed is task J, whichhas been in progress for 4 days, and only 12 days remain before thespecified completion date. The work on task J is on schedule so far as time

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is concerned, but instead of costing $200 per day for 16 days as expected, itis costing $350 per day. It is felt that an investigation costing $400 mightshow that this is due to a problem in the way the work is being carried out.If the investigation showed this to be the problem, it could be rectified at acost of $1000. This would lead to the cost being reduced to $200 per dayfor the remaining days. If it is felt that the probability of being able to trace

and immediately rectify the problem is 0.7, should the contractor undertakethe investigation? (7 marks)


Household Appliances Ltd is a divisionalised company in which each of the twodivisions operates as an independent investment centre. For the comingfinancial year the pre-tax target rate of return for the divisions and for thecompany as a whole is 15%.

Division A produces electric motors and plans to sell 60% of its output toDivision B for use in the production of tumble clothes dryers, while theremainder are to be sold to an outside user who has contracted to buy 2000motors. No further outside sales appear possible. Division A is planning to

produce 5000 motors (normal capacity).

Variable cost per motor is $30 while fixed production costs of $50 000 areexpected in Division A. Division A allocates fixed costs on the basis of normalcapacity, regardless of actual production.

The sales price for external sales is $55 per motor. For the purposes of internal

pricing the manager of Division A sets a profit mark-up of 50% on fullabsorption cost in order to earn a satisfactory return on divisional assetsemployed, $500 000.

Division B has in the past purchased all its motors from Division A. DivisionB's costs consist of the transfer-in cost, additional variable production costs of$48 per dryer, and $60 000 fixed production costs which are allocated to dryerson an expected annual production basis. Division B plans to produce 3000dryers in the coming year. Division B sells the finished dryers to retailers for$180 each. Assets employed in Division B total $1 140 000.

An external supplier has offered to provide two-thirds of Division B's electricmotor requirements for the coming year at a price of $45.

Required:(a) Calculate the expected profit and rate of return on investment for each

division and for the company as a whole in the coming year, if Division Bpurchases its motors from Division A, and sells its entire output to retailers.

(9 marks)(b) Should Division B buy its motors from the external supplier? Why?

(2 marks)(c) Prepare divisional and corporate income statements on an absorption

costing basis on the assumption that Division B accepts the offer from theexternal supplier and Division A adjusts its planned output accordingly.Calculate the company and divisional rates of return. On the basis of these

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calculations state whether it would be in the best interests of the companyto accept or reject the offer. (9 marks)


Firms P, Q and R are three companies in an industry producing product A. Eachfirm has the same 70% cost experience curve based on thousands of units - ie,the cost of their second thousandth unit will be 70% of the cost of the firstthousandth unit. The following unit costs for product A were obtained by thethree firms for their first one thousandth unit:

P: $100Q: $80R: $90

Required:

(a) The accumulated production of each firm is now: P 4000 units, Q 7000units and R 5000 units. Calculate the current unit cost of product A for eachfirm. (4 marks)

(b) The current market selling price for product A is $55 per unit. What profitper unit is being earned by each firm? (3 marks)

(c) Current market shares for each firm are: P 15%, Q 60%, R 25%. Q wishesto analyse future cost positions to evaluate some strategies. In particular, Qwishes to determine the expected unit costs for each firm after it hasreached an accumulated production of 12 000 units.(i) If the market shares remain the same, calculate the expectedaccumulated production for firms P and R when Q has reached the 12 000

unit level. (4 marks)(ii) Given the result of (i), calculate the expected unit cost position for eachof the three firms. (5 marks)

(d) Suppose that firm Q decides to lower its selling price now (before thechanges suggested in part c) to $40 per unit. Suggest the likely outcome.

(4 marks)


Pine Products Pty Ltd manufactures and sells two grades, A and B, of a single

pine product. Each grade is processed through two departments, Cutting andFinishing. The following unit information is given:

Grade A Grade B

Selling price $30.00 $20.00Direct materials $5.60 $2.00Direct labour (cutting andfinishing)

$12.00 $10.00

Variable overhead $2.40 $2.00Fixed overhead $1.44 $1.12

Labour requirements (hours):Cutting 0.50 0.50Finishing 0.40 0.20

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The Cutting Department has 400 hours available each week. The FinishingDepartment has 240 hours available each week.

Fixed overhead is allocated using a plant-wide rate based on direct labour hourswhen the denominator level of activity is equal to maximum weekly plant

capacity.

Sales are limited to a maximum of 800 units of Grade A and 600 units of GradeB per week.

Required:(a) Calculate the unit contribution margin for each Grade. (4 marks)(b) Calculate the budgeted weekly fixed overhead in the plant. (3 marks)(c) If budgeted fixed overhead is the only fixed expense and if management

wishes to produce and sell Grades A and B in the ratio 3:1, how many unitsof each should management plan to produce and sell in a week to earn a net

profit of $416? (3 marks)(d) Instead of producing the product mix in part (c), management wishes to use

linear programming to find the profit-maximising mix. Write an LP modeland solve to determine the optimum weekly mix and the resulting weeklynet profit. (8 marks)


The new manufacturing environment is characterized by more flexibility, areadiness to meet customers requirements, smaller batches, continuous

improvements and an emphasis on quality.In such circumstances, traditional management accounting performancemeasures are, at best, irrelevant and, at worst, misleading.

Required:Discuss the above statement, citing specific examples to support or refute theviews expressed and explain in what ways management accountants can adaptthe services they provide to the new environment.

*** END OF EXAMINATION PAPER ***

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ACC301 sem1