Cost and Management Accounting
Semester 1, 2016
Contribution to overall assessment: 30%
This assignment has two parts:
o Part A: 50% Technical or Practical
o Part B: 50 % Essay ( 2500 words)
For Part B, an essay format is required. Please note the following:
• Useful links: http://federation.edu.au/__data/assets/pdf_file/0015/164121/FedUni-General-Guide-to-Referencing-2014.pdf
• This is a group-assignment. Each group needs to have 2 to 3 members in it. Please organise yourselves into groups.
• Please make sure that names and ID numbers of all group members are stated on the cover sheet of your submission.
As this is a group assignment, each member of your group is awarded the same mark. As we know, working in groups has its pros and cons. I am sure that you will hold constructive and energetic group discussions on the issues at hand. In case of any disagreements, you will be able to resolve them in a reasonable way. There will be times when you may have to agree to disagree with each other. Invariably different group members bring different skills to a project; it is up to you to make the best of it. I believe one can learn a lot by discussing the issues with one’s colleagues.
If you find your group members are “not pulling their weight” or there are problems with any member’s commitment, then please try to resolve those issues amongst yourselves. Open and honest communication always helps. If you are unable to resolve these issues, you are most welcome to see me and we will try to sort out the problems together. Do this as soon as possible and certainly before the due date.
For some reason, if you do not wish to work in a group, please let us know.
You are a management accountant at WCP Management Consultants. You have been approached by Greenwood Medical Centre (GMC).
GMC performs X-rays, ultrasounds, CT scans and MRIs. It has developed a reputation as a top radiology centre in the state. GMC has achieved this status because it constantly re-examines its processes and procedures.
Traditionally, GMC has been using a single organisation-wide overhead allocation rate. The Finance Manager believes that GMC can make better process improvements if it uses more disaggregated cost information. In a recent meeting, he argued. “We have state-of-the-art medical imaging technology. Can't we have state-of-the-art accounting technology?”
GMC has provided you with the following information:
Greenwood Medical Centre
For the year ended 30 June 2015
X-rays Ultrasound CT scan MRI Total
Technician labour $61 440 $105 600 $96 000 $105 000 $368 040
Depreciation 32 240 268 000 439 000 897 500 1 636 740
Materials 22 080 16 500 24 000 31 250 93 830
Administration 20 610
Maintenance 247 320
Sanitation 196 180
Utilities 134 350
Total $115 760 $390 100 $559 000 $1 033 750 $2 697 070
Number of procedures 3840 4400 3000 2500
Minutes to clean after each procedure 5 5 15 35
Minutes for each procedure 5 15 20 45
GMC operates at capacity. The proposed cost-allocation bases for overhead are as follows:
Administration Number of procedures
Maintenance (including parts) Capital Cost of the Equipment (use depreciation)
Sanitation Total cleaning minutes
Utilities Total procedure minutes
a. Calculate the budgeted cost per service for X-rays, Ultrasounds, CT scans and MRIs using direct technician labour costs as the cost-allocation basis.
b. Calculate the budgeted cost per service of X-rays, Ultrasounds, CT scans and MRIs if RRC allocated overhead costs using Activity-based Costing (ABC).
c. Explain how the disaggregation of information could be helpful to GMC’s intention to continuously improve its services.
d. Would you advise GMC to use the traditional overhead allocation method or adopt the ABC method? Explain.
*According to Gleeson-White (2014, pp.179-80), “For Ian Ball, the then head of the International Federation of Accountants, what was most remarkable about the 2009 meeting at St. James’s Palace was not the range of players it drew together –“great though it was” – but “the level of agreement that the need for improved reporting was important, was urgent, and needed immediate action”. Eight months later, on August 2, 2010, the IIRC was launched by the Prince’s Accounting for Sustainability Project and the Global Reporting Initiative. “The world has never faced such challenges’, its press release declared. And the accounting quandary it faces, said Prince Charles, is that we are “battling 21st century challenges with, at best, 20th century decision making and reporting systems.” In response, the IIRC aimed to create a “globally accepted framework for accounting for sustainability”[emphasis added], one that “brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format – put briefly, in an ‘integrated’ format”.
Your text includes discussions on “People, Planet and Profit”. According to your text, “sustainable business practices present numerous issues for management and managerial accountants” (p.20).
Required: In your view, what role can the accounting profession play in accounting for sustainability? Identify any problems, challenges and opportunities that the profession may encounter in this process.
* Gleeson-White, J. (2014) Six Capitals, or Can Accountants Save the Planet? Rethinking Capitalism for the Twenty-first Century, NY: WW Norton.
BUACC5933, Semester 1, 2016, Group Assignment
Names: Student Numbers:
Technical component : Basis of assessment F P HD
Accuracy in calculations.
Essay: Bases of assessment F P HD
Content - Identification of relevant issues.
Research - Selection of relevant material.
A demonstration of critical evaluation of the material.
Expression of your viewpoint (and not a catalogue of quotes/ others’ ideas).
Expression - clarity, style (formal and academic), coherence in writing, grammar, punctuation, spellings and sentence structure.
A logical flow of argument at both the paragraph level and the overall text level.
Use of supporting arguments.
Use of literature to support the argument.
Structure – Synopsis (Stated the topic, reflected main arguments and identified conclusions reached).
Introduction (Provided background/contextual information; clearly stated the essay topic; outlined the plan for addressing the topic).
Discussion in appropriately linked sections and paragraphs.
Conclusion (no new material; reiterated the main line of argument).
Referencing procedure (within the text, and at the end of the text).
Appropriately styled and punctuated bibliography.
Overall Presentation – including cover page, line spacing, page numbering.