Cost Accounting

For Instructor’s Use only

Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.

Assignment Question(s):                                                               (Marks 15)

Q1. Discuss with suitable examples why activity-based costing (ABC) is better than the traditional costing system. Provide a suitable numerical example of ABC in the manufacturing sector and show all the necessary calculations required under the ABC system.                                                        

                                                                                                                                                (3 Marks)

Note: Your answer must include suitable numerical examples showing all the calculations of the ABC system. You are required to assume values of numerical examples of your own and they should not be copied from any sources.                                                                                           (Chapter 7)                                                                                                                                                                    

Answer:

 Activity-based costing (ABC) is a system that assigns costs to the specific activities performed in a manufacturing or service delivery process. ABC attempts to trace costs more accurately to products or other cost objects than traditional costing methods.

Traditional cost accounting systems assign manufacturing production costs to individual products in inventory and cost of goods sold.

Traditional cost accounting methods are also used to allocate nonmanufacturing costs for some types of contractual reporting. For example, hospitals prepare cost reports for the government in which they allocate overhead to patient services. Also, defense contractors allocate nonmanufacturing overhead costs to products for cost reimbursement reports.

Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model?

Total amount of overhead costs = [($52,000 + $78,000) ÷ (255 + 245)] × 255 = $66,300

Assume ABC costing system is used, Number of setups and number of components are identified as activity-­‐‑cost drivers for overhead. what is the total amount of overhead costs assigned to the standard model?

Setups: $52,000 ÷ (12 + 28) = $1,300

Components: $78,000 ÷ (8 + 12) = $3,900

Total amount of overhead costs = ($1,300 × 12) + ($3,900 × 8) = $46,800

Q2. “A non-routine decision is one that is taken in response to a non-repetitive, operational scenario.” Comment on this statement and explain with suitable examples the various types of non-routine operating decisions that a company makes under such a scenario. Support your answer with numerical examples along with qualitative considerations involved in making such decisions.                                                                                                     (4 Marks)      

Note: Your answer must include suitable numerical examples for various types of non-routine operating decisions. You are required to assume values of numerical examples of your own and they should not be copied from any sources.                                                                              (Chapter 4)                                                               

Answer:

Nonroutine operating decisions are not made on a regular schedule. Examples include:

1-accepts or reject a customer’s special order

2- keep or drop business segments

3- insource or outsource a business activity

4-constrained (scarce) resource allocation issues

Process for Making Nonroutine Operating Decisions

1. Identify the type of decision to be made.
2. Identify the relevant quantitative analysis technique (s).
3. Identify and analyze the qualitative factors.
4. Perform quantitative and/or qualitative analyses

Accept special order

Sunbelt Company produces 100,000 Smoothie blenders per month, which is 80% of plant capacity. Variable manufacturing costs are $8 per unit. Fixed manufacturing costs are $400,000, or $4 per unit. The blenders are normally sold directly to retailers at $20 each. Sunbelt has an offer from Kensington Co. (a foreign wholesaler) to purchase an additional 2,000 blenders at $11 per unit. Acceptance of the offer would not affect normal sales of the product, and the additional units can be manufactured without increasing plant capacity. What should management do?

Answer

Accept special order because profit increase 6,000

Make-or-buy decision

Baron Company incurs the following annual costs in producing 25,000 ignition switches for motor scooters.

Instead of making its own switches, Baron Company might purchase the ignition switches at a price of $8 per unit and he will save 10,000 of fixed costs. “What should management do?”

Baron Company will incur $25,000 additional cost if switches are purchased. So, Making is better than buying.

Q3. ADLG Company has two support departments, SS1 and SS2, and two operating departments, OD1 and OD2. The company has decided to use the direct method and allocate variable SS1 dept. costs based on the number of transactions and fixed SS1 dept. costs based on the number of employees. SS2 dept. variable costs will be allocated based on the number of service requests and fixed costs will be allocated based on the number of computers. The following values have been extracted for the allocation:                               (4 Marks)

You are required to allocate variable and fixed costs.                               (Chapter 8)

Answer:

Allocation of variable SS1 :-

Allocation of variable ss1 to OD1 = 16,000 * (250/(250+140)) = 10,256

Allocation of variable ss1 to OD2 = 16,000 * (140/(250+140)) = 5,744

Allocation of fixed SS1 :-

Allocation of fixed ss1 to OD1 = 19,500 * (47/(47+38)) = 10,782

Allocation of fixed ss1 to OD2 = 19,500 * (38/(47+38)) = 8,718

Allocation of variable SS2 :-

Allocation of variable ss2 to OD1 = 19,000 * (26/(26+32)) = 8,517

Allocation of variable ss2 to OD2 = 19,000 * (32/(26+32)) = 10,483

Allocation of fixed SS2 :-

Allocation of fixed ss2 to OD1 = 34,000 * (31/(31+37)) = 15,500

Allocation of fixed ss2 to OD2 = 34,000 * (37/(31+37)) = 18,500

Q4. JKL Company processes a direct material and produces three products: P1, P2, and P3. The joint costs of the three products in 2018 were SAR 120,000. The total number of units for each product and the selling price per unit is given below:                                         (4 Marks)

You are required to use the physical volume method and sales value at the split-off method to allocate the joint costs to each product.                                                             (Chapter 9)

Answer:

Allocation of joint cost based on physical measures:-

Allocation to P1 = 120,000 * 55,000 / (55,000+34,500+10,500) = 66,000

Allocation to P2 = 120,000 * 34,500 / (55,000+34,500+10,500) = 41,400

Allocation to P3 = 120,000 * 10,500 / (55,000+34,500+10,500) = 12,600

Allocation of joint cost based on sales value at split off point:-

Sales value at split off point (P1) = 55,000 * 70 = 3,850,000

Sales value at split off point (P2) = 34,500 * 58 = 2,001,000

Sales value at split off point (P3) = 10,500 * 44 = 462,000

Total sales value                                                   = 6,313,000

Allocation to P1 = 120,000 * 3,850,000 / (3,850,000+2,001,000+462,000) = 73,182

Allocation to P2 = 120,000 * 2,001,000 / (3,850,000+2,001,000+462,000) = 38,036

Allocation to P3 = 120,000 * 462,000 / (3,850,000+2,001,000+462,000) = 8,782

Comparison of Diversity, Equity, and Inclusion across industries

DEI Annotated Bibliography

Scenario:

Leadership is hosting a panel discussion titled: Comparison of Diversity, Equity, and Inclusion across industries. You are on the diversity committee and have been assigned to share resources with attendees. Find six credible academic sources about DEI in your own industry or one industry listed below. Be sure the sources offer a comparison of diversity, equity, and inclusion with a clear focus on how each is different from the other in theory and practice. Prepare an annotated bibliography for attendees in one of the industry options below:

• Finance
• Hospitality
• Technology

Instructions:

For each source (6 total), include an annotation that meets the following criteria:

• 2 to 4 sentences to summarize the main idea(s) of the source.
• What are the main arguments made about diversity, equity, inclusion, and belonging? What distinction is made between diversity, equity, and inclusion? How are they compared and contrasted in this source?
• What is the point of this source? To inform, persuade, share innovative thinking, to contradict popular beliefs?
• What topics are covered? DEI (Diversity Equity Inclusion)? Justice? Historical perspective? Current events from a legal perspective?
• Compare the source information.
• How does it compare with other sources about DEI in your bibliography?
• Is this information reliable? Current? Related specifically to the industry chosen for this assignment?
• How has the information in this source added or enhanced your understanding of Diversity Equity and Inclusion?
• 1 or 2 sentences to reflect on the source.
• Was this source helpful to you?
• How can you use this source for your presentation?
• Has it changed how you think about DEI?

Requirements:

• A title page
• The annotated bibliography begins on its own page with the word “References” bolded and centered at the top of the page.
• Each entry begins with an APA reference for the resource with the annotation appearing directly beneath. The entire annotation is indented 0.5 inches from the left margin.
• Entries are listed in alphabetical order. The entire document is typed in one of the six approved font styles and sizes and is double spaced. There is no additional space between entries.

President Assad and President Obama

Why did Assad Win? Was President Obama Correct to announce that “the time has come for President Assad to step aside” in Aug. 2011? What should the U.S. have done? Cite 4-5 sources minimum.

Instructions:

Make sure to use footnotes and to add a “List of Sources” at the end of your essay.

These papers should be grammatically and syntactically correct and without typographical errors. Include the question you are answering on the title page so both you and I will be sure which question you are addressing. Special attention will be given to the thesis paragraph. Make it succinct and preview how you will argue your paper. Always end with a concluding paragraph that sums up your argument.

Citations: Use footnotes, or what is called the “Notes and Bibliography” form of citation for your references (not the internal: “author date” style common in the social sciences). The first citation of a work should be complete and subsequent citations abbreviated. Read about how to use this form of citation at Quick Guide of the Chicago Manual of Style. Learn how to use footnotes (not endnotes on “Word.”

List of Sources: Be sure to add a “List of Sources” at the end of your essay, in which you list all the sources that you cite. Each article must be referenced in full. Consult the website of the Chicago Manual of Style to do this correctly. Make sure you cite internet sources correctly as well.

Materials

James Gelvin, The New Middle East, pp. 51-82.

Joshua Landis, Why Asad Is Likely to Survive to 2013. Middle East Policy, (19:1 Spring 2012) pp 72-85. http://www.mepc.org/journal/middle-east-policy-archives/syrian-uprising-2011-why-asad-regime-likely-survive-2013

https://obamawhitehouse.archives.gov/blog/2011/08/18/President-obama-future-syria-must-be-determined-its-people-President-bashar-al-assad

Aron Lund, The Free Syrian Army Doesn’t Exist, Syrian Comment, 16 March 2013. https://www.joshualandis.com/blog/the-free-syrian-army-doesnt-exist/

The No. 2 man at the CIA, Mike Morell, explains why the U.S. government fears the breakup of the state of Syria and the collapse of the central government. 60 Minutes, CBS (Sept. 15, 2013) “The Briefer: Ex-CIA No. 2 on Syria crisis https://www.cbsnews.com/news/the-briefer-ex-cia-no-2-on-syria-crisis/

Joshua Landis, “America’s Failure — and Russia and Iran’s Success — in Syria’s Cataclysmic Civil War,” Interviewed by John Judis for TPM, January 10, 2017. [6] http://talkingpointsmemo.com/cafe/americas-failure-russia-success-in-syrias-war

“Libya’s civil war: The four-year descent from Arab spring to factional chaos,” Jan. 10, 2015. Economist. http://mideastresources.blogspot.com/2015/01/libyas-civil-war-four-year-descent-from.html

“The Arab Winter,” The Economist, Jan 2016. http://mideastresources.blogspot.com/2016/01/the-arab-winter-economist-jan-2016.html

https://www.foreignaffairs.com/issues/2018/97/5 Mark Lynch, The New Arab Order,” Foreign Affairs, Sept/Oct 2018

Graham Allison, “The Myth of the Liberal Order: From Historical Accident to Conventional Wisdom, Foreign Affairs, Thursday, June 14, 2018. https://mideastresources.blogspot.com/2018/08/the-myth-of-liberal-order-graham.html

Bacevich and Mearsheimer on U.S. Policy in the Middle East, Lobelog, January 2017. http://lobelog.com/bacevich-and-mearsheimer-on-u-s-policy-in-the-middle-east/

Mark Lynch, “New Arab World Order,” Carnegie Endowment, Aug 2018. https://carnegieendowment.org/2018/08/16/new-arab-world-order-pub-77056?utm_source=ctw&utm_medium=email&mkt_tok=eyJpIjoiTW1RMU1XVm1NR1kwT0RNdyIsInQiOiJGSmtwc3dZOEF1aEVEWFlnSXlycTFuTmM2YkdEMnhlRDc2WUkzRngydGZ4d0hhSko4dW5neFhMS0R5akN3TzhwYzdtOFlEdnU1ZjB0Z0N0WEVjUitaR2RCazFwajNVY2hYVExkbHJEd1VRT1wvbEdHOU9IXC9sRHZOa2kya1BDZER1SHRsUmYyXC9nSXRaRWV3Q0ZMMU96WWc9PSJ9

Write 800 words at least to answer this question:

Organizational Description

This paper will develop a case based on a real situation in a real organization, preferably the organization where you presently work. Your paper must include both a description and an analysis. You MAY select the organization in which you work or one with which you are familiar. It is preferable to be in a position to obtain first-hand information about your selected organization. If you do not have the necessary access, you will be expected to develop your paper on the basis of second-hand information in periodicals, etc. The following is the required outline for your paper:

1)Organizational Description

• Background information, including
  • environment
  • domain and task design
  • role relationships
  • control systems
  • information technology
  • organizational goals
  • size
  • blueprint for growth
• Situation description, including
  • the nature of the task
  • the people involved
  • formal and informal relationships
  • relevant organization structure
  • prior events relative to the situation
• Discussion of organizational effectiveness, including
  • organizational behavior
  • work and efficiency
  • adaptability of the organization

2) Organizational Analysis (using the concepts learned in this course)

• Level of organizational effectiveness
• Causes for organizational effectiveness
• Mechanisms for change

3)Proposed Organizational Chart

4)Conclusions and Recommendation

5) Reference page