only one question - accounting

Assignment 1

2017

1. Due date: 5pm (Sydney time), March 22, 2017

2. Students should have completed tutorials 1 and 2, and lectures 1, 2, and 3, prior to completing this assignment

3. Submit via Turnitin on the BlackBoard site. Students should allow at least 60 mins to load up assignments as Turnitin will electronically cease accepting submissions at 5pm.

4. Each assignment-answer must have a cover sheet.

5. The workshop presenter's (tutor's) name must be disclosed on the coversheet. Students who do not attend workshops must find out the name of presenter delivering the workshop they are enrolled in.

6. Workshop-presenters will mark the assignments of students formally enrolled in their classes. Students should not change workshops without securing course coordinator's permission.

7. Submissions must be typed, not hand-written. Tables can be constructed in Word – use the Table function to "insert' a table into the Word document.

8. The School is aware that there are websites that provide answers to assignments for a fee. Students who utilise these services are short-changing themselves as they lose out on the learning that comes from investing personal effort in completing this assignment. This learning is critical in preparing for the final examination.

Q1.

Dowdy company produces 2 models of widgets: model A and model B. Both models consume services of 2 departments in the factory. Model A is more popular in the market place. The company sets market prices by adding a 10% markup to the total cost of production. Table 1 provides the production data for both models.

Table 1

Note 1: each model is produced in batches. A production run refers to the production of batch in Depts 1 and 2, which involves setting up machines. Dept 1 will have 40 production runs for model A, Dept 2 will also have 40 production runs for model A. The cost of production runs is directly related to the cost of setting up machines in Table 3.

Note 2: Inspection hours are consumed to ensure the quality of products manufactured

Table 2 provides information about the 2 production departments utilised by the 2 models.

Table 2

Table 3 provides a breakdown of the departmental overhead costs, viz. $340,500 and $280,500.

Table 3

Note 3: The cost of setting up machines remains the same per set-up (for each batch) regardless of how many units are manufactured in each batch.

Required (round off all overhead rates to 2 decimal places). Show all calculations.

1. Compute the plantwide overhead cost rate, using direct labour hours as the cost driver (or activity base). (2 marks)

2. Apply the rate in (1) to models A and B. Calculate the amount of overhead allocated to each unit of models A and B. (3 marks)

3. Calculate departmental overhead cost rates: use machine hours for Dept 1, and labour hours for Dept 2. (2 marks)

4. Apply these rates in (3) to models A and B. Calculate the amount of overhead allocated to each unit of models A and B. (8 marks)

5. Compare the overhead allocation methods under 1 and 3 for each model. Clearly explain (by referring back to the case facts) the differences in allocated costs with respect to each model. This part requires a narration that explains any figures calculated to highlight differences in allocated amounts: students cannot just provide calculations without providing a detailed explanation. The marking criteria listed in the rubric provided will be applied in assessing part (5): please ensure that the answer is written in full sentences and using paragraphs. An answer with key words only, which are not developed into a reasoned argument, is not acceptable for second-year assignments. Please see rubric for criteria used to assess the quality of this answer. (10 marks)

Total: 25 marks Rubric for discussion/narrative answer