Australian National Institute of Management and

Commerce

TACC$607$ Managerial Accounting

Term $2,2024$

Lecturer: Dr$.$ Nahid Islam

Group Assignment

Read carefully the following Case information before planning to write the Report

Asian Style Industries is a diversified company whose products are marketed both domestically

and internationally. The company's major product lines include furniture. sports equipment and

household appliances. At a recent meeting of the board of directors, there was a lengthy discussion

on ways to improve overall corporate profitability. The members of the board decided that they

required additional financial information about individual corporate operations in order to target

areas for improvement.

Danielle Murphy, the financial controller, has been asked to provide additional data that would

assist the board in its investigation. Murphy believes that profit statements, prepared along both

product lines and geographic areas, would provide the directors with the required insight into

operations. Murphy had several discussions with the division managers for each product line and

compiled the following information from these meetings:

The division managers concluded that Murphy should allocate fixed manufacturing overhead to

both product lines and geographic areas on the basis of the ratio of the variable costs expended to

total variable costs.

Each of the division managers agreed that a reasonable basis for the allocation of depreciation on

plant and equipment would be the ratio of units produced per product line $($or per geographical

area$)$ to the total number of units produced.

There was little agreement on the allocation of administrative and selling expenses, so Murphy

decided to allocate only those expenses that were traceable directly to an area. For example, sales

staff salaries would be allocated to geographical areas. Murphy used the following data for this

allocation:

Furniture

Sports

Housewares

$$120000$

$140000$

$80000$

Australia

New Zealand

Singapore

$$60000$

$100000$

$250000$

The division managers were able to provide reliable sales percentages for their product lines by

geographical area.

Murphy prepared the following product$-$line profit statement based on the above data.

Assignment Tasks and Renort Requirements