Management Accounting Trimester 3 2018 Group Assignment – 20%
This assignment has two parts: ■ Part A: 37.5% (7.5 Marks) Technical or Practical • Part B: 62.5 % (12.5 Marks) Report writing (1500 words) This is a group-assignment. Each group needs to have 3 to 4 members in it. Please organise yourselves into groups. Please make sure that names and ID numbers of all group members are stated on the cover sheet of your submission. As this is a group assignment, each member of your group is awarded the same mark.
Natural pulp Ltd, a manufacturer of paper and paper board had a flood that destroyed the company’s work in process and finished goods inventories on 1 July, 2014. All raw materials escaped damage because they were stored in a warehouse situated on the hill.
The following information is available.
Sales revenue, 1 June to 30 June 2014 $ 420 000 Income before taxes, 1 June to 30 June 2014 70 000 Direct labour cost, 1 June to 30 June 2014 160 000 Direct material used, 1 June to 30 June 2014 80 000 Cost of goods available for sale, 1 June to 30 June 2014 360 000 Work in process inventory, 1 June 2014 35 000 Finished goods inventory, 1 June 2014 55 000 Gross profit margin 40% of sales
The management accountant of the company estimated that the manufacturing overhead is 40% of the company’s total manufacturing costs.
REQUIRED: Prepare estimates of the following that were destroyed by the flood. a) The cost of Work in Process. b) The cost of finished goods inventories.
“The value chain provides a useful framework for examining the areas where costs are incurred within a business. The value chain is a set of linked processes or activities that begins with acquiring resources and ends with providing goods and services that customers value” (Langfield-smith et al, 2015, p 44).
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