Assessment 3
Assessment Type: Group Case Study - 2000 +/- 10% word report and analysis.
Purpose: This assessment is designed to assist students to combine the technical skills learned with the theoretical aspects of a number of management accounting concepts. The assessment will allow students to demonstrate their ability to analyse the information provided for a given scenario and present their findings as they relate to the requirements of this assessment.
As this is a team-based assessment, it will allow students to further develop their team-working and problem-solving skills. It contributes to learning outcomes a, b, c.
Value: 20%. %. Each member of the group will receive a mark based on their level of contribution. Students must specify their level of contribution on the title page and it must be agreed by each member. If the level of contribution is not mentioned it will be assumed that each member contributed equally.
Due Dates: Draft submission 8.00pm Monday of Week 9 for review
Final submission 8.00pm Monday of Week 10.
Group formation: Group Case study project. Groups must be formed from the same tutorial class and consists of 2-3 students.
Submission: One member only of each group must upload the final submission to the Tumitin assignment link on the KOI Moodle. All submissions must be accompanied by a signed KOI group assignment sheet attached to the front cover, listing all group members (including student ID, email, first and last names).
The group should complete any ‘tables' or calculations using the spread sheet application and then copy and paste these into a ‘document’ incorporated with their submission.
Tips for submission:
o For ease of formatting within a MS Word document, either paste’ the selected sections of the Excel Worksheet as a PICTURE', or copy and paste smaller sections.
o Groups may find it helpful to use Zoom to complete their assignment if members are unable to meet at a physical location.
o A word of warning: Ensure you take regular online (e.g. Google Drive saves) and offline (e.g. USB Memory stick) backups.
o As noted above only 1 copy per group should be submitted. If you update your assignment before the due date and time, then each updated submission must be made by the same group member otherwise you will duplicate the work and the latest edition may not be marked.
Topic: Management accounting problem (case study).
Task details: Dreamy Limited manufactures Jet skis in Melbourne. More than 70 per cent of the cost of the company's skis consists of materials and components, which are purchased from Australian suppliers.
About three years ago. Dreamy Limited introduced a comprehensive supplier evaluation system to monitor the performance of its suppliers. Each supplier was given a three-year contract that guaranteed large orders as long as it performed according to Dreamy's strict requirements. Each supplier s performance was measured by considering its adherence to delivery schedules, accuracy of orders delivered, number of
components rejected on delivery, and its achievements in reducing its production costs (and, therefore, its material and component prices) over the contract period. Performance in all of these arears will determine whether Dreamy renews the supplier's contract or offers the contract to another supplier. The suppliers are aware that there are many alternative component suppliers who would be eager to enter into a long-term contract with Dreamy.
After holding discussions with the purchasing manager, as part of the review process, the financial controller has conducted a study to determine the full cost of dealing with suppliers. While the company uses a series of non-financial performance measures to measure most aspects of supplier performance, the financial controller believes that the calculation of the total cost of ownership will provide an additional perspective to viewing supplier performance. For the most recent year, the following supplier-related activities and costs have been identified:
ACTIVITY TOTAL COST NUMBER OF ACTIVITIES
Order components from supplier S1 900 000 7 000 orders
Receive order $10 000 000 12 000 deliveries
Return reject components to supplier $28 500 60 returns
Receive late deliveries $360 000 150 late deliveries
Production downtime due to late delivery $3 400 000 900 hours
Production downtime due to defective material $2 600 000 4 000 hours
Process invoice and pay supplier $2 050 000 4 000 invoices
Dispute invoice amount $100 000 80 disputes
Quality audit of supplier $600 000 12 audits
Dreamy obtains handlebar steering for the jet skis from two suppliers: Roted Limited and Ter Manufacturers. Last year. Dreamy purchased 3 500 units from Roted Limited at $110 per unit, and 4 500 units from Ter Manufacturers at $99 per unit. Both suppliers provide an identical component.
The analysis revealed that last year the following activities related to the two suppliers:
ACTIVITY ROTED LIMITED TER MANUFACTURERS
Order components from supplier 100 orders 140 orders
Receive order 90 deliveries 150 deliveries
Return reject components to supplier 17 returns 19 returns
Receive late deliveries 5 late deliveries 30 late deliveries
Production downtime due to late delivery 50 hours 65 hours
Production downtime due to defective material 22 hours 32 hours
Process invoice and pay supplier 11 invoices 129 invoices
Dispute invoice amount 4 disputes 4 disputes
Quality audit of supplier 2 audits 3 audits
Required:
1. Calculate the total cost of ownership and the per unit cost of ownership for the two suppliers.
2. Calculate the supplier performance index for the two suppliers.
3. Analyse the performance of the two suppliers.
4. What is the total cost of ownership and the per unit cost of ownership for Ter Manufacturers if the number of late deliveries is reduced by 40% and the production downtime due to late deliveries is reduced to 30 hours? Analyse the relative performance of the two suppliers.
5. Describe the changes that the purchasing manager and the financial controller could implement to minimise supplier-related costs.
6. Consider the various criteria used by Dreamy to determine whether or not supplier contracts should be renewed. For each criterion, suggest two performance measures that Dreamy might use to evaluate supplier's performance.
7. Recently Dreamy discovered another supplier, Dorait Limited, is supplying the same handlebar steering for only $65 per unit. Do you think Dreamy should enter a three-year contract with Dorait Limited? Explain your answer.
Research requirements: Students need to support their analysis with reference from the text and a minimum of six (6) suitable, reliable, current and academically acceptable sources - check with your tutor if unsure of the validity of your sources. Groups seeking higher grades should support their analysis with an increased number of reference sources comparable to the grade they are seeking.
Presentation: Report format. Title page, executive summary, table of contents, appropriate headings and sub-headings. Single spaced.
Marking Guide:
Marks awarded will be based on the following criteria:
Research 25%
Calculations 25%
Analysis 30%
Report / Presentation 10%
Conclusion 5%
Referencing 5%
Marks will be scaled to a mark out of 20.