ARE YOU PLANNING TO ENROL FOR UNIT 5 MANAGEMENT ACCOUNTING - HIGHER NATIONAL DIPLOMA IN BUSINESS?
Qualification - Higher National Diploma in Business
Unit Name - Unit 5 Management Accounting
Level - Level 5
Assignment Ref - U5 - 19-20-A4.1
Assignment Title - Practicing Management Accounting in Large- Sized Business
Learning outcome:
Learning outcome 1: Demonstrate an understanding of management accounting systems.
Learning outcome 2: Apply a range of management accounting techniques.
Business scenario - The case of Engines Makers
Engines Makers Group is a large- sized company which holds two companies; Modern Parachute LLC and Modern Motorcycle LLC. Modern Parachute company sells parachute balloons to tourism agencies for organizing tourism purpose in Cappadocia - Turkey which is famous for such touristic activities. Working in tourism sector is complicated issue because tourism sector is highly affected by different factors such as economic conditions, competition from other highly preferable tourist places globally, geopolitical conditions, taxation laws, and the relationships between Turkey and other countries. For example, in order to support companies that work in tourism industry, government in Turkey decided to reduce the income tax rate on their profits to amount just 10%.
On the other hand, Modern Parachute company deals with One-Off Job orders that comes from different tourism companies. Considering all these facts, top managers and other managerial and non- managerial employees are required to upgrade their knowledge regarding importance and role of management accounting in the modern business environment. The following are important information related to Engines Makers company:
1- Operations- related information:
A. Modern Parachute company sells one unit with unit price ($ 75000).
B. The cost of direct materials used in manufacturing parachute is ($ 20000) per unit.
C. The cost of direct manufacturing labor is ($10000) per unit.
D. Variable manufacturing overhead cost is ($ 2500) per unit
E. Fixed manufacturing cost overhead is ($ 25000) per quarter.
F. Other fixed cost per quarter:
Managerial employees' salaries ($ 8000)
Office building depreciation ($ 2000)
Office equipment depreciation ($ 15000)
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2- Balance sheet- related information at the end of first quarter (operating/ net income is NOT included):
G. Owner's Equity ($ 2000000)
H. Cash ($ 395000)
I. Office building ($ 454000)
J. Office building- accumulated depreciation ($ 4000)
K. Office equipment ($ 1030000)
L. Office equipment- accumulated depreciation ($ 30000)
M. Accounts Receivable ($ 1000000)
N. Accounts Payable ($ 45000)
- In the first quarter of year 2019 Modern Parachute company manufactured
20 units and sold them all.
Furthermore, the following are Modern Parachute company's net income during the previous ten years (2009-2018) consecutively:
300,000 370,000 420,000 470,000 490,000 512,000 630,000
700,000 710,000 740,000.
As for Modern Parachute company's sales revenues during the same period, they were as follows:
800,000 950,000 1,050,000 900,000 850,000 1,020,000 1,200,000
1,150,000 1,300,000 1,400,000.
As for the Modern Motorcycle, the company produces two types of motorcycle; type A which is being sold at 1200$ to individuals and type B which is being sold at 7000$ to specific companies.
The operations and sales information are as follows:
A- The company will produce 100,000 type A motorcycle and 500 type B motorcycle.
B- Setup cost per batch is 150000$.
C- There should be one batch for type B motorcycle and 3 batches for type A motorcycle.
D-Welding cost for type A motorcycle is 13,545,000 $ and 1,500,000 $ for type B motorcycle.
E- Assembly cost for type A motorcycle is 10$ per unit and 70$ per unit for type B motorcycle.
F- Direct materials for each motorcycle type is 240 $ per unit.
G- Direct manufacturing labour for type A motorcycle is 400$ per unit and 3400$ per unit for type B motorcycle.
H- Single allocation rate 40% of direct labour cost.
I-The company produced and sold 100,000 units from type A motorcycle and 500 units from type B motorcycle in the first quarter of year 2019.
Job/role scenario - You work for Engines Makers company as Management Accountant who ensure the accuracy of financial statements and prepare financial documentation and explains their findings to individuals or a company's or its management. Your manager delegated you to prepare report and presentation to give briefing to your other team members in the department.
Assignment Brief
In a Presentation critically evaluate management accounting systems by explaining the requirement and reports by evaluating their benefits, application and integration for Engines Makers.
In a report, produce a sufficient financial reporting documents using management accounting techniques such as activity based costing and traditional costing methods accurately; considering the appropriate cost analysis techniques to prepare income statement by absorption and marginal approaches including data interpretation for the range of business activities.
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Assessment Criteria
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Pass
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Merit
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Distinction
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LO1 Demonstrate an understanding of management accounting systems
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P1 Explain management accounting and give the essential requirements of different types of management accounting systems.
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M1 Evaluate the benefits of management accounting systems and their application within an organizational context.
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D1 Critically evaluate how management accounting systems and management accounting reporting is integrated within organizational processes.
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P2 Explain different methods used for management accounting reporting.
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LO2 Apply a range of management accounting techniques
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P3 Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costs.
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M2 Accurately apply a range of management accounting techniques and produce appropriate financial reporting documents.
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D2 Produce financial reports
that accurately apply and interpret data for a range of business activities.
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