Page 1 of 5 BUACC 5933 COST AND MANAGEMENT ACCOUNTING Semester 1, 2020 GROUP ASSIGNMENT DUE DATE AND TIME: XXXXXXXXXXWeek 10, Sunday 31st May at 5:00 PM XXXXXXXXXXOnline group submission through...

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Answered Same DayMay 21, 2021BUACC5933

Answer To: Page 1 of 5 BUACC 5933 COST AND MANAGEMENT ACCOUNTING Semester 1, 2020 GROUP ASSIGNMENT DUE DATE AND...

Akash answered on May 28 2021
148 Votes
Running Head: COST AND MANAGEMENT ACCOUNTING    1
COST AND MANAGEMENT ACCOUNTING     5
BUACC 5933
COST AND MANAGEMENT ACCOUNTING
Table of Contents
Part A    3
1.    3
2.    3
3.    3
4.    3
5.    4
Part B    4
Part C    5
1.    5
2    7
References    9
Part A
1.
    Conventional Costing System
    Particulars
    Basis
    Serta ($)
    Tempur
($)
    Direct Material Cost
     
    40
    65
    Direct Labour Cost
     
    35
    35
    Fixed Overhead
    Machine Hours
    150
    135
     Manufacturing cost per unit
    Total
    225
    235
2.
    Activity Based Costing
    Particulars
    Basis
    Serta
    Tempur
    Total
    Manufacturing Setups
    Setups
    8,40,000
    5,04,000
    3,44,000
    Machine Processing
    Machine Hours
    12,70,000
    22,86,000
    35,56,000
    Product Shipping
    Shipping
    8,75,000
    5,25,000
    14,00,000
    Total Fixed Overhead
    29,85,000
    33,15,000
    63,00,000
    Budgeted Units
    15000
    30000
    
    Per unit Fixed Cost
    199
    111
    
    Add:- Direct Material Cost
    40
    65
    
    Add:- Direct Labour Cost
    35
    35
    
    Total Per Unit Cost of Material
    274
    211
    
3.
The cost of Tempur bed has decreased by $24 with the use of Activity based.
4.
The discount is advisable since after giving the discount, the firm is able to earn a profit of $ 40 per unit using activity based costing.    
5.
Conventional costing method does not allocate the fixed overheads properly as the activity based costing methods allocate it. According to Shea, Waldrup, Xu and Williamson (2018), in case of conventional costing method, the overhead are allocated based on machine or similar parameters rather than using different parameters for allocation of different type of cost. This results in a distorted picture and is not advisable for decision-making.
Part B
The owner of the company is getting an offer for cheaper quality raw material from one of the dealers. This will although reduce per unit cost of the products considerably but the same has many setbacks. Firstly, the company is required to make payments for the injuries cause due to breaking or damaging of the bed while sleeping but it will have severe repercussions on the goodwill and reputation of the company. In the long term, no customers are going to buy the products, which may lead to decrease in future business. Besides that, the federal government does even not permit products, which may have a negative effect on the health of an individual.
As per Australian Consumer law, every products is require to meet certain quality benchmarks and if the same is breached the government has the right to take action against the company (Hoozee & Hansen, 2018). Further, the company is also require to provide necessary guarantees with respect to its products. However, in the instant case, if the company fails to meet the benchmark than its products will not be allowed to be sold in the market, which will be a huge setback for the company.
In short, it can be said that although, per unit cost of the bed will be significantly low as compared to the current per unit cost. However, the company will have to suffer other problems, huge compensation, repairing costs, loss of reputation, loss of goodwill and even market credibility. On...
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