Management Accounting Project

Management Accounting Project: Due Date (For all parts): 9/10/2014 at 6.30pm Part 1: (Theory) Instructions:  Each student should submit write a report answering the following questions.  You are also required to do research and reference your work academically.  You are required to use at least three resources (e.g. Journals, Articles, books… etc) from EBSCO. Brave Brands Marketing is a well-renowned marketing organisation with a strong workforce of dedicated employees. However, the CEO has recently identified that many of his staff members have a poor understanding of financial statements and difficulty in interpreting financial data as their tertiary education has not exposed them to such information. As an ADSM graduate, you have been asked to do research which will enable you to answer the following questions in preparation for the training course that you will perform internally for the company. 1 In a brief but comprehensive response, define the role of accounting. (You are required, amongst others, to address accounting information, users of financial information, the accounting process and the role of financial accounting vs. management accounting.) 2. In general, explain what the statement of comprehensive income (income statement) and statement of financial position (balance sheet) portray about a business entity and briefly discuss what is contained in each statement. 3. Briefly discuss the difference between the cash basis and accrual basis of accounting using the example of rent of 24000AED being paid in advance by Company A for 12 months from 1 September 2014. Company A has a December year end. 4.The CEO has described an item in the financial statements of Brave Brands Marketing as “…a present obligation, arising from a past event, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits.” Describe using accounting terms the above statements 5. You received the following chart: You need to: 1- Arrange these costs in a table that lists factory overhead costs for the year. 2- Analyze the remaining costs and select those related to production activity for the year; selected costs should include the materials and goods in process inventories and direct labour. Part 2: Instructions:  This is a group assignments. Students should form groups of 2- 4 members  Please note that groups of more than 4 people can’t be accepted and their work will not be graded  All students in a group can produce the same answers  Each student should provide a reflective paragraph on the challenges and problems they faced in the report and how they overcame it. (This shouldn’t be more than 100 words per student)  Answer the following three cases: Case 1: A Dubai factory manufactures garden huts. The production process is classified into two production departments, Assembly and Joinery. There is one service department, the canteen. The relevant forecast information for the year ahead is as follows: Indirect costs for all three departments in total as well as the apportionment methods are as follows: The following information is available for each department: REQUIRED 1. Allocate production overhead costs to the Assembly, Joinery and Canteen departments using the apportionment methods provided. Use the format below to answer the question. 2. For each production department, calculate an overhead cost rate, based on labour hours, which may be used to absorb production overhead cost to jobs (correct to two decimal places). 3. Find the overhead cost of a job which spends three labour hours in the Assembly department and four labour hours in the Joinery department (correct to two decimal places). Case 2: The following planned results are available for ABC Company with a single product: REQUIRED 1 Calculate the break-even point in units. 2 Calculate the margin of safety in units. 3 What would be the required sales volume to earn a profit of 10 000? Case 3: XYZ Company has a single product and the following information for the period has been provided: 1 - What sales revenue is required to break even (rounded to the nearest whole cent) using the contribution margin %? 2- Briefly explain what happens to the breakeven point and the margin of safety in the following circumstances: A. An increase in the selling price of a product B. A decrease in variable costs per unit C. An increase in fixed costs