Subject Code and Name ACCT6004 Management Accounting
Assessment Case Study
Length (2,000 words +/- 10%), if applicable
Learning Outcomes b) Identify and analyse ethical and organisational issues confronting contemporary management accountants.
c) Categorise and identify the nature of various types of costs, cost objects and cost behaviours and use cost estimation techniques to develop cost functions.
d) Apply cost accounting techniques to calculate the cost of a range of cost objects, as well as analyse costs.
e) Apply cost information to planning, control and decision-making.
f) Critically evaluate the relevance of both quantitative and qualitative costing information to management decision making.
Submission By 11:55pm AEST/AEDT Sunday of Module 5 (week 10)
Total Marks 100 marks
This case study illustrates motivation and design for an activity-based cost system. Students estimate the new cost model, which provides a different perspective on product line profitability. Students are required to suggest actions, based on the new cost model, to improve the company's profitability.
• Students in each class will organise themselves into groups of 3 to 4 (no less than 3 and no more than 4).
• Students will read the 'Destin Brass Products' case study. Students will work in their groups to prepare a response to ALL of the case questions listed in the case study.
• Students need to submit a report, presented in proper report format (including a reference list) by the end of Week 10.
• The report needs to be submitted though the submission link available on the Blackboard.
• One copy of this report needs to be submitted by a representative of each group on the Blackboard.
• The report should be submitted in Word format
Instructions for accessing the materials for the case study.
1. Click on the link below.
2. Once you click on the link, you will be prompted to log into the Harvard Business Publishing (HBP) Education website if you already have an account. Otherwise,from the same screen, you can register for a student account.
3. Once logged in, you will be automatically directed to the Coursepack.
4. You should be able to download the case study materials in .pdf format.
5 Once you download the case study, please refer to page 5 of ‘ACCT6004 Assessment 3 Brief’ document for case study questions.
If you experience any difficulties to access the case study materials through the provided link, please email Mohammad Wasimi at firstname.lastname@example.org and cc your lecturer in that email.
Destin Brass Products
Case Study Questions
1. Explain the three possible ways of cost allocation discussed in this case study.
2. Develop activity-based costs for valves, pumps and flow controllers. Use the information provided in Exhibit 5 and the description of the activity-based costing system provided in the case.
3. Compare the estimated unit costs under the activity-based costing system (calculated in requirement 2) to existing standard unit costs (Exhibit 3) and the revised unit costs (Exhibit 4). What causes different product costing methods to produce such different results?
4. Destin Brass is experiencing price pressure in the pump market, but the company can increase the price of the flow controllers without inviting competition. What are some of the possible reasons for the actions of competitors? Provide an answer based on your understanding of the company’s activity-based costing system.
5. Discuss the strategic implications of your ABC analysis. You may consider the following factors in your answer.
• Could the production process for flow controllers be changed in such a way to allow Destin Brass Products to reduce the unit cost of flow controllers? How?
• How would the change in the lot size for the flow controller production affect unit cost?
• Has Destin Brass Products adopted the most profitable distribution system in the flow controller market?
What actions would you recommend to managers at Destin Brass Products Company?
6. Assume that interest in a new basis of cost accounting at Destin Brass Products remains high. In the following month, quantities produced and sold, activities and costs were all at standard. How much higher or lower would the net income reported under the activity-transaction-based system be than the net income that will be reported under the present, more traditional system? Why?
Learning Rubric: Assessment 3
Assessment Criteria Fail (Unacceptable) 0-49% Pass (Functional) 50-64% Credit (Proficient) 65-74% Distinction (Advanced) 75 -84% High Distinction (Exceptional) 85-100%
Knowledge and understanding of the cost concepts and techniques used in the case study.
15% Shows very little to no understanding of how to apply the costing system technique to the case study questions.
Key components of the assignment are not addressed.
Demonstrates little to no capacity to explain and apply relevant concepts.
Has answered most parts incorrectly. Shows limited understanding of how to apply the costing system technique to the case study questions.
Has answered some parts incorrectly. Thorough knowledge or understanding of the costing system techniques relevant to the case study. Highly developed understanding of the costing system techniques relevant to the case study. A sophisticated understanding of the costing system techniques relevant to the case study.
Knowledge and understanding of management accounting concepts, techniques and processes Limited awareness of relevant management accounting information required for business decisions
Difficulty and/or confusion in identifying correct management accounting concepts, tools Understanding and being able to identify relevant accounting information for business decisions
Understanding a range of management accounting techniques and processes available for generating and analysing information Understanding rationale for selecting specific management accounting tools and processes
Understanding and being able to explain quantitative and qualitative characteristics of management accounting Thoroughly understanding the management accounting concepts, techniques and processes
Being able to justify selection of specific accounting tools and processes Thoroughly understanding management accounting concepts, techniques and processes, and accounting information required for solving practical problems
Being able to critically justify selection of applicable accounting tools and processes
30% and processes required for case study questions Ability to use appropriate management accounting techniques and processes information useful for business decisions
Analysis and application of relevant management accounting concepts, techniques and processes
35% No or little use of management accounting information for decision making
Difficulty and/or confusion in preparing management accounting reports
Difficulty and/or confusion in identifying and applying correct accounting procedures Applying correct steps in preparing management accounting reports
Applying appropriate accounting procedures Identify and explain quantitative and qualitative characteristics of management accounting information, which are useful for business decisions Analysing quantitative and qualitative characteristics of accounting information, and applying analysis to solve practical problems
Correctly preparing and interpreting different management accounting statements. Correctly preparing and interpreting different management accounting statements.
Critically justifying business decisions using relevant management accounting information
20% Difficulty in explaining rationale for selected accounting tools and processes Mostly clear information presentation, with some minor errors
Evidence of attempts to make clear to audience, the rationale and application of selected accounting tools and processes Mostly clear and understandable presentation of information Clearly presented and adequately justified responses
Good references to quantitative and qualitative information where applicable Clearly presented and adequately substantiated responses, which indicate full understanding and thorough application of relevant accounting tools and processes
Sufficiently substantiated discussion of quantitative and qualitative information