Word count: 1500 words (+/- 10% acceptable) (Excluding Title page, Forward, Table of Contents, Reference and Appendix)

Scenario:
You are the newly recruited Financial Advisor of Norman and Co. Ltd. This company absorbs production overhead using machine hours. All products are priced by adding a 25% mark-up on cost to obtain the selling price.

The management has the following information about their products:
Applicable to its products:
Total Overheads = £100,000
Total machine Hours = 50,000 hrs

Product X Y
Units of Production 2,500 5,000
Material Cost p/unit £30 £50
Labour Cost per unit £20 £16
Machine Hrs P/unit 10
After interviewing all the important people of the organization you have apportioned the overhead costs as per below:
% Overheads

Set up Costs 35
Inspections 45
Materials Handling 20

Cost Pools are as follows:

X Y Total
Set ups 300 50 350
Inspections 500 250 750
Goods Movements 300 700 1000

The financial director of Norman and Co Ltd. is considering replacing the existing traditional system with activity based costing but is unsure exactly what would be involved. He is also determined to keep costs to a minimum and does not want any new system to involve a lot of extra work or expenditure.

Required:
Prepare a report for the financial director which must address the following:
1. An appraisal of the existing traditional system. (What is the Cost per unit of X and Y under Traditional Absorption Costing) (10 marks for calculation and 15 marks for analysis)
2. A broad outline of an ABC system with an explanation as to why it might be desirable. (15 marks)
3. Your recommendations for ABC implementation and any problems you foresee bringing in ABC for Norman and Co. Ltd. What is the Cost per unit of X and Y under ABC (20 marks for calculation and 20 marks for analysis)
4. Your advice on whether ABC is viable for Norman and Co. Ltd., given the financial directors concerns. (10 marks)
5. In addition 10 marks will be awarded for the style and presentation of the report. (Total 100 marks)

Submission Criteria:

(a) In the form of a report of 1500 words (+ – 10% is acceptable)
(b) Be adequately proof read prior to submission, and therefore does not contain significant errors of spelling and grammar;
(c) Be properly referenced (Harvard Referencing System)
Ensure that font style should be Arial or Times New Roman and font size should be 12 in all assignments
(d) Ensure that (in paragraph) line spacing should be 1.5 and alignment should be justified.
Grading Criteria:
NB: where a submission does not meet the Pass requirement for a criteria they will be assessed at a mark commensurate to a Referred / Fail based on the examiner’s professional judgement.
Word count:
The main body of your report part should not exceed or fell below 1,500 words (+ – 10%).

Learning Outcomes Assessed:
The assignment will assess the student’s ability to prepare a report for management, assessing the viability of replacing a traditional system of overhead allocation with ABC.

Assessment:
To achieve a good mark in this assignment a student will have to prepare a concise, structured report addressing all of the issues identified.

Additional
? The report should be direct to the financial director.
? Do not show the calculations in the body of the assignment, the calculation should be shown in the appendix
? References: References Harvard style < journals, Books, Article, essays on based in UK only.
? The report should be cited and argue where it needs.

management accounting
Subject: – Accounting
All materials are attached.

Client`s comment: can you label which answer is to which qns? there are q1 part a,b, c (i) – (vi) ,d, and e. like wise for qns 2.
in addition, for qns 1 part ci-vi, i need a journal entries, which look like this example

Purchased materials on account:
Dr Raw Materials150,000
Cr Accounts Payable150,000

c.Materials requisitioned for production:
Dr Work in Process138,000
Dr Overhead Control6,000
Cr Raw Materials144,000