# APPLY ANALYTICAL PROCESSES TO CONSTRUCT ACCOUNTING

## APPLY ANALYTICAL PROCESSES TO CONSTRUCT ACCOUNTING SYSTEMS AND MODELS

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The purpose of Assessment item 1 is to establish the skills needed in the workplace for costing products and services using the appropriate processes and tools and apply analytical processes to construct accounting systems and models using workplace tools. Each question uses realistic data and the professional practices similar to that found in workplaces.

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

QUESTION 1 Management accounting and costs (4 marks)

Identify the three major cost elements in the cost of a product or service. Define each and give examples.

QUESTION 2 Costing (4 marks)

Give three examples of products where more detailed recording of costs is required and three examples of products where averaging techniques may be appropriate.

QUESTION 3 Cost concepts (4 marks)

The monthly cost of renting a manufacturing plant is

Aa prime cost and an inventoriable cost.
B a prime cost and a period cost.
C a prime cost and a product cost.
D a conversion cost and a period cost
E a conversion cost and an inventoriable cost.

QUESTION 4 Manufacturing statement and income statement (18 marks)

See the requirements within the spreadsheet template below.

Check the assignment requirements in this subject outline paying particular attention to the spreadsheet requirements. Ensure you have separate data and report areas showing only formulas. Use IF functions to allow for the possibility of either a net income or a net loss. Show row and column headings and paste both a normal view and a formula view.

QUESTION 5 Cost concepts (8 marks)
Should overtime payments be treated as direct labour, or as overhead? Explain.

QUESTION 6 Understanding the entries in the Materials Control account (6 marks)
The Materials Control account balances were \$40 000 on 1 April and \$20 000 on 30 April. During April direct materials issued to production were \$70 000 and indirect materials consumed were \$30 000.

Required:
Show the Materials Control account in the ledger for April and a general journal entry to record the cost materials purchased during April.

QUESTION 7 Understanding the entries in the Accrued Payroll account (8 marks)

Required:
T-account for Accrued Payroll for March and general journal entries for recording salaries and wages earned by factory employees during March.

QUESTION 8 Payroll: direct and indirect labour (8 marks)
J. Smith worked for 48 hours during the pay week ending Friday April 24. His normal working week consists of 40 hours, of which 35 hours were spent on production while the remaining 5 hours were non-productive idle time. Smith worked 2 hours overtime at a premium of 50% on Monday April 20 because a customer required work finished by Tuesday April 21 even if overtime had to be worked to complete it. Smith worked a further 6 hours overtime on Wednesday April 22 on other production. It is the policy of the company to pay an overtime premium of 100% after the first 3 hours on any one day. Smith’s normal wage rate is \$22 per hour.

Required:
(a) Calculate Smith’s gross pay for the week.
(b) Indicate the sum to be treated as indirect labour.

QUESTION 9 Activity Based Costing (10 marks)

Prepare a business report outlining the traditional costing system and evaluate arguments for and against ABC. Use the Internet as a resource. The following resources will help you prepare and format your report:

QUESTION 10 Direct, step and reciprocal methods of overhead allocation (20 marks)
Colin and Company has two production departments and two service departments. The budgeted costs of these departments are:

The services of S1 are allocated according to the number of employees in the other departments:

S2 has 20 employees, P1 30 employees and P2 30 employees.

The services of S2 are allocated 30% to S1, 20% to P1 and 50% to P2.

Required:
Allocate service department costs to the production departments using
(a) the direct method
(b) the step method
(c) the reciprocal services method.

1. Solve manually. Use the algebraic method for the reciprocal services method.
2. Then solve with a spreadsheet. Show the Matrix algebra solution. See examples in your text.

The presentation for this assignment is weighted at 10 marks.

Rationale

This assignment assesses your achievement of learning outcomes including the application of cognitive skills in the design and operation of costing systems; the design and operation of performance management systems including manufacturing statements, job costing systems, ABC and service department cost allocation; the role of management accounting in organisational contexts and the implications for management accounting of different paradigms; the application of analytical and synthetical skills in report writing; quantitative techniques and computer software including using the Internet as a professional source; the creation and implementation of computerised decision models; and to critique how managers make decisions.

In particular, this assignment is designed to assess your application of knowledge, understanding and skills in certain topics including cost flows in management accounting, functions, terminology, manufacturing statements, spreadsheet construction, product costing, materials acquisition systems, labour payment systems, accounting for overhead, business report writing, activity based costing, (ABC) and the allocation of overhead including service department costs.

Marking criteria

For spreadsheet questions formula views showing row and column headings are important.

Your assignments will be marked as a whole with recognition being given to application of knowledge, quality thinking and application of skills. For some questions, students have a chance to demonstrate some creativity, or provide their own examples or give evidence of wider reading or structure a computer spreadsheet model in an innovative manner. We also need to avoid the snowballing effects of cumulative errors - that is, an error early in a practical question which carries through. Thus a marking system is used with deductions for errors and omissions. Full marks are possible for well structured, complete, quality answers.

Any assignments with significant evidence of plagiarism may be referred to the university`s academic misconduct processes and will receive a grade of zero.

The marking criteria for your assignments will be based on the content of the subject as identified by the learning objectives as outlined above and at the beginning of each of the various topics as outlined in the Interact topics. Good spreadsheet answers will comply with the assignment requirements.

Example of marking criteria for an essay/business report.

Example criteria used in marking essays/discussion questions/case studies/business reports
While there is no particular format required for these answers, the following criteria are likely to be used. Note that business reports are more structured than essays.

Criteria
Relevance of the answer - are the important issues raised in the question identified? Did the student answer the questions?
Critical capacity. Has reference material been carefully analysed or critically accepted?
Structure of the answer. Is the answer well-structured and the argument logically developed?
Writing style. Is the style concise and lucid or confused, making it difficult for the reader to get the point?
Scope of reading. Does the answer indicate a satisfactory coverage of literature relevant to the questions?

• be well planned with arguments flowing logically;
• use correct sentence structure, punctuation and spelling;
• present original ideas where appropriate;
• and present a justified conclusion and acknowledge all sources.

Presentation

• Single spacing and small margins are welcome to save paper.
• For any business report style questions a report structure is expected.
• Provide references throughout your assignment including page references to texts, articles and URL’s of websites.
• CSU uses the APA referencing style. See or refer to the CSU library
• Post enquiries to the subject discussion forum to clarify any assignment format issues.
• Acknowledge ALL sources used.
• At the end of your assignment include a complete Bibliography (Reference List) of resources actually used including the Internet, textbook, Study Guide, Software help files and videos supporting this subject.

Requirements

Assignment Requirements (also check the presentation expectations above).

1. On the first page of your assignment list all questions attempted and include an academic integrity statement that the work submitted is your own and that all sources used have been acknowledged.
2. Your Turnitin submission will consist of two files - a Word file and an Excel file.
3. Paste the spreadsheet solution and a formula view of each spreadsheet in the word file showing
4. Assignment solutions must be presented in the same sequence as set out in the Study Schedule.
5. See referencing requirements above in the Presentation section.
7. For good spreadsheet design it is very important that you have completely separate data entry and solution/report areas. A good spreadsheet solution format is to key in the question in a structure which allows the solution to be completely formula driven. Thus NO data/numbers are entered into the solution/report area.
8. Create the spreadsheets as separate spreadsheets in one workbook. Name the tags at the bottom of the computer screen with the question number. See the examples provided with the Spreadsheet Advice PDF in Interact2 Resources.
9. Where appropriate, use the IF function to provide built-in checks etc. Variances? Net income or net loss?
10. How do you display potential negative numbers in brackets? Google the question! Hint. Format / Cells / Number and select Custom. Enter this: #,##0;(#,##0);0
11. Save each spreadsheet in your workbook with the cursor in cell A1 of the first spreadsheet.
12. Examples of spreadsheets are provided in the Spreadsheet Advice document in Interact2. You MUST read and follow these examples. If you choose to create spreadsheet solutions for other assignment problems, these solutions do not need to comply with the spreadsheet requirements.
13. Please check for viruses. Do not use macros in your files.
14. Keep a copy of all your work. Make copies of your work in progress in case your computer has an accident. Backup frequently.

You can discuss your work with other students prior to submission using the discussion forum. However, please do not post complete versions of answers to the forum. Do not leave assignments until the last minute.

The first page of your assignment should consist of the following parts:

• subject code and name;
• your name and student ID number;
• list of questions attempted and a list of questions not attempted;
• dates and details of any extension granted; usually include a copy of the approval email;
• an academic integrity statement that the work submitted is your own;
• an acknowledgement of all your sources, and
• a footer with your name, student ID and page number.

In today’s business environment we need verbal skills, writing skills, numeracy skills AND digital literacy skills. All of these skills are assessed throughout your study. It is suggested that you attempt the assignment questions week by week.

Solutions to questions should vary in length according to the nature of the question. Solutions to exercises and problem questions should be in a similar form to that demonstrated in the text.

Check the Assignment Requirements above AND the Spreadsheet Advice PDF. Also check the interactive videos.
You should normally submit the assignment only once. Multiple copies received by the University can result in unnecessary delays