Student Written Assessment
Business Unit/Work Group Financial Services
Qualification Code FNS50215
Title Diploma of Accounting
Advanced Diploma of Accounting
FNSACC507 Unit Title/s Provide Management Accounting Information
Title Unsupervised Assessment
Student SIS ID
Student Guide for Written Assessment
Overview of Assessment This assessment covers overhead/indirect manufacturing costs, activity based costing, direct and absorption costing and cost volume profit analysis
Task/s to be
• Stock Cards
• Labour costs
• Overhead application rates
• Budget preparation
• Variance analysis
• Policy and procedure recommendations
Time allowed 2 weeks
Location External students to complete the assessment at home
Decision making rules To receive a satisfactory outcome, student must accurately reconcile information given, use that information to prepare a budget and analyse the variances between the budget and actual results. Students must also give correct and relevant recommendations in their report.
Assessment conditions Assessment is open book, students may ask their lecturer to clarify the information given both in the Skype session and via email and telephone.
Resources required • Text book
• Internet connection
• Skype and webcam
Results/Reassessment When and how will the student be advised of the assessment outcome? Provide information about reassessment process.
You have been approached by Trowkan Ltd, a small family company which manufactures a single product which requires the use of two direct materials. They have hired you to assist them in improving their accounting practices and provide some general accounting and procedural advice.
Note that Part D of this assessment involves talking to a lecturer who will play the part of the owners of Trowkan Ltd, any questions you have about the information provided can be asked during this part of the assessment.
The manufacturing process for Trowkan Ltd using two products, Sydon and Tyrox. These materials are purchased in bulk and then kept in a store room until they are needed in production. You ask to see the records of all movement of stock in and out of the store room for May, the owners go to the stock room, take a clipboard from a hook on the wall and give you the following store room report. You ask if this is the only copy of the stock records and they say it is, the store manager keeps track of all of the ins and outs on the clipboard and the report goes in a filing cabinet at the end of each month.
• Sydon 12000kg @ $8.90 per kg
• Tyrox 20290kg @ $4.80 per kg
• Finished Goods 110000 units
• 9th May 80000kg Sydon, invoice value $72,000
• 9th May 12000kg Tyrox, invoice value $57,000
• 15th May 48000 units finished goods
• 25th May 8000kg Sydon, invoice value $72,400
• 25th May 12000kg Tyrox, invoice value $57,240
• 31st May
Stock out 56000 units finished goods
• 1st May 6000kg Sydon to production
• 1st May 1200kg Tyrox to production
• 4th May 65000 units of finished goods sold
• 16th May 7000kg Sydon to production
• 16th May 14000kg Tyrox to production
• 21st May 55000 units finished goods sold
• 26th May 50kg faulty Syndon returned to supplier
Closing stock (monthly stocktake)
• Syndon 14720kg
• Tyrox 17860kg
• Finished Goods 94000 units
After giving you the stock report, one of the owners remembers that on the 29th they went in to the store room, took 50kg of Tyrox for their own use and forgot to put it on the stock report.
Trowkan Ltd have a stock discrepancy account which they use to transfer any discrepancies in stock numbers after the monthly stocktake.
1. Check the information you have been given thoroughly for any potential errors.
2. Using Excel, create stock cards for the raw materials used in production. Use the weighted average method for Sydon and the FIFO method for Tyrox.
3. Prepare journal entries for the stock movement of the raw materials, including stock discrepancy, and finished goods (you can assume the opening and closing stocks of WIP are 0).
4. The store managers salary was $3800 for the month. Use this, along with the stock discrepancy to find a rate to charge material overheads per unit produced.
Next you ask to see details of employees who work in the factory. You already know about the store manager so you ask for the records of the other factory employees.
The owners tell you that each employee has a time card for the week. Employees must fill out this time card and then at the end of the week, after the payroll has been done, the cards are put in the filing cabinet. You ask for the time cards for the month and the owners go to a filing cabinet in the staff room and remove the cards. You ask about the filing cabinet and are told that neither the staff room nor the cabinet are locked and the documents kept in the cabinet are the only copies.
You look at the time card for one week and have the following information.
P. Watkins 40 hours supervision $900 per week
P. Uhlman 38 hours machine operating – normal time
(Operator) 2 hours waiting for machine to be repaired
5 hours machine operating – overtime
R. Jarvis 32 hours machine operating – normal time (Operator) 2 hours machine operating – overtime 8 hours personal leave (fully paid)
J. Stephens 32 hours cleaning – normal time
(General hand) 8 hours machine operating – normal time
J. Reid 40 hours machine operating – normal time
(Operator) 5 hours machine operating – overtime
Overall for the month, you have the following.
P. Watkins 184 hours supervision $4140
P. Uhlman 182 hours machine operating – normal time (Operator) 2 hours waiting for machine to be repaired
12 hours machine operating – overtime
R. Jarvis 176 hours machine operating – normal time
(Operator) 15 hours machine operating – overtime
8 hours personal leave (fully paid)
J. Stephens 152 hours cleaning – normal time
(General hand) 32 hours machine operating – normal time
J. Reid 160 hours machine operating – normal time
(Operator) 8 hours machine operating – overtime 24 hours personal leave (fully paid)
A machine operator is paid at $15.30 per hour. General hands are paid at $12.80 per hour but at operators’ rates when operating machines. Repair time is in normal working hours. Overtime is paid at time-and-a-half. Tax is deducted at the following rates:-
Supervisor – 30%
Operator – 25%
General hand – 20% *All of J Stephen’s pay (including machine operating) is taxed at this rate
The operators and supervisor pay union fees of $4 per week while the general hand pays $2. Watkins, Uhlman and Reid also make contributions to a medical fund of $10 per week. All these amounts are deducted from wages. All employees normally work a 40 hour week at 8 hours a day and there were 4 pay days during May.
In addition you ask for any other invoices which the factory has paid for the month. The owners go to the filing cabinet again and take out a folder with all miscellaneous invoices paid during May, the total for the invoices is $47,084.
1. Using Excel, prepare a payroll register using the weekly figures given which shows the pay details for each employee and totals for the week including gross pay, deductions and net pay.
2. Use your payroll register to find the following figures for the week:
• Direct labour
• Indirect labour
• Overtime premium
• Idle time
• Supervision • Personal leave
3. Find the direct and indirect labour costs for the month.
4. Prepare the general journal entries for the direct and indirect labour as well as the other overheads
5. Use the information given to find an overhead application rate based on direct labour hours.
6. You will also be required to a rate per hour to charge for an operator which will cover all payroll related on-costs
You have been asked to prepare a budget for Trowkan Ltd for June, you have been provided the following information.
• Expected sales 100000 units @ $16 per unit
• Expected production 95000 units
• Working days for June 20 (there is a paid public holiday during the month)
• Overtime expected 42 hours for operators
• Expected Sydon purchases 12000kg @ $9.10 per kg
• Expected Tyrox purchases 25000kg @ $4.80 per kg
• Operating expenses o Sales commissions 5% of total sales value o Cartage out $0.20 per unit sold o Office salaries $30 000 per month
o Electricity $200 per month o Depreciation of motor vehicles $600 per month
o Telephone $3000 per annum plus 0.05% of sales o Office supplies $0.10 per unit sold
o Rent $750 per month
o Motor vehicle expenses $1200 per month o Bank fees and interest $1400 per month
Using the information given and your calculations from parts A and B, prepare a budget for Trowkan Ltd for June including:
• Stock cards
• Payroll summary for the month
• Manufacturing statement
• Income statement
Organise a Skype session with a lecturer via the link in the course site. During this session, your lecturer will play the part of the owners of Trowkan Ltd and you will be required to:
• Present your overhead applications rates and June budget
• Inquire about any possible errors in the information provided
• Ask for any additional information you may need to perform the tasks required
It is now the end of June. Trowkan Ltd have provided you with the actual figures for June which can be compared with the budgeted figures.
Sales 100000 units
Stock in $1600000 revenue
• 7th June 6000kg Sydon, invoice value $54,600
• 7th June 13000kg Tyrox, invoice value $62,400
• 14th June 48000 units finished goods
• 19th June 6000kg Sydon, invoice value $54,900
• 19th June 12000kg Tyrox, invoice value $57,240
• 29th June
Stock out 47000 units finished goods
• 1st June 6000kg Sydon to production
• 1st June 12000kg Tyrox to production
• 6th June 60000 units of finished goods sold
• 15th June 6000kg Sydon to production
• 15th June 12000kg Tyrox to production
• 25st June 40000 units finished goods sold
Closing stock (monthly stocktake)
• Syndon 14460kg
• Tyrox 18110kg
• Finished Goods 89000 units
P. Watkins 160 hours supervision $3600
8 hours public holiday $180
P. Uhlman 160 hours machine operating – normal time
8 hours public holiday (fully paid) 15 hours machine operating – overtime
R. Jarvis 160 hours machine operating – normal time
18 hours machine operating – overtime
8 hours public holiday (fully paid)
J. Stephens 152 hours cleaning – normal time
(General hand) 8 hours public holiday (fully paid)
J. Reid 155 hours machine operating – normal time
(Operator) 8 hours machine operating – overtime
5 hours waiting for machine repair
8 hours public holiday (fully paid)
Store manager $3500
Other overhead invoices
Operating Expenses $52452
• Sales commissions $82 500
• Cartage out $20 000
• Office salaries $32 000
• Electricity $240
• Depreciation of Motor Vehicles $640
• Fixed telephone expenses $300
• Variable telephone expenses $750
• Office supplies $10 800
• Rent $800
• Motor vehicle expenses $1 800
• Bank fees and interest $1 600
Prepare a report for the owners of Trowkan Ltd which includes the following:
• A fully classified income statement showing variances against budget
• Recommendations for overhead applications rates to be used
• Describe the variances can be used to improve costing systems moving forward
• Explain the key principles of budget preparation and how they can be used to produce more accurate budgets in the future (may need to do your own research)
• Outline any procedural or organizational changes which Trowkan Ltd could make to help improve costing systems, management accounting requirements and data security
• The owners of Trowkan Ltd are concerned about a journal entry where their bank account is debited when a sale is made, explain the principles of double entry bookkeeping and how a debit in the bank account is different to a debit bank balance
Include all calculations as an attachment to your report.
Reassessment details (if applicable):
Date of reassessment: _____________________________________ (Attach supplementary documentation used in re-assessment)
Reassessment outcome, if applicable:
Feedback to student:
Student Name Student Signature I have been advised of the outcome of this assessment.