ACT202 Management Accounting, Semester 1, 2020
90 Marks – Weight 40%
Due Date: Sunday 17/5/2020 (week 10) 5 pm (Darwin Time)
• This assignment consists of two questions. The due date and time is noted in
the unit information document as well as above.
• It is your responsibility to ensure you factor in any time difference between
Darwin and other locations when submitting your assignment.
• Please construct your answer in the worksheet in Excel file and upload using
the submission point for the assignment on Learnline.
• Marks will be given for the quality of your calculation formats (evident from
the formulas on the Excel spreadsheet) even if your final calculations are not
correct. Show your calculations clearly.
• Assignments submitted via e-mail will NOT be accepted.
• There is no need to complete a university cover sheet but DO please include
your name & Student Number.
• Do not include the actual question in your submitted assignment. You need to
only include your answers to the questions.
• This is not a group assignment, it is an individual assessment. Your solutions
will likely be different from other students. If portions of your assignment are
copied or very close to copying, all parties will be penalised for copying. Copying
would be considered plagiarism and CDU has restrict policies in this regard (please
see https://www.cdu.edu.au/academic-integrity for details).
Q. 1 (Max. Marks:30)
John Smith, a college student, plans to sell CD players over the internet & by mail order
during the semester to help pay his expenses. He buys the players for $29 & sells them for
$50. If payment by cheque accompanies the mail order (estimated to be 40% of sales), he
gives 10% discount. If customers include a credit card number for either internet or mail
order (estimated 30% of sales), they receive 5% discount. The remaining collections are
estimated as follows:
One month following 15%
Two months following 8%
Three months following 5%
Sales forecast are as follows:
September 150 units
October 250 units
November 350 units
December 450 units
January Business terminated
John plans to pay his supplier 60% in the month of purchase, and 40% in the following
month. A 5% discount is granted on payments made in the month in the month of purchase.
However, John will not be able to take any discounts on the September purchases because
of cashflow constraints. All September purchases will be paid for in October.
John has 50 players on hand (purchased in August and to be paid in September), and plans
to maintain enough end-of-month inventory to meet 60% of the next month’s sales. John
also wished to maintain a closing cash balance of $1,500 in the bank once the business
commences in September. The current interest rate on short term loans is 3.5% pa.
Prepare schedules for monthly budgeted cash receipts (10 marks) & cash disbursements (13
marks) & the cash budget (5 marks). During which month will John need to organise a short-
term loan & for how much? (2 marks)
Q.2 (Max Marks:60)
Warsaw Ltd operates at capacity and makes glass-topped dining tables and wooden chairs,
which are then typically sold as sets of four chairs with one table. However, some customers
purchase replacement or extra chairs, and others buy some chairs or a table only, so the sales
mix is not exactly 4:1. Warsaw Ltd is planning its annual budget for the financial year 2020.
Information for 2020 is as follows:
Wood $5.30 per board metre
Glass $11.5 per sheet
Direct manufacturing labour
$14 per direct manufacturing labour-
Input quantities per unit of output
Wood 1.2 board metres 1.7 board metres
Glass — 2 sheets
labour 3 hours 6 hours
Machine-hours (MH) 2 MH 5 MH
Inventory information, direct materials
Beginning inventory 27 200 board metres 8 700 sheets
Target ending inventory 29 360 board metres 9 500 sheets
Sales and inventory information, finished goods
Expected sales in units 172 000 45 000
Selling price $70 $900
Target ending inventory in
units 8 400 2 050
Beginning inventory in units 7 500 2 150
Chairs are manufactured in batches of 500 and tables are manufactured in batches of 50. It
takes three hours to set up for a batch of chairs and two hours to set up for a batch of tables.
Warsaw Ltd uses activity-based costing and has classified all overhead costs as shown in the
fixed Cost driver/allocation base
handling $342 840 $600 000 Number of board metres used
Set-up 97 000 300 740 Set-up hours
Processing 789 250 5 900 000 Machine-hours
Marketing 2 011 200 4 500 000 Sales revenue
Distribution 54 000 380 000 Number of deliveries
Delivery trucks transport units sold in delivery sizes of 500 chairs or 500 tables.
For the year 2020:
1. Prepare the revenues budget. (1 mark)
2. Use the revenues budget to:
1. find the budgeted allocation rate for marketing costs (1.5 marks)
2. find the budgeted number of deliveries and allocation rate for
distribution costs. (3.5 marks)
3. Prepare the production budget in units. (2 marks)
4. Use the production budget to:
1. find the budgeted number of set-ups, set-up hours and the allocation
rate for set-up costs (5 marks)
2. find the budgeted total machine-hours and the allocation rate for
processing costs. (2.5 marks)
5. Prepare the direct materials usage budget and the direct materials purchases
budget. (5 marks)
6. Use the direct materials usage budget to find the budgeted allocation rate for
materials-handling costs. (2.5 marks)
7. Prepare the direct manufacturing labour cost budget. (1.5 marks)
8. Prepare the manufacturing overhead cost budget for materials handling, set-
up and processing. (1.5 marks)
9. Prepare the budgeted unit cost of finished good (16.5 marks) and ending
inventories budget. (4.5 marks)
10. Prepare the cost of goods sold budget. (3 marks)
11. Prepare the non-manufacturing overhead costs budget for marketing and
distribution. (1 mark)
12. Prepare a budgeted income statement (ignore income taxes). (3 marks)
13. Compare the budgeted unit cost of a chair to its budgeted selling price. Why might
Warsaw Ltd continue to sell the chairs for only $70? (6 marks)