ACT502 Management Accounting, Semester 2, 2020
Marks - Weight 30%
Due Date: Sunday 4th October Midnight (week 10)
? This assignment consists of one question only. The due date and time is noted in the unit information document as well as above.
? It is your responsibility to ensure you factor in any time difference between Darwin and other locations when submitting your assignment.
? Please construct your answer in the worksheet in Excel file and upload using the submission point for the assignment on Learnline.
? Marks will be given for the quality of your calculation formats (evident from the formulas on the Excel spreadsheet) even if your final calculations are not correct. Show your calculations clearly.
? Assignments submitted via e-mail will NOT be accepted.
? There is no need to complete a university cover sheet but DO please include your name, Student Number, and your tutor’s name.
? Do not include the actual question in your submitted assignment. You need to only include your answers to the questions.
? This is not a group assignment; it is an individual assessment. Your solutions will likely be different from other students. If portions of your assignment are copied or very close to copying, all parties will be penalised for copying. Copying would be considered plagiarism and CDU has restrict policies in this regard (please see https://www.cdu.edu.au/academic-integrity for details).
ABC Pty Ltd produces turbines used in the production of hydro-electric generating equipment. The turbines are sold to various engineering companies that produce hydropowered generators in Australia.
Details of the operations for the coming four months are provided in the attached excel spread sheet.
• The company plans to purchase land for future expansion
• Sales are on credit. Amounts not received in the month following the sale are written off as bad debt immediately.
• The payment for labour and purchases of materials and other costs are for cash and paid for in the month of acquisition.
• If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage (including any interest payments due ). Any cash borrowed is repaid one month later, as is the interest due.
During the process of preparing the organisation’s budget, the Sales Manager is discussing the possible outcome of the forthcoming election with the Production Manager. She noted that if one of the major political parties wins the election and forms the government, there is a strong possibility that alternative sources of energy such as hydro-powered electricity may no longer be as actively supported by the new government as is the case under the current government.
The sales manager’s primary concern is that market for alternative power generation is already volatile and subject to significant uncertainty. The production manager is also concerned about his plans to build the new automated manufacturing facility on the land to be purchased in May. This new manufacturing facility will enable him to manufacture, in-house, the major two parts he is now purchasing and to significantly automate the assembly process that is currently somewhat labour intensive. His projection for the new facility indicates a reduction in direct material & direct labour costs of 33% but that his fixed manufacturing overheads are likely to increase by 65% due to the increased investment in production capacity.
Part A: Prepare Operating Budgets as follows: (75% of the marks)
1) Monthly Sales Budget for the quarter ending June
2) Monthly Production Budget for the quarter ending June
3) Monthly Direct Materials Budget for the quarter ending June
4) Monthly Direct Labour Budget for the quarter ending June
5) Monthly Manufacturing Overhead Budget for the quarter ending June
6) Monthly Selling & Administrative Expenses Budget for the quarter ending June
7) Ending Inventory Budget for the month of June
8) Cost of goods Sold Budget for the quarter 9) Budgeted Income Statement for the quarter 10) Monthly Cash budget for the quarter.
Part B (25% of the marks)
Write a brief report (approx. 500 words or less) addressing the Sales managers concerns, using some of the concepts covered in topic 1 to 6 AND the information provided on the cost structures identified in the budget prepared in Part A. Your report should also include a discussion on the impact of the production manager’s intended investment in new manufacturing capacity. Support your report with relevant calculations.
Note that you should restrict your report to the concepts specifically covered in topics 1-6 and not discuss the current political situation, environmental issues or the marketing of alternate energy sources etc. or other interesting but otherwise irrelevant issues.