Faculty of Business, Economics & Accounting

Department of Accounting and Finance

HELP Bachelor of Business (Hons) Year 3

INTERNAL SUBJECT DETAILS

Semester 1, 2016
Subject:

ACC 301
Management Accounting 3

Subject Lecturer/Tutor: Mr Selvanadan

Telephone: 603- 2716 2000
Fax:
603- 2093 5311
Email:
mselvanadan@help.edu.my

Consultation:

By appointment

PRE-REQUISITE (S)
QBM101
ACC201

BUSINESS STATISTICS &

MANAGEMENT ACCOUNTING 2

SYNOPSIS
The subject is concerned with the current issues in management accounting. We will
build upon topics studied in ACC103 Management Accounting 1 and ACC201
Management Accounting 2 by introducing more advance and detail topics in the
framework of management accounting. The subject provides exposure to techniques and
methods used in management accounting application. We focus on evaluating existing
competitive strategies, developing new strategies, and monitoring and assessing progress
towards chosen strategies. The subject seeks to assist those involved in organizational
decision making by providing models which can be used in understanding, structuring
and resolving problems.
OBJECTIVES
Upon completion of this subject, students should be able to:
explain how management accounting helps organizations meet their strategic goals;
design financial models to match strategic and operation decisions;
explain and estimate the relationship between costs and cost drivers;
understand the issues of transfer pricing and divisional performance evaluation;
analyze strategic problems and access factors involved in decision making generally,
and strategic managerial decision making in particular;
demonstrate understanding of the process of strategic analysis and skill in using
relevant techniques to analyze firm and competitor strategies;
analyze customer-related activities and profitability of customers and products;

use various financial and non-financial performance measures to evaluate

performance,

apply expectancy and agency approaches to motivation and evaluate the

alternative features of compensation plan;

use linear programming to model decisions about the use of multiple scarce
resources;

explain the importance of balanced scorecard for communication, motivation

and evaluation, and discuss the internationalization of management accounting,
including the nature and implications of global competitiveness, management
accounting in multinational organizations, and cultural impact of management
accounting.

TOPICS
TOPIC 1: Introduction: The management accounting framework
Development of Management Accounting
The Changing Business Environment
Primary Function Management Accounting System
Contemporary Management Accounting Practices
Total Quality Management, BPR and JIT Systems
Life Cycle Costing, Target Costing and Kaizen Costing
Activity Based Management and the Value Chain
Environmental Cost Management
Ethics in Management Accounting

TOPIC 2: Current Issues in Management Accounting

Different Types of Controls
Harmful Side-effects of Controls
Measurement and Reward Process with imperfect measures
Advantages and Disadvantages of Different Types of Controls
Management Control Systems
Nature of Management Accounting Control Systems
The Controllability Principle
Accounting Information for Performance Evaluation

TOPIC 3: Strategic Management Accounting

What is Strategic Management Accounting?
Accounting in Relation to Strategic Positioning
Gaining Competitive Advantage through Value Chain
The Balance Scorecard
Benefits and Criticisms of Balance Scorecard

TOPIC 4: Capital Investment Decision

Capital Budgeting and its process
Cost of Capital, Risk and Return
Appraisal Techniques
Comparison of NPV and IRR
Capital Investment Decisions
Capital Rationing and ranking conflicts
Taxation and Investment Decisions
Dealing with Inflation
Impact of Inflation on Interest rates and Discount rates
Investment Appraisal and Inflation
3

Risk Adjusted Discount Rates and Weighted Average Cost of Capital

Decision Trees for multi-stage decision problems
Sensitivity Analysis in decision modeling
Due Diligence Investigation and Ethical Issues

TOPIC 5: Product profitability and product mix strategies

Limiting Factor
More than one limiting factor
Linear Programming
Assumptions underlying Linear Programming
Graphical method and the mechanics of Simplex solutions
Shadow prices and its use

TOPIC 6: Managing customer profitability

Customer/Channel Profitability Analysis
Customer Revenues and Costs
Customer Cost Hierarchy
Factors in evaluating Customer Profitability such as customers and distribution
channels
Customer Profitability Analysis Illustrated
Sales Variances Mix, Quantity and Volume
Market Share and Market Size Variances

TOPIC 7: Strategy, Balance Scorecard and Strategic Profitability Analysis

What is Strategy?
Five Aspects of Industry Analysis
Basic Business Strategies
Implementation of Strategy
Balance Scorecard Perspectives
Strategy and Balance Scorecard
Evaluating Strategy

TOPIC 8: Cost Estimation and Predictions

Cost Estimation
Cost Estimation Methods
Criteria for using Past Data
Criteria to Evaluate and Choose Cost Data
Goodness of Fit
Statistical Significance Test
Nonlinearity and Cost Function
Learning and Experience Curves
4

TOPIC 9: Network Analysis

Project Management
Issues that are addressed by CPM and PERT
Project Planning, Scheduling and Controlling
Steps common to CPM and PERT
Advantages and Limitations of CPM and PERT
Drawing the Network
Steps in Project Crashing
PERT

TOPIC 10: Quality,Time and Theory of Constraints

Quality as a Competitive Tool
Two Aspects of Quality
Quality and Failure
Costs of Quality and Quality Reports
Control Charts Statistical Quality Control Charts
Pareto Diagrams
Cause and Effect Diagrams
Time as a Competitive Tool
Two Operational Measures of Time
Time Drivers
Theory of Constraints
Steps in Managing Bottleneck Operations
Methods to relieve Bottlenecks

TOPIC 11: Transfer Pricing and Divisional Performance

Transfer Pricing and purposes
Alternative Transfer Pricing Methods
Transfer Pricing Conflicts and how to Resolve it
Dual Rate Transfer Pricing System
International Transfer Pricing

TOPIC 12: Incentive Systems and Performance Measurement

Fundamental Principle of Incentive and Compensation
Expectancy Theory View of Behavior
Designing Incentive Systems
Financial and Non-Financial Measures
Performance Measurement of Multinational Companies
Distinction and Tradeoffs
Moral Hazard and Intensity of Incentives
Preferred Performance Measures
5

PRESCRIBED TEXTS
Drury, C. (2015). Management and Cost Accounting, 9th Ed. United Kingdom:
Cengage Learning.
Fatseas, V. A., & Williams, J. F. (2009). Management Accounting Decisions. McGraw
Hill: Australia.
Horngren, C. T., Datar, S.M., & Rajan, M.V. (2013). Cost Accounting: A Managerial
Emphasis, 14th Ed. England: Pearson Education.
RECOMMENDED REFERENCES
Atkinson, A.A., Banker, R.D., Kaplan, R.S., Matsumara, E.M. & Young, S.M. (2013)
Management Accounting: Information for Decision Making and Strategy Execution 6th
edition) Pearson Education.
Hilton, R.W., Maher, M.W. and Selto, F.H. (2012) Cost Management: Strategies for
Business Decisions, International student edition. Boston: McGraw Hill.
Langfield-Smith, K., Thorne, H. & Hilton, R. (2014) Management Accounting:
Information for Managing and Creating Value, 6th ed.: McGraw-Hill.
Young, S. M. (2011). Readings in Management Accounting. 6th edition. Prentice Hall.

Subject Outline / Teaching Plan

Department
Lecturer

: Accounting & Finance

: M. Selvanadan

Week

Subject Code : ACC301

Subject Title : Management Accounting 3

Topics

References

Tutorial Questions

Introduction: The management

accounting framework

Drury Ch 1 & 21

1-4,1-6,1-9,21-8,21-13

Management control systems

Drury Ch 16

Strategic management accounting

Drury Ch 22

16-2, 16-8, 16-12, 1615, 16-25

22-1,22-2,22-3,2217, 22-19

Capital investment decisions

Drury Ch 13 &i 14

13-17,13-18,1319, 14-15, 14-16

Product profitability and

product mix strategies

FBW Ch10,
Drury Ch 25

10-9,10-11,10-12,
10-17, 10-20

Managing customer profitability

HDR Ch 14

14-6, 14-8, 14-19, 1420, 14-25

Mid Semester Test

Strategy, balance scorecard and
strategic profitability analysis

HDR Ch 13

13-18, 13-19, 1320, 13-21, 13-27

Cost estimation and prediction

Drury Ch 23

23-14,23-15,23-17,2319

Transfer Pricing

Drury Ch 20

20-15, 20-16, 2019, 20-21, 20-23

Quality, time and the theory of

constraints

HDR Ch 19

19-16, 19-22, 1923, 19-24, 19-25

Network Analysis

FBW Ch 11

11-1, 11-6, 11-7,

11-8,11-11

Incentive systems and

performance measurement

HDR Ch 23

23-11,23-20,2324, 23-32, 23-33

3
4
5
6
7
8
9
10
11
12
13
14 15

Final Examination

** Subject to change
Drury: Drury, C. (2012)
FBW: Fatseas, V.A., & Williams, J. F. (2009)
HDR: Horngren, C. T., Datar, S.M., & Rajan, M.V. (2013)

ASSESSMENT
There are 3 assessment items for this subject.

Assessment Items

Value

Due Date

1. Assignment

15%

11 April, 2016

2. Mid Semester Test

15%

Week 7 Date TBC***

3. Final Examination (Closed Book)

70%

Examination period: 23 April

7 May 2016**

*** To be confirmed

REQUIREMENTS
To gain a pass in this subject, students must:

Achieve a passing grade in the final examination i.e. score a minimum of 35

marks out of 70 marks if there is an examination for this subject.

Attempt ALL areas of assessment; and achieve a total result of 50% or better
overall.

** - Please check on the notice board and My Acel for the actual date. HELP
University reserves the right to make any changes to the above where appropriate.

ASSIGNMENT QUESTION
Written Assignment
Value: 15%
Due Date: 11 April, 2016

QUESTION 1 (50 MARKS)

Lopten Industries is one of the largest, listed consumer durables manufacturers in the
world, making washing machines, tumble dryers and dishwashers. It has recently
expanded into Beeland which is a developing country where incomes have risen to the
point where demand is increasing for Loptens goods among the growing middle-class
population.
Lopten believes in the economies of scale of large manufacturing sites with dispersed
selling branches in the markets in which it operates. Therefore, it has entered the
Beeland market by setting up a local sales force and supporting them with a national
marketing campaign. The company is currently selling only two products in Beeland
(both are types of washing machines):
a basic product (called Cheerful) with functions which are comparable with
the existing local competitors output and
a premium product (called Posh) which has functions and features similar to
Loptens products in other developed countries.
Both products are manufactured and imported from its regional manufacturing hub,
which is in the neighbouring country of Kayland.
The competitive environment in Beeland is changing rapidly. The washing machine
market used to be dominated by two large local manufacturers who make simple, cheap
and reliable machines. There are two other major international manufacturers apart
from Lopten. One of these has already opened a factory in Beeland and is producing
machines similar to Cheerful to compete directly with the existing local producers. The
government of Beeland has supported this new entrant with grants, as it is keen to
encourage inward investment by foreign companies and the resulting expertise and
employment which they provide. The other international competitor is now considering
entering the Beeland market with more highly specified machines similar to Loptens
Posh brand.
Loptens stated mission is to be the most successful manufacturer of its type of
products in the world. The board has set the following critical success factors (CSFs)
for Loptens Beeland operations:
1. to obtain a dominant market presence
2. to maximise profits within acceptable risk
3. to maintain the brand image of Lopten for above average quality products.
The board is considering using the following key performance indicators (KPIs) for
each product: total profit, average sales price per unit, contribution per unit, market

share, margin of safety, return on capital employed (ROCE), total quality costs and
consumer awards won.
(Note: Margin of safety has been defined as [actual sales units breakeven sales
units]/actual sales units.)
The board has asked you as a consultant to assess its current performance measurement
systems. They want a report which calculates the various indicators suggested above
and then assesses how the key performance indicators address issues in the external
environment. The report should assess the balance between planning and controlling
represented by the KPIs as they want to ensure that these match what they should be
doing at the strategic level in Lopten. Also, it should evaluate how the KPIs fit with the
CSFs which have been selected. The data given in Appendix 1 has been collated for
your use.
Finally, the board is considering two new marketing strategies going forward:
Plan A is to continue operations as at present allowing for 4% growth p.a. in volumes
of both Cheerful and Posh.
Plan B is to dramatically reduce the marketing spend on Cheerful and to reallocate
resources to focus the marketing on Posh. This is expected to lead to an anticipated
growth in volume of 15% p.a. for Posh and flat sales for Cheerful.
The target operating profit for the Beeland operation in two years time is set at $135m
and the board wants an evaluation of these strategies in meeting that target.

Appendix 1
Beeland operations information for the most recent financial year
Cheerful
$ per unit
90
60
40
45
20

Posh
$ per unit
120
80
50
45
30

Fixed costs
Administration costs
Distribution costs
Quality costs
Marketing costs

$m
18
16
6
80

$m
18
16
6
80

$m
36
32
12
160

Other data
Revenue
Capital employed

$m
448
326

$m
308
250

$m
756
576

Units
933
112

Units
133
044

Units
1066
156

Variable costs
Materials
Labour
Overheads
Distribution costs
Quality costs

Total market size (millions)

Beeland operations sales (millions)

10

Total

Notes:
1. Cheerful has won one best buy award from the Beeland Consumer Association.
2. Posh has won four best buy awards from the Beeland Consumer Association.
3. The allocations of fixed costs are based on a recent activity-based costing exercise
and are considered to be valid.

Required:
Write a report to the board of Lopten which:
(i) calculates the key performance indicators (KPIs) suggested by the board for
the assessment of performance of the Beeland operations;
(12 marks)
(ii) uses PEST analysis to identify issues in the companys external environment
and then evaluates the effectiveness of the suggested KPIs in addressing these
issues;
(12 marks)
(iii) takes each critical success factor (CSF) in turn and evaluates how the
suggested KPIs fit to the CSFs given;
(10 marks)
(iv) assesses the extent to which the suggested KPIs would be suitable for use in
planning rather than controlling;
(6 marks)
(v) evaluates whether the two proposed marketing strategies result in a
performance gap.
(10 marks)

11

QUESTION2 (50 MARKS)

Landual Lamps (Landual) manufactures and delivers floor and table lamps for homes
and offices in Beeland. The company sells through its website and uses commercial
logistics firms to deliver their products. The markets for its products are highly
competitive. The company has traditionally relied on the high quality of its designs to
drive demand for its products.
The company is divided into two divisions (components and assembly), plus a head
office that provides design, administrative and marketing support. The manufacturing
process involves:
1. the components division making the housing components and electrical components
for the lamp. This is an intricate process as it depends on the specific design of the
lamp and so serves as a significant source of competitive advantage for Landual;
2. the assembly division assembling the various components into a finished lamp ready
for shipment. This is a simple process.
The finance director (FD) of Landual is currently overloaded with work due to changes
in financial accounting policies that are being considered at board level. As a result, she
has been unable to look at certain management accounting aspects of the business and
has asked you to do a review of the transfer pricing policy between the components and
assembly divisions.
The current transfer pricing policy at Landual is as follows:
(a) market prices for electrical components are used as these are generic components
for which there is a competitive external market; and
(b) prices for housing components based on total actual production costs to the
components division are used as there is no external market for these components since
they are specially designed for Landuals products.
Currently, the components division produces only for the assembly division in order to
meet overall demand without the use of external suppliers for housing and electrical
components. If the components division were to sell its electrical components
externally, then additional costs of $269,000 would arise for transport, marketing and
bad debts.
The FD is considering two separate changes within Landual: one to the transfer pricing
policy and a second one to the divisional structure.
First, the transfer pricing policy for housing components would change to use variable
cost to the components division. The FD wants to know the impact of the change in
transfer pricing policy on the existing results of the two divisions and the company. (No
change is proposed to the transfer price of the electrical components.)
Second, as can be seen from the divisional performance report below, the two divisions
are currently treated as profit centres. The FD is considering splitting the components
division into two further separate divisions: an electrical components division and a
12

housing components division. If the board agrees to this proposal, then the housing
components division will be treated as a cost centre only, charging its total production
cost to the assembly division. The electrical components and assembly divisions will
remain as profit centres.
The FD needs to understand the impact of this proposed new divisional structure on
divisional performance assessment and on the company as a whole. She has asked that,
in order to keep the discussion on the new divisional structure simple, you use the
existing transfer pricing policy to do illustrative calculations. She stated that she would
reallocate head office costs to the two new components divisions in proportion to their
cost of sales.
You are provided with the following financial and other information for Landual Lamps.
Actual data for Landual Lamps for the year ended 31 March 2013

Sales

Electrical
Housing
sub-total

Components
Division
$000
1,557
8,204

9,761

Assembly
Division
$000

Landual
Lamps
$000

15,794

15,794

804
6,902

7,706

1,557
8,204

9,761

7,706

370
1,302

1,672
461

(78)

1,268
2,046

2,719

2,940
2,507

2,641

Cost of sales
Electrical
Housing
sub-total
Fixed production costs
Electrical
Housing
sub-total
Allocated head office costs
Profit

Note:
1 The components division has had problems meeting budgets recently, with an adverse
variance of $575,000 in the last year. This variance arises in relation to the cost of sales
for housing component production.
Required:
(a) Evaluate the current system of transfer pricing at Landual, using illustrative
calculations as appropriate.
(15 marks)
(b) Advise the finance director (FD) on the impact of changing the transfer pricing
policy for housing components as suggested by the FD and comment on your
results, using illustrative calculations as appropriate.
(20 marks)
(c) Evaluate the impact of the change in proposed divisional structure on the
profit in the divisions and the company as directed by the FD.
(15 marks)
13

Assignment No.: __

Assignment Cover Sheet

Student Information (For group assignment, please state names of
all members)
Name

Grade/Marks

ID

Office
Acknowledgement

Module/Subject Information
Module/Subject Code
Module/Subject Name
Lecturer/Tutor/Facilitator
Due Date
Assignment Title/Topic
Intake (where applicable)
Word Count

Date/Time

Declaration
. I/We have read and understood the Programme Handbook that explains on plagiarism, and I/we
testify that, unless otherwise acknowledged, the work submitted herein is entirely my/our own.
. I/We declare that no part of this assignment has been written for me/us by any other person(s) except
where such collaboration has been authorized by the lecturer concerned.
. I/We authorize the University to test any work submitted by me/us, using text comparison software,
for instances of plagiarism. I/We understand this will involve the University or its contractors copying
my/our work and storing it on a database to be used in future to test work submitted by others.
Note:1) The attachment of this statement on any electronically submitted assignments will be deemed
to have the same authority as a signed statement.
2) The Group Leader signs the declaration on behalf of all members.

Signature:

Date:

mail:

14

Feedback/Comments*
Main Strengths

Main Weaknesses

Suggestions for improvement

Student acknowledge feedback/comments

Graders signature

Students signature:

Date:

Date:

Note:

1)A soft and hard copy of the assignment shall be submitted.

2)The signed copy of the assignment cover sheet shall be retained by the marker.
3)If the Turnitin report is required, students have to submit it with the assignment. However, departments may allow
students up to THREE (3) working days after submission of the assignment to submit the Turnitin report. The
assignment shall only be marked upon the submission of the Turnitin report.
*Use additional sheets if required.

15

Department of Accounting &

Finance
ACADEMIC INTEGRITY
Honesty and Responsibility
Academic integrity is an important tenet for HELP University. In pursuit of the highest
standards of academic integrity, the Department of Accounting & Finance holds it
students to the highest ethical standards defined by the Rules and Regulations section
of the Academic Handbook. All students at the Department of Accounting & Finance
are subjected to and are bound by the Student Academic Misconduct Rule to assure
academic honesty. Students are required to sign a pledge on the assignment cover sheet
before submitting your assignments to the Administration Office of the Faculty of
Business, Economics & Accounting.
What is Plagiarism?
Plagiarism is academic dishonesty or academic theft, and it is a serious academic
offence. Plagiarism includes, but is not limited to, the followings:
1. quote, paraphrase or summarize someone elses ideas, theories or data, in whole
or in part, without appropriate acknowledgement
2. borrow ideas, opinion or words, in whole or in part, from other sources without
properly crediting the author(s)
3. use any facts, statistics, diagrams or graphs, in whole or in part, without
acknowledging the source clearly
4. claim or imply original authorship of someone elses ideas, theories or data, in
whole or in part, as your own
5. employ or allow someone to help to revise, amend or write your work and pass
off as your own original work
6. collaborate with or allow other students to copy your work
7. draw on sources more than what you have acknowledged by citations
While a student is not discouraged to discuss an assignment with his/her friends or
classmates, the work he/she submits must be done by the student alone. If a student
shares his/her assignment with other students and they plagiarize it, the student is as
guilty as those students who plagiarized his/her assignment. All parties to plagiarism
are considered equally guilty. Under no circumstances should a student be involved in
collusion with other students unless he/she is permitted to work on an assignment
jointly by the lecturer/tutor. If a student is unsure what constitutes plagiarism, he/she is
obliged to consult the lecturer/tutor on the matter before submission of his/her
assignment.
When and How to Reference?
Knowing when and how to cite is a students responsibility. If he/she is in doubt or
need more help on this matter, the student may consult the lecturer/tutor. The following
list comprises some of the sources a student will need to reference. The list is by no
means exhaustive, but simply consists of the most common sources used by students to
complete their work.
1. Books
16

2.
3.
4.
5.
6.
7.
8.

Chapters in books
Journal articles
Conference papers
Newspaper articles
Magazines
Websites
Study guide

Students are advised to cite in the following cases [1]:

1. When he/she quotes two or more words verbatim, or even one word if it is used
in a way that is unique to the source
2. When he/she introduce facts that he/she have found in a source
3. When he/she paraphrase or summarize ideas, interpretations, or conclusions that
he/she find in a source
4. When he/she introduce information that is not common knowledge or that may
be considered common knowledge in your field, but the reader may not know it
5. When he/she borrow the plan or structure of a larger section of a sources
argument (for example, using a theory from a source and analyzing the same
three case studies that the source uses)
6. When he/she build on anothers method found either in a source or from
collaborative work in a lab
7. When he/she build on anothers program in writing computer code or on a notcommonly-known algorithm
8. When he/she collaborate with others in producing knowledge
In general, a referencing system requires two parts:
1. In-text citations
This is information about a source within the text of an assignment.
2. List of references
This is a list of all sources a student has used to research his/her assignment. It
is alphabetically arranged by author surname and appears immediately after the
last page of an assignment.
Different faculties or departments may have different requirement on how referencing
for an assignment should be done. The various formats used for in-text citations and list
of references are available in the following websites:
1. Harvard System (http://www.adelaide.edu.au/library/guide/gen/harvard.html)
2. Chicago Style (http://www.chicagomanualofstyle.org/index.html)
3. American Psychological Association or APA Style (http://www.apastyle.org)
4. Modern Language Association of America or MLA Style (http://www.mla.org)
Once a student has selected a referencing style for his/her assignment, he/she must
follow the same style consistently throughout the assignment. We strongly suggest that
the student consults the lecturer/tutor about which method to use before submission of
his/her assignment.

http://www.yale.edu/bass/writing/sources/plagiarism/warning.html, accessed May 18, 2008.

17

What are the Procedures and Penalties for Plagiarism?

When a lecturer/tutor encounters a possible case of plagiarism, the lecturer/tutor shall
report the matter to the Head of the Department, who then initiates an investigation on
the matter. The following procedures would be carried out:
1. The lecturer/tutor shall provide evidence that substantiates an academic offence
has occurred. The following documentations must be ready prior to reporting of
alleged plagiarism:
a. Copy of the alleged plagiarized assignment
b. Copy of the source material (e.g. articles, websites, newspaper, etc.)
c. Report of plagiarism
d. Any other information that would support the claim of plagiarism
2. If the evidence warrants an accusation of academic offence, the Head of
Department shall establish a Board of Inquiry comprising 3 academic staff. The
Department shall provide all necessary documentations, including report on
prior academic offences if applicable, to the Board of Inquiry.
3. The Board of Inquiry shall put the matter to the student in writing and give
him/her an opportunity to respond to the accusation within 3 working days.
4. The student will be required to attend a meeting with the Board of Inquiry.
After meeting the student, the Board of Inquiry shall decide whether or not the
alleged plagiarism has occurred. The following documentations shall be
submitted to the Head of Department at the end of the meeting:
a. Findings of the investigation
b. Recommended action(s) to be taken or imposed
5. The Head of Department shall review the Board of Inquirys report with
supporting evidence and shall decide on an appropriate action(s) based on the
recommendation of the Board of Inquiry.
6. The decision of the Head of Department shall be put in writing to the student.
Copies of all documentations will be retained in the Department.
7. If the student feels that he/she has been unfairly accused or treated, the student
may appeal to the Head of Department within 5 working days.
8. The Head of Department shall review the appeal and the final decision will be
communicated to the student in writing and a copy will be kept with the
Department. Once a determination of plagiarism and penalty has been made by
the Head of Department, the investigative process will be deemed to have ended
and the student will not be allowed to appeal.
Possible penalties for plagiarism range from mark reduction for the assignment to
expulsion from the University. The student will not be allowed to make up the
assignment. If plagiarism has been found to have occurred, the Department will take
action(s) as determined by the forms of plagiarism implicated:
1. Complete plagiarism
Verbatim copying another persons work without acknowledgement
1st offence : A grade of F in the subject and a warning letter will be
issued
2nd offence : Expulsion from the University at the discretion of the Head of
Department
2. Substantial plagiarism
Near-verbatim copying another persons work by simply altering the order of
the sentences or the format of presentation or by changing a few words or
phrases without acknowledgement.
18

1st offence

Zero mark on the assignment and a warning letter will be

issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
3rd offence : Expulsion from the University at the discretion of the Head of
Department
3. Minimal plagiarism
Acknowledgement is made but paraphrasing by changing and/or eliminating
some words
1st offence : Deduction of 50% of available marks on the assignment and a
warning letter will be issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
3rd offence : Expulsion from the University at the discretion of the Head of
Department
4. Unintentional plagiarism
Insufficient acknowledgement by not applying citation or quotation marks
correctly
1st offence : Deduction of up to 50% of available marks on the assignment
and a warning letter will be issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
rd
3 offence : Expulsion from the University at the discretion of the Head of
Department
Pleading ignorance or unintentional plagiarism does not constitute valid reasons for
plagiarism and will not avoid the penalties from being imposed. Excuses for acts of
plagiarism such as the following, but not limited to, will not be entertained:
1. I dont have time to do the assignment
2. I have too many assignments due on the same day
3. I dont know, I really didnt do it
4. I am not aware
5. I dont understand what plagiarism means
6. I have no intention to plagiarize
7. I forgot to cite the reference
8. I forgot to include the bibliography
9. My English is not good
10. My lecturer/tutor did not explain to me
11. In my country, it is alright to copy someone elses work
12. My friend copied my assignment when I let him/her to look at my assignment
13. My friend copied my assignment when I allow him/her to use my laptop
14. I did my assignment in the computer lab, someone must have copied my work
15. I asked my friend to submit my assignment and he/she copied my work
16. I discussed my assignment with my friends, so our answers are the same/similar
17. Even though I do not have in-text citation but I have bibliography/reference list
Students should be reminded that it is their responsibilities to take due care throughout
their written work to effectively reference or cite when they use others ideas from any
source.

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DEPARTMENT OF ACCOUNTING & FINANCE

SEMESTER X, 20XX
SAMPLE FINAL EXAMINATION
Subject Code

ACC301

Subject Name

MANAGEMENT ACCOUNTING 3

This examination carries 70% of the total assessment for this subject.
Examiner(s)

Moderator(s)

MR SELVANADAN MUNIAPPAN
Day

Date

Time :

Time allowed :

Reading 10 MINUTES
Writing 3 HOURS

INSTRUCTION(S):
1. This examination consists of FIVE (5) problem solving and discussion questions.
2. All questions are COMPULSORY and must be attempted.
3. Students are required to answer ALL questions in the answer booklet provided.
4. This is a CLOSED BOOK examination.
5. Students are NOT permitted to retain this examination paper.
6. Students MUST pass this examination to pass the subject.

(This question paper consists of 5 questions in XX printed pages, including cover page)

20

Problem Solving and Discussion Question (100 marks)

All Five (5) questions are COMPULSORY and must be attempted. Please show details
of all calculations. DO NOT round the figures unless stated otherwise.
Question 1 (30 marks)
A Civil Engineering Contractor is planning a major project. As a first step the
project has been broken down into a number of separate tasks identified by the
letters A to J. It has been determined that the following relationships exist among
these tasks:
A and B can be commenced at the same time.
C and D can both be commenced as soon as A is completed.
E cannot be commenced until C and D are completed.
F can be commenced as soon as D is completed.
G can be commenced as soon as F is completed.
H cannot be commenced until E and G are completed.
I cannot be commenced until B and E are completed.
J cannot be commenced until H and I are completed.
The following time and cost estimates for the tasks have been prepared.
Task
A
B
C
D
E
F
G
H
I
J

Normal Time
(days)
7
34
3
12
20
9
8
11
17
16

Normal Cost
($)
1000
3900
400
1800
1600
1500
1800
1100
1500
3200

Crash Time
(days)
5
33
2
12
15
6
6
11
15
16

Extra Cost per

Day Saved ($)
100
230
160
200
220
300
140
-

Required:
(a) Draw a network diagram for the project showing the task letters on the
activity paths.
(5 marks)
(b) Identify the critical path, and, if the work is to be carried out at normal cost,
calculate the minimum time for completion.
(3 marks)
(c) Calculate the absolute minimum time in which the project could be
completed, and the minimum total cost at which that completion time could
be achieved.
(10 marks)
(d) Explain how a network diagram and the associated time and cost estimates
may be used for control purposes while a complex project is in progress.
(5 marks)
(e) Assume that the project described in the question is nearing completion and
that the contract contains severe penalty provisions if the work is not
finished by the specified date. The only task not completed is task J, which
has been in progress for 4 days, and only 12 days remain before the
specified completion date. The work on task J is on schedule so far as time

is concerned, but instead of costing $200 per day for 16 days as expected, it
is costing $350 per day. It is felt that an investigation costing $400 might
show that this is due to a problem in the way the work is being carried out.
If the investigation showed this to be the problem, it could be rectified at a
cost of $1000. This would lead to the cost being reduced to $200 per day
for the remaining days. If it is felt that the probability of being able to trace
and immediately rectify the problem is 0.7, should the contractor undertake
the investigation?
(7 marks)

Question 2 (20 marks)

Household Appliances Ltd is a divisionalised company in which each of the two
divisions operates as an independent investment centre. For the coming
financial year the pre-tax target rate of return for the divisions and for the
company as a whole is 15%.
Division A produces electric motors and plans to sell 60% of its output to
Division B for use in the production of tumble clothes dryers, while the
remainder are to be sold to an outside user who has contracted to buy 2000
motors. No further outside sales appear possible. Division A is planning to
produce 5000 motors (normal capacity).
Variable cost per motor is $30 while fixed production costs of $50 000 are
expected in Division A. Division A allocates fixed costs on the basis of normal
capacity, regardless of actual production.
The sales price for external sales is $55 per motor. For the purposes of internal
pricing the manager of Division A sets a profit mark-up of 50% on full
absorption cost in order to earn a satisfactory return on divisional assets
employed, $500 000.
Division B has in the past purchased all its motors from Division A. Division
B's costs consist of the transfer-in cost, additional variable production costs of
$48 per dryer, and $60 000 fixed production costs which are allocated to dryers
on an expected annual production basis. Division B plans to produce 3000
dryers in the coming year. Division B sells the finished dryers to retailers for
$180 each. Assets employed in Division B total $1 140 000.
An external supplier has offered to provide two-thirds of Division B's electric
motor requirements for the coming year at a price of $45.
Required:
(a) Calculate the expected profit and rate of return on investment for each
division and for the company as a whole in the coming year, if Division B
purchases its motors from Division A, and sells its entire output to retailers.
(9 marks)
(b) Should Division B buy its motors from the external supplier? Why?
(2 marks)
(c) Prepare divisional and corporate income statements on an absorption
costing basis on the assumption that Division B accepts the offer from the
external supplier and Division A adjusts its planned output accordingly.
Calculate the company and divisional rates of return. On the basis of these
22

calculations state whether it would be in the best interests of the company

to accept or reject the offer.
(9 marks)

Question 3 (20 marks)

Firms P, Q and R are three companies in an industry producing product A. Each
firm has the same 70% cost experience curve based on thousands of units - ie,
the cost of their second thousandth unit will be 70% of the cost of the first
thousandth unit. The following unit costs for product A were obtained by the
three firms for their first one thousandth unit:
P:
Q:
R:

$100
$80
$90

Required:
(a) The accumulated production of each firm is now: P 4000 units, Q 7000
units and R 5000 units. Calculate the current unit cost of product A for each
firm.
(4 marks)
(b) The current market selling price for product A is $55 per unit. What profit
per unit is being earned by each firm?
(3 marks)
(c) Current market shares for each firm are: P 15%, Q 60%, R 25%. Q wishes
to analyse future cost positions to evaluate some strategies. In particular, Q
wishes to determine the expected unit costs for each firm after it has
reached an accumulated production of 12 000 units.
(i) If the market shares remain the same, calculate the expected
accumulated production for firms P and R when Q has reached the 12 000
unit level.
(4 marks)
(ii) Given the result of (i), calculate the expected unit cost position for each
of the three firms.
(5 marks)
(d) Suppose that firm Q decides to lower its selling price now (before the
changes suggested in part c) to $40 per unit. Suggest the likely outcome.
(4 marks)

Question 4 (18 marks)

Pine Products Pty Ltd manufactures and sells two grades, A and B, of a single
pine product. Each grade is processed through two departments, Cutting and
Finishing. The following unit information is given:

Selling price
Direct materials
Direct labour (cutting and
finishing)
Variable overhead
Fixed overhead
Labour requirements (hours):
Cutting
Finishing
23

Grade A
$30.00
$5.60
$12.00

Grade B
$20.00
$2.00
$10.00

$2.40
$1.44

$2.00
$1.12

0.50
0.40

0.50
0.20

The Cutting Department has 400 hours available each week. The Finishing
Department has 240 hours available each week.
Fixed overhead is allocated using a plant-wide rate based on direct labour hours
when the denominator level of activity is equal to maximum weekly plant
capacity.
Sales are limited to a maximum of 800 units of Grade A and 600 units of Grade
B per week.
Required:
(a) Calculate the unit contribution margin for each Grade.
(4 marks)
(b) Calculate the budgeted weekly fixed overhead in the plant.
(3 marks)
(c) If budgeted fixed overhead is the only fixed expense and if management
wishes to produce and sell Grades A and B in the ratio 3:1, how many units
of each should management plan to produce and sell in a week to earn a net
profit of $416?
(3 marks)
(d) Instead of producing the product mix in part (c), management wishes to use
linear programming to find the profit-maximising mix. Write an LP model
and solve to determine the optimum weekly mix and the resulting weekly
net profit.
(8 marks)

Question 5 (12 marks)

The new manufacturing environment is characterized by more flexibility, a
readiness to meet customers requirements, smaller batches, continuous
improvements and an emphasis on quality.
In such circumstances, traditional management accounting performance
measures are, at best, irrelevant and, at worst, misleading.
Required:
Discuss the above statement, citing specific examples to support or refute the
views expressed and explain in what ways management accountants can adapt
the services they provide to the new environment.

*** END OF EXAMINATION PAPER ***

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