Posted: October 20th, 2022

MAA262 – Management Accounting Assignment

MAA262 – Management Accounting
Trimester 2, 2019
Assessment 2 – Individual Assignment Part I
DUE DATE AND TIME: Week 5, 09/08/2019, 6:00 PM
PERCENTAGE OF FINAL GRADE: 15%
HURDLE DETAILS: No hurdle
Learning Outcome Details
Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO)
ULO 3: Prepare and explain alternate product costing using job
costing, variable and absorption costing, and activity-based costing
systems.
GLO 1, 2 & 5
ULO 6: Demonstrate a student-oriented approach to learning. GLO 1 & 2
Assessment Feedback:
Students who submit their work by the due date will receive their marks and feedback on
CloudDeakin on 26/08/2019, 6:00 PM.
Instructions
Penalties for late submission: The following marking penalties will apply if you submit an assessment
task after the due date without an approved extension: 5% will be deducted from available marks for
each day up to five days, and work that is submitted more than five days after the due date will not
be marked. ‘Day’ means working day for paper submissions and calendar day for electronic
submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or
impracticable to assess the task after the due date.
Page 2 of 10
Extension and special consideration: If you want to request an extension for an assignment task or
some other sort of special consideration please check whether you are eligible or not. Please note
that if you are not eligible or you lack evidence supporting your request, your request will be
dismissed. Special consideration requests regarding summative assessment tasks before the due
date should be directed to the unit chair. Special consideration requests regarding the final exam
should be lodged with our Division of Student Administration (DSA), so please note the unit chair is
not responsible for handling special considerations regarding the final exam. Extensions can be
granted for unexpected circumstances such as serious illness or for compassionate reasons under
special circumstances. Extensions can only be approved by the unit chair and have to be requested
before the due date. You will be asked to provide evidence to support your request and a draft of the
work completed to date. Where an extension is approved you will be given between 1 day and 2
weeks to submit your work. For requests after the due date please submit your request to Special
Consideration https://www.deakin.edu.au/students/studying/assessment-and-results/specialconsideration. Work or holidays or other assignments are not grounds for an extension – you are
expected to manage these issues as part of your studies. You are strongly encouraged to start early
and to continually backup your assignment as you progress. Computer crashes or corrupted files will
not be accepted as valid reasons for an extension of any length.
A brief description of the assessment task: This assignment task will consolidate your understanding
of some of the key concepts covered in this unit. Please submit your answers to the questions in the
order they are presented, clearly identifying on the document which question is being addressed. As
long as you are clearly identifying which question is being addressed you are not required to repeat
the question on your assignment.
Submission instructions: This assignment is to be submitted online only. The completed assignment
must be submitted as one file as a Microsoft Word document or Portable Document Format (PDF)
into the allocated area on CloudDeakin under the Dropbox folder on or before the due date. Once
submitted, you cannot retract your assignment but you can submit another version. Note that only
the most recent version submitted will be marked. You must keep a backup copy of every assignment
you submit until the marked assignment has been returned to you. In the unlikely event that one of
your assignments is misplaced, you will need to submit your backup copy. When you are required to
submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin
email address confirming that it has been submitted. You should check that you can see your
assignment in the Submissions view of the Assignment Dropbox folder after uploading it, and check
for, and keep, the email receipt for the submission.
Plagiarism: You should answer the questions using your own words. If you use material or ideas from
a third-party source you must cite the reference in text and include the full details of the source in a
reference list. Your assignment submission will be assessed through Turnitin. Assignments submitted
with 50% or more on the similarity index (orange or red colour) will not be marked. Note that Turnitin
works in the assignment folder, and there is where you should submit your assignment. Do not
submit your assignment somewhere else, because if you submit your assignment in another folder
from another unit the document will be stored in Turnitin memory, and I will receive a notice of 100%
plagiarism. Hence, to avoid such hassle please submit your assignment in the assignment folder.
Check Academic Integrity for more information regarding plagiarism and collusion:
https://monkessays.com/write-my-essay/deakin.edu.au/students/studying/academic-integrity
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Detail of student output: Your response should respond to all questions. The word limit is 2,000
words (maximum) in total, and words limit includes headings, tables, references and appendices.
Note that a contents page and cover page are not required. In regards to the formatting of the
assignment, there is no specific requirement in regards to font, font size and line spacing. There is no
minimum amount of words. Any word above the limit of 2,000 will be penalised by 1 mark for each
additional word, thus 2,010 words have a 10 marks penalty, 2,020 words have a 20 marks penalty,
and henceforth.
Weight (% total mark for the unit): This assignment is marked out of 100 and is worth 15% of your
final grade. The final examination is the only hurdle requirement for this unit. If you choose not to
submit this assignment, you will score zero for this assignment.
Referencing style: Use the Harvard style of referencing. More information regarding referencing
styles at https://www.deakin.edu.au/students/studying/study-support/referencing
Researching for your assignment: There is no such thing as a minimum or maximum amount of
references to be used in this assignment, and references should be used only when required. If a
question requires research for answering, check the guidelines available on the academic skills study
support page: https://monkessays.com/write-my-essay/deakin.edu.au/students/studying/study-support/academic-skills
Queries: Please peruse the discussion forum as you may find the information you are looking for. If
you are unable to find the information regarding the individual assignment you are looking for, please
contact the teaching team by using the discussion forum on CloudDeakin.
Page 4 of 10
Fridges-R-Fun
Fridges-R-Fun is a small company which makes and sells fridges. The company is owned by John, who started
his business from scratch. The second in the chain of command is Paul, the general manager.
Question 1
Recently John has been concerned that his company may be wasting too much money on unnecessary costs,
so he decided to hire someone to analyse his company’s numbers and do some management accounting. He
requested his general manager, Paul, to hire someone who can fulfil this management accounting task.
For doing some management accounting analyses, Paul hired George the Plumber. George is a licensed
plumber. Also, George is Paul’s brother-in-law and had been looking for a full-time job for a while. Paul has
explained to the owner of Fridges-R-Fun that George understands a lot about pipes, so he was pretty sure he
would exceed on his role.
Required
Please state one of the ethical standards, as provided by the Institute of Management Accountants (IMA)
Statement of Ethical Professional Practice, which is being jeopardized by Paul hiring George the Plumber and
justify why this standard is being jeopardized. (There might be more than one ethical standard being
jeopardized but only one is required for this question). (10 marks)
Question 2
John is proud of his ‘learning as you go approach’. Since his early days in the industry, John enjoys reworking
on fridges for fixing problems. Often Fridges-R-Fun products display problems on the welding between heatexchanging pipes and the compressor. Also, it is not uncommon having customers requesting repairs or
replacements due to problems with their fridges during the 5 years warranty.
John and Paul are concerned that Fridges-R-Fun is wasting too much money. So, Paul has hired Ringo for doing
some management accounting. (George the Plumber did not last a month in the job). Ringo is a qualified
management accountant and is keen to use his knowledge to Help Fridges-R-Fun.
Ringo reviewed the quality costs activities (Year 1) and noted that Fridges-R-Fun has been spending too much
money on warranties. With the support of both John and Paul, Ringo decided to implement the following
changes:
• Develop a new system for streamlining the assembly line.
• Provide technical support to suppliers for minimizing the chances of receiving faulty material.
• Field testing of fridges at customers’ sites.
• Inspection of fridges on assembling line.
Page 5 of 10
The amounts spent on quality costs are listed on Table 1:
Table 1 – Quality Costs
Activity Year 1 Year 2 Year 3
Systems development $ $ 200 $ 100
Technical support to suppliers of compressors $ $ 150 $ 150
Technical support to suppliers of pipes $ $ 100 $ 100
Field testing at customers’ sites $ $ 250 $ 250
Inspection on assembling line $ $ 500 $ 500
Rework on assembling line $ 500 $ 100 $
Warranty repairs of fridges $ 700 $ 600 $ 500
Warranty replacements of fridges $ 1,500 $ 1,300 $ 1,100
Total quality costs $ 2,700 $ 3,200 $ 2,700
Required
a) Classify the 8 activities among the four types of quality costs. (6 marks)
b) Using the information provided in Table 1, explain the relationship between the four types of quality
costs and what has changed throughout the years. (6 marks)
Question 3
When the quality costs for Year 3 were ready, John was disappointed with the outcome. The total quality costs
have increased in Year 2 and finally, in Year 3 the company was back to square zero, spending $ 2,700 in quality
costs. Paul was supportive of Ringo’s decisions and argued that quality is a long-term investment as it takes
time to reap its benefits.
Required
a) Explain John and Paul’s differing points of view of quality costs. (6 marks)
b) Explain what is expected to happen in Year 4 if (i) Fridges-R-Fun keeps following Ringo’s decision and
if (ii) Fridges-R-Fun cancels the activities Ringo has implemented. (6 marks)
Question 4
Ringo is working on the expenses of delivering fridges to customers. Expenses for six months are compiled in
Table 2.
Table 2 – Delivery Expense
Month Fridges delivered Delivery expense
January 450 $ 4,600
February 280 $ 3,000
March 400 $ 4,100
April 550 $ 5,700
May 500 $ 5,000
June 450 $ 4,700
Total 2,630 $ 27,100
Page 6 of 10
Required
a) Using the high-low method and the information provided in Table 2, estimate the variable and the
fixed portions of the delivery expense for Fridges-R-Fun. (6 marks)
b) After reviewing Ringo’s estimated delivery expenses using the high-low method, Paul has noted that
the estimated expenses do not exactly match the actual expenses for all months in Table 2. Why is
this happening? (6 marks)
Question 5
Ringo has implemented a job-order costing system for Fridges-R-Fun using predetermined overhead rates. For
this part, the focus is on two different processes in Fridges-R-Fun, namely, welding the pipes to the compressor
and assembling the fridges. The predetermined overhead rate for welding is based on machine-hours and the
predetermined overhead rate for assembly is based on direct labour-hours.
Ringo has compiled the following estimates for Year 1:
Table 3 – Estimates for Year 1
Estimates Welding Assembly
Direct labour-hours 3,600 7,200
Machine-hours 6,000 600
Fixed manufacturing overhead cost $ 288,000 $ 64,800
Variable manufacturing overhead per machine-hour $ 2.00 $ –
Variable manufacturing overhead per direct labour-hour $ – $ 1.00
The plan is to use the implemented job-order costing system for the following job:
Table 4 – Job
Job Welding Assembly
Direct labour-hours 25 80
Machine-hours 40 5
Direct materials $ 500 $ 200
Direct labour cost $ 300 $ 800
Required
Based on this specific job, answer the following questions:
a) Calculate the predetermined overhead rates used for welding and assembly. (6 marks)
b) Calculate the total overhead cost applied to this specific job. (6 marks)
c) Calculate the total manufacturing cost recorded for this specific job. (6 marks)
d) Considering that this specific job contains 100 units, calculate the unit product cost. (6 marks)
e) Considering the industry benchmark for the overhead for assembly is 75% of direct labour cost,
identify whether this specific job has an overhead for assembly lower or higher than a job using the
industry benchmark. Briefly explain what could cause a difference between this specific job and the
industry benchmark for the assembly overhead cost. (6 marks)
Page 7 of 10
Question 6
After the changes implemented on the costs of quality presented in Question 2, Ringo wants to implement
value-based pricing for Fridges-R-Fun products. As a consequence, the price of fridges would become
customised to different customers based on criteria such as geographic location. Currently, Fridges-R-Fun uses
cost-plus pricing for setting the prices of its products, as discussed by Dholakia (2018).1
Required
a) List and explain three limitations of using cost-plus pricing, as discussed by Dholakia (2018). (6 marks)
b) Explain how value-based pricing would benefit from the costs of quality changes implemented by
Ringo, as discussed in Question 2. (6 marks)
Question 7
Ringo is reviewing the predetermined overhead rate used to estimate the welding overhead cost Year 1. The
estimated total welding overhead cost is $ 300,000 and the estimated level of activity is 6,000 machine-hours.
By the end of the year, Fridges-R-Fun incurred actual total manufacturing overhead cost for welding of
$320,000 and 5,800 total machine hours.
Required
a) Determine the amount of underapplied or overapplied manufacturing overhead for Year 1. (6 marks)
b) What is the implication of having large overapplied or underapplied overhead to the management
planning and product costing? (6 marks)
1 The additional reading for this unit is the following Harvard Business Review article https://hbr.org/2018/07/when-cost-plus-pricing-is-agood-idea
Criteria N N P C D HD
0 3 6 7 8 10
GLO1 –
Ethics
(Q1 – 10
marks)
Not able to list the
ethical standards or
justify why these
standards are being
jeopardized.
Not correctly list the
ethical standards or
justify why these
standards are being
jeopardized.
List some of the ethical
standards or justify
why these standards
are being jeopardized.
List the ethical
standards and partially
justify why these
standards are being
jeopardized.
List the ethical
standards and justify
why these standards
are being jeopardized.
Clearly and succinctly
list the ethical
standards and justify
why these standards
are being jeopardized.
0 2 3 4 5 6
GLO1 –
Quality
Costs
(Q2.a – 6
marks)
Not able to classify the
activities.
Not able classify
correctly most of the
activities among the
four types of quality
costs.
Classify correctly most
of the activities among
the four types of
quality costs.
Classify correctly a
substantial part of
activities among the
four types of quality
costs.
Classify correctly the
majority of activities
among the four types
of quality costs.
Classify correctly all 8
activities among the
four types of quality
costs.
0 2 3 4 5 6
GLO2 –
Quality
Costs
(Q2.b – 6
marks)
Not able to explain the
behaviour between the
four types of quality
costs and what has
changed throughout
the years.
Not able to properly
explain the behaviour
between the four types
of quality costs and
what has changed
throughout the years.
Partially explain the
behaviour between
the four types of
quality costs and what
has changed
throughout the years.
Explain most of the
behaviour between
the four types of
quality costs and what
has changed
throughout the years.
Explain the behaviour
between the four types
of quality costs and
what has changed
throughout the years.
Clearly and succinctly
explain the behaviour
between the four
types of quality costs
and what has changed
throughout the years.
0 2 3 4 5 6
GLO2 –
Quality
Costs
(Q3.a – 6
marks)
Not able to explain the
differing points of view
of quality costs.
Not able to properly
explain the differing
points of view of
quality costs.
Partially explain the
differing points of view
of quality costs.
Explain most of the
differing points of view
of quality costs.
Explain the differing
points of view of
quality costs.
Clearly and succinctly
explain the differing
points of view of
quality costs.
0 2 3 4 5 6
GLO5 –
Quality
Costs
(Q3.b – 6
marks)
Not able to explain
what is expected in the
next year considering
two different
scenarios.
Not able to properly
explain what is
expected in the next
year considering two
different scenarios.
Partially explain what
is expected in the next
year considering two
different scenarios.
Explain most of what is
expected in the next
year considering two
different scenarios.
Explain what is
expected in the next
year considering two
different scenarios.
Clearly and succinctly
explain what is
expected in the next
year considering two
different scenarios.
0 2 3 4 5 6
Page 9 of 10
Criteria N N P C D HD
GLO1 –
Mixed
Costs
(Q4.a – 6
marks)
Not able to estimate
the variable and the
fixed portions of the
delivery expense.
Not able to properly
estimate the variable
and the fixed portions
of the delivery
expense.
Partially estimate the
variable and the fixed
portions of the
delivery expense.
Estimate most of some
part of the delivery
expense.
Estimate correctly most
of the variable and the
fixed portions of the
delivery expense.
Estimate the variable
and the fixed portions
of the delivery
expense.
0 2 3 4 5 6
GLO5 –
High-Low
Method
(Q4.b – 6
marks)
Not able to explain
why the estimated
expenses do not
exactly match all actual
expenses.
Not able to properly
explain why the
estimated expenses do
not exactly match all
actual expenses.
Partially explain why
the estimated
expenses do not
exactly match all
actual expenses.
Explain most of why
the estimated
expenses do not
exactly match all
actual expenses.
Explain why the
estimated expenses do
not exactly match all
actual expenses.
Clearly and succinctly
explain why the
estimated expenses
do not exactly match
all actual expenses.
0 6 13 16 18 24
GLO1 –
Activity
Costs
(Q5.a-d –
24
marks)
Not able to calculate
the predetermined
overhead rates used
for welding and
assembly, the total
overhead cost applied
to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
Not able to properly
calculate the
predetermined
overhead rates used for
welding and assembly,
the total overhead cost
applied to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
Partially calculate the
predetermined
overhead rates used
for welding and
assembly, the total
overhead cost applied
to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
Calculate most of the
predetermined
overhead rates used
for welding and
assembly, the total
overhead cost applied
to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
Calculate correctly
most of the
predetermined
overhead rates used
for welding and
assembly, the total
overhead cost applied
to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
Calculate the
predetermined
overhead rates used
for welding and
assembly, the total
overhead cost applied
to Job, the total
manufacturing cost
recorded for Job, and
unit product cost.
0 2 3 4 5 6
GLO2 –
Activity
Costs
(Q5.e – 6
marks)
Not able to identify
and explain the
difference in
estimating the
overhead cost.
Not able to properly
identify and explain the
difference in estimating
the overhead cost.
Partially identify or
explain the difference
in estimating the
overhead cost.
Identify and explain
most of the difference
in estimating the
overhead cost.
Identify and explain the
difference in
estimating the
overhead cost.
Clearly and succinctly
identify and explain
the difference in
estimating the
overhead cost.
0 2 3 4 5 6
GLO1 –
Cost-plus
Pricing
Not able to list and
explain three
Not able to properly list
and explain three
Partially list and
explain three
List and mostly explain
three limitations of
using cost-plus pricing.
List and explain three
limitations of using
cost-plus pricing.
Clearly and succinctly
list and explain three
Page 10 of 10
Criteria N N P C D HD
(Q6.a – 6
marks)
limitations of using
cost-plus pricing.
limitations of using
cost-plus pricing.
limitations of using
cost-plus pricing.
limitations of using
cost-plus pricing.
0 2 3 4 5 6
GLO2 –
Valuebased
Pricing
(Q6.b – 6
marks)
Not able to explain
how value-based
pricing would benefit
from the costs of
quality changes
implemented.
Not able to properly
explain how valuebased pricing would
benefit from the costs
of quality changes
implemented.
Partially explain how
value-based pricing
would benefit from the
costs of quality
changes implemented.
Explain mostly how
value-based pricing
would benefit from the
costs of quality
changes implemented.
Explain how valuebased pricing would
benefit from the costs
of quality changes
implemented.
Clearly and succinctly
explain how valuebased pricing would
benefit from the costs
of quality changes
implemented.
0 3 7 8 9 12
GLO2 –
Activity
Costs
(Q7.a-b –
6 marks)
Not able to calculate
and explain the
implication of applied
overhead cost.
Not able to properly
calculate and explain
the implication of
applied overhead cost.
Partially calculate or
explain the implication
of applied overhead
cost.
Mostly calculate and
explain the implication
of applied overhead
cost.
Calculate and explain
the implication of
applied overhead cost.
Clearly and succinctly
calculate and explain
the implication of
applied overhead cost.
0-24% 25-49% 50-59% 60-69% 70-79% 80-100%

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