ACC203 B1 T1 Management Accounting | Cost Of The Company

Instructions: ACC203 B1 T1 Management Accounting

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ACC203 B1 T1 Management Accounting | Cost Of The Company

You are required to finish each of these questions, total 40 marks. Please give the solutions in detail, show calculations and submit the solutions to Moodle using a single file, it can be Excel format, Word format or PDF format, no requirement on word limits, if use any references, please refer to Harvard style.

Question 1: Differences between management accounting and financial accounting (15 Marks)

You are the financial controller of a large manufacturing organization and intend to approach the human resources (HR) manager seeking to create two new positions: a financial accountant and a management accountant.


1 Prepare a briefing document for the HR manager which explains the differences between these two roles.

2 Formulate (and answer) the five likely questions that you anticipate the HR manager will ask you about these two positions when you meet.

Question 2: Product cost classification: manufacturer (15 Marks)

The following cost data for the current year relate to Heartstrings Pty Ltd, a greetings card manufacturer:

Service department costs1                              $ 50 000

Direct labour: wages                                         242 500

Direct labour: on-costs                                      47 500

Indirect labour: on-costs                                   15 000

On-costs for production supervisor                                4 500

Administrative costs                          75 000

Rental of office space for sales personnel2 7 500

Sales commissions                                           2 500

Product promotion costs                                   5 000

Direct material                                    1 050 000

Advertising expense                                         49 500

Depreciation on factory building                     57 500

Cost of finished goods inventory at year end57 500

Indirect labour: wages                                      70 000

Production supervisor’s salary                        22 500

Total overtime premiums paid                        27 500

Cost of idle time: production employees3     20 000


Calculate each of the following costs for the year:

1            Total prime costs.

2            Total manufacturing overhead costs.

3            Total conversion costs.

4            Total product costs (for external reporting purposes).

5            Total period costs.

Question 3: Cost behavior; engineered cost; committed and discretionary costs: manufacturer(10 Marks)

HappyDaze T-shirts manufactures and prints customised designs on T-shirts. Below is a list of some of their major costs.

(a)           Cost of daily radio advertising on the local community radio station.

(b)           Cost of the fabric used to make the T-shirts.

(c)           Cost of the ink used in the designs.

(d)           Salary of the managing director.

(e)           Wages of the production employees who sew and print the T-shirts.

(f)            Cost of movie tickets provided for the Employee of the Month award each month.

(g)           Depreciation of the sewing machines, calculated on a units of production basis.

(h)           Cost of electricity used in the factory building.

(i)            Rent of the building.

(j)            Wages of the staff who package the T-shirts.

(k)           Cost of sewing machine maintenance.

(l)            Cost of the new advertising sign at the front of the factory.

(m)          Cost of the company car used by the managing director.


For each cost:

1   Indicate whether it is fixed or variable.

2   If the cost is variable, indicate whether it is an engineered cost. Explain why.

3  If the cost is fixed, indicate whether it is committed or discretionary. Explain why. 





David Marks

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