ACC512 | Assignment 2 Preparing Budget | Accounts

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Your assignment consists of different question styles including discussion questions, reports, exercises, problem questions and spreadsheet questions. It assesses learning outcomes as listed in the assignment rationale below.

The purpose of this assignment is to continue to develop skills in costing systems with an emphasis on the role of control in managing the production of goods and services efficiently in the workplace. Each question builds on the knowledge gained through the first assignment to develop the concepts of management accounting control through cost. Each question uses realistic data and professional practices similar to that found in workplaces.

Question 1: Budget (20 marks in total)

Resort Island University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 15,000 students are enrolled on campus. However, the university is forecasting a 5 % growth in student numbers in the coming year, despite an increase in fees of 53,500 per subject. The following additional information has been gathered from an examination of the university records and conversations with university managers:
 Resort Island is planning to award scholarships to 150 students, which will cover their fees.
 The average class has 80 students, and the typical student takes 4 subjects per semester. Resort Island operates 2 semesters per year.
 The average academic staff salary is 5120,000 per annum including on-costs.
 Resort Island's academic staff are evaluated on the basis of teaching, research administration and professional/community service. Each of the academic staff teaches the equivalent of three subjects during the academic year.

1. Prepare a revenue budget for the upcoming academic year
2. Determine the number of staff needed to cover classes.
3. Assume there is a shortage of full-time academic staff. List at least five actions that Resort Island might take to accommodate the growing student numbers.
4. You have been requested by the university's deputy vice-chancellor (DVC) to construct budgets for other areas of operation (such as library, grounds, cafeteria, and maintenance). The DVC noted: 'The most important resource of the university is academic staff. Now that you know the number of staff needed, you can prepare the other budgets. Academic staff are indeed the key driver - without them, we don't operate: Does the DVC really understand the linkages with the budgeting process? Explain.

Question 2: Standard Costing (20 marks in total)

Good Health Insurance Company uses a flexible overhead budget for its new police department. The firm offers five types of policy, with the following standard hours allowed for policy clerical processing:

Question 3: Activity-based costing (20 marks in total)

The Accountant for Pix Photographic supply Ltd has estimated the following activity cost pools and activity drivers for the coming year:

Question 4: Relevant information for decisions (20 marks in total)

Cool Pool Ltd produces equipment and chemical supplies for the swimming pool industry. In one joint process, 10,000 litres of GSX are processed into 7,000 litres of xenite and 3,000 litres of banolide. The cost of the joint process including the GSX, is $40,000 Cool Pool allocates $28,000 of the joint cost to the xenolite and $12,000 of the cost to the banolide. the 3,000 litres of banolide can be sold at the split-off point for 55,000, or they can be processed further into a product called kitrocide. The sales value of the 3,000 litres of kitrocide is $20,000, and the additional processing cost is $26,200.
Cool Pool also manufacture pool vacuum cleaners. A new product is now available from India and Cool Pool's management are considering buying in these new vacuum cleaners and badging them as Cool Pool cleaners.
Cool Pool's managing director has asked your consulting firm to make a recommendation as to whether the banolide should be sold at the split-off point or processed further and to provide them with details of the issues that they should consider when making the decision to outsource this product. Required

1. Write a letter providing an analysis and a recommendation with respect to whether the banolide should be sold at split off or processed further. Also include in this letter the key issues that the management should consider when making the outsourcing decision. Question 5: Variable costing (20 marks in total)

Slumbenvorld Pty Ltd's planned production for the current year was 15,000 units. This production level was achieved, but only 13,500 units were sold at 360 each. Other data are as follows:

Direct material used
Direct labour cost incurred
Fixed manufacturing overhead (actual and planned)
Variable manufacturing overhead (actual and planned)
Fixed selling and administrative expenses
Variable selling and administrative expenses
Finished goods inventory, 1 January

The company uses normal costing. There were no work in process inventories at the beginning or end of the year. Required

1. Prepare an income statement for Slumberworld for the current year using:
1.absorption costing
2.variable costing
2. Which costing method, absorption costing or variable costing, shows a higher operating profit? Why?
3. What would be Slumbenvorld's finished goods inventory cost on 31 December, under:
1.absorption costing
2.variable costing
4. Which costing method, variable or absorption, would you recommend to Slumberworld's management? Why?

Online submission via Turnitin is required for this assignment. Details will be provided by yoursubject lecturer. Rationale

This assessment task will assess the following teaming outcome/s:
 be able to critically evaluate the design and operation of performance management systems.
 be able to explain the role of management accounting in organisational contexts and the implications for management accounting of different paradigms.
 be able to apply analytical and synthetical skills in report writing, and use quantitative techniques and computer software including using the Internet as a professional source.
 be able to create and implement computerised decision models.
 be able to critique how managers make decisions.

For spreadsheet problems, good answers will comply with the spreadsheet requirements including the separation of data entry and report/solution areas, pasted normal and formula view with row and column headings and the use of the IF function where appropriate. Review the examples in the Spreadsheet Advice PDF provided online in Interact2 Resources.

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