ACCT-0050 INTRODUCTORY MANAGEMENT ACCOUNTING Unit 2 Assignment (10%) Instructions: Assignment 2 will be posted in Moodle at the end of Unit 2, and will need to be submitted on time, using properly formatted excel files. Question 1 and 2 are each worth 50 marks each for a total of 100 marks, which will be 10% of your final grade. The Assignment is due November 1st, 2023 midnight. Complete both questions using a properly formatted excel solution. This assignment is an individual effort, and you may not use the same excel file for different students consistent with ACCs academic integrity policy. For question 1, you may utilize the excel file from 7.2 as a starting point, if you wish. Excel cells need to properly calculate, you are not to hardcoded, unless they are clearly identified input cells. Each hardcopy entry will have a 2-point deduction. Question 1 The Automachine Corporation produces three high-quality components and last year allocated all costs except material on the basis of direct labour hours/unit. However, due to the introduction of CAD/CAM and a complete review of the cost allocation system, Automachine Corporation is considering changing its basis of machined component costs. For the following year the budget and production data have been extracted by the machine manufacturing department: Activity 1 Automated machinery total cost $1,800,000 Activity 2 Finishing operations total cost 530,000 Activity 3 Material handling total costs Your Student Number Activity 4 Packaging and shipping costs 100,000 Activity 5 Production setup total costs 80,000 Activity 6 Production scheduling total costs 60,000 The most appropriate cost drivers for the six activities have been identified as: machine hours, direct labour hours, number of parts, number of orders shipped, number of production setups, and number of production orders respectively. Based on actual data for the previous year, next years predicted data for the three high-quality components are as follows: Compu #123 Compu #456 Compu #789 Machine hours/unit 4 4 10 Direct labour hours/unit 1 3 6 Number of parts/unit 15 25 60 Number of orders shipped 500 1,000 400 Number of production setups 50 25 25 Number of production orders 150 35 100 Total units to be produced 5,000 2,500 400 Direct materials cost/unit 40 25 55 Required: As the Management Accountant for the Automachine Corporation, prepare supporting schedules for: a) Activity rates for each of the six activities. b) A budget of total costs and unit costs for each of the three components, excluding direct materials. c) The computation of the budgeted total and unit costs using the old direct labour hour based system for each of the three components. d) Comparing the results of (b) and (c) above. In conclusion, interpret and suggest the most appropriate system, and discuss the pros and cons of using ABC cost drivers. Question 2 Mercury Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $122 Units in beginning inventory 0 Units produced 8,300 Units sold 8,200 Units in ending inventory 100 Variable costs per unit: Direct materials $27 Direct labour $46 Variable manufacturing overhead 4 Variable selling & admin 7 Fixed costs: Fixed manufacturing overhead Your Student Number Fixed selling & admin $106,600 Required: a) What is the unit product cost for the month under variable costing? b) What is the unit product cost for the month under absorption costing? c) Prepare an income statement for the month using the variable costing method. d) Prepare an income statement for the month using the absorption costing method. e) Reconcile the variable costing and absorption costing net incomes for the month