accounting 2

  

ACG24
Management Accounting

Assignment 2- Case Study
due on 26 October 2012

Brilliant Accents Company manufactures and
sells two styles of kitchen taps: Brass and Chrome. The Brass has been produced
since 2004 and sells for $22.50, and the Chrome, a newer model introduced in
early 2009 that sells for $28.50. Based on the following income statement for
the year ended November 30, 2011, senior management at Brilliant Accents have
decided to concentrate its marketing resources on the Chrome model and to begin
to phase out the Brass model.

Brilliant Accents Income Statement

for the Fiscal Year Ended November
30, 2011

a

Machine
costs include lease costs of the machine, repairs and maintenance

b

Manufacturing
overhead was allocated to products based on machine-hours at the rate of $.625
per hour

Brilliant
Accent’s controller, James Nader, is advocating the use of activity-based
costing and has gathered the following information about the company’s manufacturing
overhead costs for the year ended November 30, 2011.

18,750

After completing the analysis, Nader shows
his results to Sandy Mason, the Brilliant Accents division president. Mason
does not like what she sees. “If you show headquarters this analysis, they are
going to ask us to phase out the Chrome line, which we have just introduced.
This whole costing stuff has been a major problem for us. First Brass was not
profitable and now Chrome.”

“Looking at the ABC
analysis, I see two problems. First, we do many more activities than the ones
you have listed. If you had included all activities, maybe your conclusions would
be different. Second, you used number of setups and number of inspections as
allocation bases. The number would be different had you used setup-hours and
inspection-hours instead. I know that measurement problems precluded you from
using these other cost-allocation bases, but I believe you ought to make some
adjustments to our current numbers to compensate for these issues. I know you
can do better. We can’t afford to phase out either product.”

Nader knows that the numbers
are fairly accurate. As a quick check, he calculates the profitability of
Chrome and Brass using more and different allocation bases. The set of
activities and activity rates he had used resulted in numbers that closely
approximate those based on more detailed analyses. He is confident that
headquarters, knowing that Chrome was introduced only recently, will not ask
Brilliant Accents to phase it out. He is also aware that a sizeable portion of
Mason’s bonus is based on division revenues. Phasing out either product would
adversely affect her bonus. Still, he feels some pressure from Mason to do
something.

____________

Required

1.
Describe the current costing system and
list the potential weaknesses of this system regarding product costing accuracy
and cost control.

2. Describe
the proposed ABC system, the benefits from using it and why those benefits
occur.

3.Using
activity-based costing, calculate the unit cost, gross margin and gross margin
percentage for both the Chrome and Brass models.

4. Discuss
thoroughly whether Brilliant Accents Technology should discontinue production
of the Brass model and concentrate on production of Chrome.

5.Comment on Mason’s
concerns about the accuracy and limitations of an ABC system.

6.Referring
to the ethical dilemma in the case, what would you suggest James Nader should
do in response to Mason’s comments?

Please
Note: Your Report should at all times be focused on and refer to given problems
and circumstances at the Brilliant Accents Company. If and where you do not
apply your Report to the specifics of the Brilliant Accents Company then you
will receive zero marks, for example by using general comments as found in the
textbooks and other sources.

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ACG24

Assessment Feedback Form

Case Assessment 2012

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General Instructions for
Assessment 2: Group Case

OBJECTIVES

The assignment will help to extend
your knowledge of this course material, encourage you to work collaboratively
and develop your communication and problem solving skills. You will strengthen
your graduate qualities as discussed further later in these instructions.
Please refer to the assignment feedback form, which outlines the marking
criteria. The feedback form is available above in this document.

This case is designed as a group assignment. In
the business world, people often need to work collaboratively. Getting
organised into a group and managing the task is part of the assignment to
fulfil the UniSA graduate qualities and prepare you for the workforce.

As a result of group work, you and your group
members acquire benefits. Employers seek graduates who can work effectively in
teams. Completing significant projects in business and professionally often
requires the collaboration of many people. Working in teams exposes you as
students to a “real world” situation and develops skills that employers’ value.
In teams, you co-operate, share knowledge, reach consensus, show leadership and
deal positively with conflicts that may develop within the team from time to
time.

Learning benefits can also be derived from group
work. Research indicates that students who are actively engagedin
the learning process learn more. Working in teams provides you with such an
opportunity throughproblem solving, communication with peers, learning
from others and reinforcement of knowledge through explanation of concepts to
others.

You can complete this assignment individually or
in a group of three students (maximum). Only 1 assignment file is submitted per
group, with each student’s name and ID number clearly marked on the coversheet.
You are advised to organise a group early in the study period. There are many
benefits associated with completing this assignment in a group. Getting
organised into a group and managing the task (group management) is an important
skill to learn for application in your professional career. Opportunities to
organise a group are available through the discussion forum. You are advised to
look over the assignment as soon as possible to become aware of the nature of
the information in it and then read the questions carefully.

FORMAT

You are
expected to present your assignment in a report format. The word limit is a
maximum of 1,500 words, plus calculations(+/-
10%). It should be noted that the report for this assignment is an academic
report whichrequires an Executive
Summary and Bibliography as well as the other elements. Please note that the
executive summary and the appendix of your report are not included in the word
count Please refer to the article “Writing Readable Reports” (available on the
course website) for guidance on writing an analytical report. Also, please look
at:

http://www.unisa.edu.au/ltu/students/study/assessment/reports.asp

To assist
you in preparing your report, please refer to the assignment feedback form,
which outlines the marking criteria. This form is available in this document.

SUBMISSION OF THE ASSIGNMENT

•
The assignment MUST be submitted online via Grade
book (see below under important information). Assignments submitted via
alternative modes will not be accepted.

Please make sure that your names appear
on the assignment cover sheet.

Before submitting an assignment
using Gradebook:

•
keep a copy(a backup is imperative),

•
number and put your names on the pages and

•
include an electronic version of the Assignment
Cover Sheet.

Your assignment will be marked and returned,
usually no later than three weeks from the due date.

REFERENCING
& PLAGIARISM

For any
citations use the Harvard method, where the format of your reference list
should be consistent with the Harvard system. If you are not aware of the
Harvard style, refer to:

http://www.unisanet.unisa.edu.au/learningconnection/student/studying/referencing.asp

Note brief points below
that assist in clarification of the meaning of plagiarism:

•
Do not copy from texts, articles or any other
source without citing the source.

•
Quotations should be kept to a minimum and when
used must be cited (refer to the source of the information).

•
If information contained in the assignment is not
your own words or ideas, you must acknowledge the source within the text
of the paper as well as in the reference list.

•
To acknowledge the source when you use another
person’s words (i.e. quote them) you must indicate that this is a
direct quote, usually by quotation marks,and reference the source
(including the pagenumber) within the text of the paper, as well
as providing full source information in the reference list.
Including the source in the reference list at the end of the paper alone is not
sufficient.

•
Changing, deleting, adding only a few words, or
rearranging the sentence/paragraph does not negate that fact that you are
quoting.

•
If paraphrasing you still need to include
an in-text reference (which includes the page number). Take care that
the paraphrasing is not ‘too close’ to the original and then, in fact, a quote.

•
The fact that the source of the material is from a
text book, an Internet site, and/or the specific author cannot be identified
does not negate the need to acknowledge the source of the ideas, or words, and
to reference correctly.

If
you need help with referencing, please refer to the following resources
available from the Learning Connections website at: http://www.unisanet.unisa.edu.au/learningconnection/student/studying/referencing.asp:

•
Introduction to referencing

•
Styles of referencing

•
Referencing using the Harvard
system

•
Frequently asked questions

All students should ensure that they are familiar
with the plagiarism policy and referencing requirements BEFORE commencing the
assignment in this course.

It is
your responsibility, if unsure, to make sure you understand plagiarism, so that
you do not present any assessment containing plagiarism. Plagiarism is regarded
as a serious issue within the university system with severe consequences for
students who have been found to have plagiarised. Often the minimum penalty is
a zero for the assignment with exclusion from the university an option in
serious cases.

The University’s policies
on academic misconduct include the following:

9.2.2 (c)
submitting another student’s work in whole or in part, where such assistance is
not expressly permitted in the course information booklet;

9.2.1(e)
providing assistance to a student in the presentation of individual work, where
such assistance is not expressly permitted in the course information booklet.

Whilst we
understand that pressures from fellow students are sometimes difficult to
resist, and it is acceptable (and indeed generous) to assist other students by discussing
issues relating to the assignment, it is not acceptable to provide access to,
or copies of, your own assignment (or part of your assignment) to other
students. Nor is it acceptable to use another student’s work as the
basis for submission of your own (or part of) assignment, whether quoting,
paraphrasing or simply using their ideas.

Note that
it is intended that the assignment in this course will be checked, using
text comparison software, for instances of plagiarism or collusion.