management accounting assignment

Case Study 1: Ollivander’s (19 marks)

Ollivander needs your help interpreting these variances! Can you help Ollivander?

1. For the year ended March 2020, compute the variance, indicating whether each is favourable (F) or unfavourable (U). (9 marks)

a. Variable manufacturing overhead efficiency variance

b. Total manufacturing overhead rate variance

c. Production volume variance

2. Select any two of the variances calculated and prepare an explanation (or possible explanation) that you would present to the management team. (4 marks)

Suggestion: select two of the more significant variances OR select two that are related to each other,

3. Prepare the journal entry(ies) to record your variances and write them off at the end of the year. Assume the variance accounts are written off to Cost of Goods Sold. Show your work. (5 marks)

4. Before making any adjustments for variances, (ie. The journal entry you wrote in part 3) will net income for the year be over-stated, or under-stated? (1 mark)

Case Study 2: Gringott’s (15 marks)

1. Draw a diagram to depict this process. Be sure to label all the relevant product categories, key points in the process, and related costs for each stage and output. Show your work. (5 marks)

*you may draw and scan a photo of a diagram and paste it in your excel tab for this question*

2. With respect to Gornok’s suggestion:

a. List and explain the costs that are relevant to Bogrod’s decision. If a cost is not relevant, explain why using simple terminology that Bogrod will understand. Remember, he has never taken a cost accounting course (or any course for that matter). (4 marks)

b. Should Bogrod bring Galleon production in house? Support your answer with a balanced analysis of both quantitative and qualitative factors. (6 marks)

( Management Accounting, I FINAL EXAM QUESTIONS )

( 1 )

Case Study 3: Hogwart’s Houses (18 marks)

1. HH is happy with the profitability of its Construction division but is concerned that the other two divisions are struggling. PH is considering discontinuing one or both of these divisions. Advise HH as to whether it should discontinue one of, both, or neither of its divisions (4 marks)

2. Now consider for 2020 that there are other competitors in the pre-engineered home business. Prefabrication can sell, Transportation can buy and sell, and Construction can buy from external parties and all divisions are operating at capacity. Market prices for 1 prefabricated housing unit, pre and post shipping, are $60,000 and $90,000, respectively. Further assume that at these prices, the optimal capacity remains at 200 units per division. Calculate operating income for each division using market prices as the transfer prices – does your answer to part a change at all given these results? (8 marks)

3. Still considering that the market prices from part b exist, what would happen if HH allowed the divisions to negotiate their own transfer prices? Qualitatively discuss whether or not there would be changes to the transfer price or quantity exchanged. (6 marks)

Case 4: Bethilda’s Brooms (18 marks)

1. Calculate the expected customer-level operating income for the six customers. Use the number of written orders at $30 each to calculate expected order costs. (6 marks)

2. Recalculate the customer-level operating income using the number of written orders but at their actual $12 cost per order instead of $30 (except for Brooms ‘R Us, whose actual cost is $30 per order). What will Bethilda’s assessment of customer-level (and salespeople) performance be for this period? (ie. Did they perform better or worse than expected?)

(6 marks)

3. Recalculate the customer-level operating income if salespeople had not broken up actual orders into multiple smaller orders. Don’t forget to also adjust sales commissions. (3 marks)

4. How is the behaviour of the salespeople affecting the profit of Belinda’s Brooms? Is their behaviour ethical? What can Bethilda do to change their behaviour? (3 marks)

*hint* this question requires you to take the same information making only minor adjustments. Read the full question first, then plan for your response