Assessment Information
This assessment tool is designed to gather evidence on your knowledge as well as abilities to gather record and analyse operating and cost data, prepare budget reports and review costing systems integrity to calculate and record the costs of products and services.It applies to individuals who use specialised knowledge and analytical skills to manage complex financial data and develop comprehensive organisational reports. Your Trainer/Assessor will go through the unit of competency at the very beginning of this unit explaining each element, performance criteria, foundation skill, performance evidence, and knowledge evidence that you will be assessed on via this assessment tool.
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This assessment has two parts:
Assessment Activity 1 - Business scenarios
Assessment Activity 2 - Case studies/Business scenario
Assessment activity 3- Knowledge questions
In order to be deemed competent in this unit you must obtain satisfactory outcome in each part of this assessment. You must collate the following documents and submit in a portfolio format:
- Assessment activity one
- Assessment activity two
- Assessment activity three
Guide for Preparing and Submitting Assessment
- Read each task carefully, to make sure you know what is expected of you. Check whether the task has multiple parts, and make sure you answer all parts.
- Answer all the required task in the sequence as provided
- Research widely and use a variety of reputable sources. Use class notes and discuss with your trainer
ASSESSMENT TASK-01: Business scenarios
Gather and record operating and cost data, Analyse data and assign costs
Task 1.1 (PC-1.1, 1.2)
The following information relates to Lee Manufacturing Ltd. for the year ended 30 June 2015. Lee manufacturing has an organisational policy to make sure all cost data and information systematically coded, classified and checked for accuracy and reliability. Look at following data and answer the task below:
Inventory Balances as at 1 July, 2014 $
Raw Materials Inventory 2,700
Indirect Materials Inventory (Supplies) 500
Work-in-Process Inventory 3,200
Finished Goods Inventory 5,000
Inventory Balances as at 30 June, 2015 $
Raw Materials Inventory 2,800
Indirect Materials Inventory (Supplies) 700
Work-in-Process Inventory 2,950
Finished Goods Inventory 4,500
Other Data for the year ended 30 June, 2015 $
Purchases - direct materials 5,600
Purchase returns - direct materials 190
Direct labour 11,300
Purchases - indirect materials 250
Indirect labour 2,100
Insurance - factory building 750
Depreciation - plant and equipment 9,200
Power 3,500
Rates 1,470
Repairs and maintenance 980
Miscellaneous factory overhead 320
Production Information
Units in work-in-process at 1 July 2014 75
Units commenced during the year 550
Units in work-in-process at 30 June 2015 125
You are required to:
a) Prepare a Manufacturing Statement.
b) Prepare a statement showing the cost of goods sold
c) Calculate the unit cost of goods manufactured.
Task 1.2
Pacific-manufacturing Company employs you as Cost Accountant; you are assigned to establish cost accounting system.
Pacific manufacturing Company has interpreted revenues and costs data that are supported by valid analysis. Pacific Company produced 4000 Car during the year. The Car sells for $800 each. At the end Of the year, there were 800 cars in finished goods inventory. Pacific used back up and security system to protect data and for this, they maintained back up data and authorized person to have password to access cost data. To analysis business performance Pacific accounting records show following data financial year ends December 2015.
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Purchase of material
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640000
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Direct material inventory (31.12.2014)
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93600
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Direct material inventory (31.12.2015)
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133600
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Finished goods inventory(31.12.2015)
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Direct labour
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400000
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Indirect labour
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80000
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Rent factory building
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84000
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Depreciation factory equipment
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120000
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Utilities factory
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23912
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Salary sales supervise
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180000
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Commission sales person
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360000
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General administration
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600000
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1. Cost are assigned to product, service and organizational unit, based on these categories explain following cost term:
a. Variable cost,
b. Fixed cost, and Semi-variable
c. Labor, material, overhead
2. Prepare statement of cost of goods manufactured.
3. Compute Production Cost per unit
4. Prepare the income statement.
Task 1.3
The following April movements occurred in the stock of liquid soap (used by factory employees for hand washing). This material is recorded on perpetual stock cards using FIFO costing.
Apr. 1 Balance on hand 75 litres comprising the following:
25 litres @ $6.00 per litre
50 litres @ $6.20 per litre
22 Issued 55 litres
24 Credit purchase 50 litres @ $6.30 per litre
30 10 litres returned to the materials store from production.
The units returned to the store on 30 April were from the issue on 22 April.
Required:
(I) calculate the cost of the materials issued on 22 April.
(ii) Prepare general journal entries to record all of the above transactions.
(iii) A physical stocktake at 30 April shows 65 litres of soap on hand. Prepare a journal entry to record the cost of the stocktake adjustment.
Task 1.4
The weekly payroll for the week ended 22 June for Barwon Pty Ltd was:
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$
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Gross wages for 4 factory staff
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2552
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(Gross wages includes overtime of $152)
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Gross sales and general wages (nil overtime)
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3300
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PAYG withholding
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1275
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Union dues
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350
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Medical fund
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510
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The company's liability for superannuation is 9% of gross ordinary earnings for all employees. No leave entitlements were paid for the week.
Required:
(i) Prepare journal entries to record the gross pays and the payment of net pays.
(ii) Prepare the journal entry to record the company's superannuation liability for the week.
(b) A machine operator is paid $16 per hour. This person worked 44 hours in a week. The 44 hours worked comprised 37 ordinary hours on jobs, 4 hours overtime on jobs and 3 hours of idle time. Overtime worked is paid at time-and-a-half. The policy of this business is that overtime premium is charged to factory overhead.
Required:
Prepare the general journal to record the distribution of the machine operator's wages as direct and indirect.
(c) The time card for a production employee who earns $19 per hour showed the following entries on a given day:
Start Stop
7.00 8.00 Setting up machine
8.00 9.30 Job no. 1555
9.30 11.00 Job no. 1556
11.30 12.00 Waiting for materials
12.00 3.00 Job no. 1558
3.00 3.30 Cleaning up
An ordinary working day is 8 hours.
Required:
Prepare a journal entry recording the distribution of the employee's earnings as direct and indirect.
(d) A manufacturer has six factory employees who each earn $900 per week (for a normal 40-hour working week). These employees have a yearly entitlement to sick leave of 3 weeks and to annual leave of 4 weeks plus 17½% loading.
Required:
Prepare the entry in general journal form recording the provision/accrual of leave entitlements for one month. Assume that the manufacturer provides/accrues employee on-costs equally over each month of the year.
ASSESSMENT TASK- Case Studies/ Business Scenarios
Prepare cost report and budget, analyse variances, and review costing system integrity
Task 2.1
The following information has been supplied by Point Percy Porcelain to enable the preparation of various budgets for the year ending June 30, 2015.
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Expected sales of Product P (units)
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$79,000
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Selling price per unit of Product P
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$4.4(including GST)
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Product P material required per unit
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Raw Material F 2 kg
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Raw Material U 4 litres
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Product P (unit)
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inventory level - beginning 5,000
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Required inventory level - end 6,000
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Raw Material F
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inventory level - beginning 10,000 kg
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Required inventory level - end 12,000 Kg
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Raw Material U
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inventory level - beginning 12,000 litres
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Required inventory level - end 15,000 litres
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Purchase price
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Raw Material F $0.44/kg (including GST)
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Raw Material U $0.22/litre (including GST)
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Product P is manufactured in batches of 1,000 units and requires 50 direct labour hours per batch.
Labour is charged at $12.00 per hour.
Variable overhead is applied at $8.5 per hour (GST includes $0.5)
Fixed overheads are likely to be $63,000 for the year (GST includes $3,000)
Required:
Prepare the following budgets for the year ending June 30, 2015:
a)Sales
b)Production (units)
c)Raw materials usage/cost (units and $)
d)Raw materials purchases (units and $)
e)Direct labour cost
f) Factory overheads
Task 2.2
Half-crown & Co. produces one type of product with the following costs and revenues for the year:
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$
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Total sales
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3 125 000
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Total fixed costs
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1 000 000
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Total variable costs
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1 875 000
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Total units produced and sold 312 500.
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Required:
(a) How many units must be produced and sold to break-even?
(b) Calculate the margin of safety as a percentage.
(c) Determine the expected profit or loss if selling price decreases by 10% and all other cost and revenue relationships remain the same.
(d) Determine the expected profit or loss if sales volume decreases by 10% and all other cost and revenue relationships remain the same.
(e) If fixed costs increase by 10% and all other cost and revenue relationships remain the same, determine the expected net profit or loss.
Task 2.3
The Just Right Company produces a single product with the following standard costper unit:
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Direct material
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2 kg @ $12 = 24
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Direct labour
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5 hours @ $9 = 45
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Overhead 5 hours @ $$
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20
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Total standard unit cost
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$89
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Overhead is applied based on units produced ($20 per unit).
The overhead rate for the year was determined based on the following data:
- Expected output 50,000 units.
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Actual data for the year was as follows:
- 100,000 kg of raw materials purchased at $12.20 per kg.
- Direct labor rate paid was $9.10 per hour
- Actual direct labour hours 190,000 hours
- Good units finished were 40,000 units
- Actual direct material used was 90,000 kg
- fixed overhead incurred was $280,000
Variable overhead incurred was $589,000 ($3.10 per direct labour hour)
Required:
- Direct material price variance
- Direct material quantity variance
- Direct labour rate variance
- Direct labour efficiency variance
- Overheadspending variance
- OverheadEfficiency variance:
- Overhead Volume variance:
Task 2.4
Discuss the meaning of double entry accounting; also explain the difference between cash accounting and accrual accounting.
ASSESSMENT TASK 03: knowledge gathering activities
Task 3.1
Discuss the differences between manual and computerised systems when entering final transactions. (1.1)
Task 3.2
It is very important to code the data systematically. Keeping this in mind, match the following terms with the correct description. An example has been given. (1.2)
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Numeric classification
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8
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Archives
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Subject classification
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Computerised systems
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Keyword classification
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Information management system
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Alpha-numeric classification
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System integrity
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Manual systems
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Chronological classification
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1. Organising information using a specific subject or heading as the indexing unit.
2. A system that stores and provides the data or information relating to the organisation's operational performance and decision-making processes.
3. Organising information in date order.
4. Organising information using a combination of letters and numbers.
5. Organising information using a specific word from the information as the indexing unit.
6. A system in which information is stored in the correct places, is accessible to the correct people, and is presented in user-friendly format.
7. Consist of hard copy materials, filing cabinets etc.
8. Organising information using a file number or code.
9. Information/ files that are not currently in need.
10. Consist of hardware, software and people.
Task 3.3
Discuss the importance of presenting budgets and reports in a clear manner that they conform to management information requirements
Task 3.4
Consider an example of a new car sale yard.Managers predicted that they would sell 1,400 of model A and 1,800 of model B in the fiscal year. They would prepare their budget accordingly. Sales of model A did not meet expectations and sold 1,200 units. Model B had sales rise to 2,400 vehicles for the year. The expected margin on each vehicle is $2,000 for model A and $3,000 for model B. (4.2)
Calculate the predicted and actual sales mix and the impact of the variations on income.
Task 3.5
Discuss the importance of data reconciliation. Also, discuss what is involved in interpreting revenue and cost?
Task 3.6
Suppose you work as an accountant with an accounting firm. One client (who runs a small business) came to discuss about accounting information system and budgeting requirements. Consider your trainer as that client.
Do a five minutes meeting with your trainer to identify client requirements. You may ask following questions:
1. What kind of business you have? Size and structure.
2. Which accounting system are you using?
3. Which are major cost of your business
4. Which budgets you want me to prepare for your business?
5. For how long you want to prepare your budgets, quarterly or monthly etc.
Make sure you use clear English, ask all questions in a professional way, and record all answers given by your trainer to submit along with this assessment.