Assignment: OAES Entry

Module Overview: 

Accounting and Information Systems In the previous modules, you learned about financial reporting—making financial statements usable for external users. In this module, you will transition from financial reporting to management accounting. You will learn how managers use the same financial information to make various company and unit-level business decisions.

Any reporting is a process of converting raw data into meaningful information. Data is a set of raw facts and is made usable by some form of summarization or analysis to translate it into information. For example, cost data can be summarized and analyzed in a usable report. This creates meaningful business information that managers can use for decision making. An organization typically follows an accounting and information system to collect the business information and present it in a summarized form for the management. This system forms the basis of a management accounting system in the organization.

Information gathered from these systems needs to be relevant, timely, accurate, complete, concise, and understandable. This would improve decision making, customer service, product or service quality, and productivity in organizations. However, the process of collecting and analyzing data and reporting information is expensive. Apart from other costs, it involves the cost of the hardware, software development, and staff time. As a manager, you need to ensure that the value of the information obtained through these information systems is greater than the cost of providing that information.

Module Readings:

Complete the following readings early in the module:

Read the online lectures for the Module

From the textbook, Accounting for Managers: Interpreting Accounting Information for Decision Making, 5th, read the following chapters:

Chapter 10: Marketing Decisions

Chapter 10 textbook Microsoft PowerPoint slides

Chapter 11: Operating Decisions

Chapter 11 textbook Microsoft PowerPoint slides

Chapter 12: Human Resource Decisions

Chapter 12 textbook Microsoft PowerPoint slides

Assignment:  OAES Entry

Instructions:  “Save” your response to each question by changing the color to the answer to RED as you work through the assignment

Question 1 (3 points)

Q10-1: Fixed costs are costs that:

Question Answer Options: Choose One

Never change

Change with increases in business activity

Do not change with increases in business activity

Change when activity reaches a critical level

Question 2 (3 points)

Q10-2: The volume of activity and costs which a business expects over the short-term planning horizon is represented in the:

Question Answer Options: Choose One

CVP analysis

Profit-volume graph

Breakeven calculation

Relevant range

Question 3 (5 points)

Q10-3: A professional services business has fixed costs of €150,000 and variable costs of €15 per hour. The difference between average costs at a level of activity of 12,000 and 15,000 units is:

Question Answer Options: Choose One

A reduction of €2.50

An increase of €2.50

An increase of €15

A reduction of €25

Question 4 (4 points)

Q10-4: Use the following information to determine the breakeven in units, breakeven in £, the number of units to get close to the Target Profit, and the amount of £ estimated from the unit sensitivity analysis. Then match the item with the correct units or £.

Fixed costs= £240,000

Selling price per unit= £18.00

Variable costs per unit= £12.60

Target profit= £120,000

Question Answer Options: Choose & Match

66,667              1234

800,000           1234

1,200,000       1234

44,444               1234

1.  breakeven in units

2.  breakeven in £

3.  number of units to approximate Target Profit

4.  amount of £ estimated from the unit sensitivity analysis

Question 5 (1 point)

Q10-5: Looking at Q10-4, if expected sales are 50,000 units, the margin of safety is closest to:

Question Answer Options: Choose One

11.1%

12.5%

30%

50%

Question 6 (1 point)

Q10-6: BCD Inc sells its products for $12 each. The company’s volume has remained unchanged for some time at 10,000 units per month although it has spare capacity. Production costs are $10 per unit including fixed costs which average $3 per unit for the production volume. A customer has requested a special order of 2,000 of BCD’s products at a special price of $9. BCD should:

Question Answer Options: Choose one

Reject the order because there would be a loss of $2,000

Reject the order because the selling price of $9 is lower than the cost price of $10           Accept the order because there would be an additional profit of $4,000           Accept the order because there would be additional revenue of $18,000

Question 7 (3 points)  

Q11-1: A standard cost may be defined as:

Question Answer Options: Choose One

The actual quantities of material and labour multiplied by the costs of material and labour

The standard quantities of material and labour multiplied by the costs of material and labour

The actual quantities of material and labour multiplied by the costs of material and labour

The standard quantities of material and labour multiplied by the costs of material and labour expressed per unit

Question 8 (3 points) 

Q11-2: The accounting system which records production costs for a batch of identical goods is:

Question Answer Options: Choose One

Custom costing

Batch costing

Job costing

Process costing

Question 9 (5 points)

Q11-3: Little Known Tax, Ltd prepares tax returns for clients. The firm employs six bookkeepers who cost the firm £10,000 in total each week. Each bookkeeper is expected to charge 30 hours per week to client jobs. At the end of the week the total hours charged by the six bookkeepers to client jobs is 150. The cost of spare capacity is closest to:

Question Answer Options: Choose One

£1668

£30

£150

£5555

Question 10 (5 points)

Q11-4: Last Group has a rental cost of €25,000 per month with a four-year lease term. Casual staff are employed on a weekly basis to carry out telephone sales. The cost of casual staff is €12,000 per month and telephone call costs are €5,000 per month. An offshore call centre has offered to carry out the telephone sales activity from its own premises and using its own staff and telephone services for a fixed payment of €15,000 per month. The call centre’s outsourcing proposal should be:

Question Answer Options: Choose One

Accepted because the relevant cost is €42,000 compared to €40,000 for in-house telephone sales

Accepted because the relevant cost is €15,000 compared to €17,000 for in-house telephone sales

Rejected because the relevant cost is €45,000 compared to €42,000 for in-house telephone sales

Rejected because the relevant cost is €17,000 compared to €15,000 for in-house telephone sales

Question 11 (5 points)

Q12-1: An accounting consultant is paid a salary of £80,000 per annum and his employer pays up to of 18% of base salary for medical, life, and dental insurance. His employer also contributes toward a retirement plan at a maximum of 8% of base salary. Assuming the consultants works 250 days per year and is productive for 81% of that time, his daily cost rate is closest to:

Question Answer Options: Choose One

£378

£327

£302

£403

Question 12 (6 points)

Q12-2: Upper Central Consultancy (UCC) wishes to bid for a market research project. The cost estimates on which UCC will base its bid are shown below:

275 hours work in initial data collection and preparation of research questionnaire. The hours are broken down as follows:

•135 hours are available from existing staff that are not currently utilized. Their total employment cost is £22 per hour.

•140 hours will have to be bought in from a Temporary Staff Agency for a cost of £16 per hour.

UCC’s in-house existing library resources will be utilized to provide data for the project. The research data that will be used was purchased some months previously at a cost of £2,050. The data has never been used before and is unlikely to be used again. An additional updated report will however have to be purchased at a cost of £500.

Printing and postage of questionnaires will incur a cost of £1,100.

The in-house computer processing facility will process returned questionnaires. The computer facility makes an internal charge of £2,000 for each survey it processes.

The consultancy will have to purchase a specialist software package to undertake the sophisticated statistical analysis required at a cost of £1,750 and incur training costs of £600 to learn how to use the package. The package may be used again in the future.

A manager will be involved in the detailed planning, design and logistics for the research. The management time has been costed at 14 days at £550 but he is very busy and will have to be remunerated through overtime at an additional cost of £3,500 in order for him to carry out other work that he is committed to complete.

A partner will supervise the whole project. An estimate of her time has been costed at £1,600 although the consultancy will not incur any additional costs for the project.

Using all of the above information, calculate the cost for the market research project based on absorption costing principles. Please detail all of your work.

Question Answer Options: Choose One

25,001

22,005

28,107

26,010

Question 13 (6 points) 

Q12-3: Using the information from Q12-2 above, what is the relevant cost of the market research project?

Question Answer Options: Choose One

9,690

11,290

17,390

11,740

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