Fnsacc613 task 1

question no:- 4-6

6:52 a moodle.cibt.edu.au Crown Institute of Business and Technology Pty Ltd ABN 86 116 018 412 National Provider No: 91371 CRICOS Provider Code: 02870D North Sydney Campus: 116 Pacific Highway North Sydney NSW 2060 P 02 9955 0488 F 02 9955 3888 Sydney CBD Campus: Level 5, 303 Pitt St Sydney NSW 2000 P 02 8959 6340 F 02 9955 3888 Sydney CBD Campus: Level 11, 307 Pitt St Sydney NSW 2000 P 02 8034 6431 Canberra Campus: Suite 1, Level 4, 40 Cameron Avenue, Belconnen, ACT 2617 P 02 6253 5184 Question 4 (a) Define relevant costs. Give three examples of relevant costs in a make or buy decision. (b) Why are historical costs irrelevant to decision making? (c) Identify the Benefits and Limitations of implementing Activity Based Costing. (d) Are all future costs relevant to a decision? Give examples of when they would not be relevant in a sell or further process decision? (e) Why is a sunk cost considered to be irrelevant in business decisions? Question 5 (a) Why should backup schedules be reviewed and why is undertaking such a practice important? (b) Explain the relevance of Australian Standard: Record Management to maintaining management accounting information. Question 6 The management of The Wall Corporation requires assistance from its economic analyst in arriving at a decision whether to continue manufacturing a certain part of an assembly or to buy it from an outside supplier who has been quoting a price of $8 per unit. The company's annual requirement is 5,000 units and the costs accumulated for their manufacture are: Direct Materials $20,000 Direct Labour 10,000 Indirect Labour 6,000 Power 400 Other costs 600 If the parts are purchased outside, present machinery used to make the parts could be sold and its book value would be realised. This step would reduce total machinery depreciation by $2,000 and insurance by $1,000. FNSACC613 Assessment Task 01 v2.2 Page 3 of 5 Crown Institute of Business and Technology Pty Ltd ABN 86 116 018 412 National Provider No: 91371 CRICOS Provider Code: 02870D North Sydney Campus: 116 Pacific Highway North Sydney NSW 2060 P 02 9955 0488 F 02 9955 3888 Sydney CBD Campus: Level 5, 303 Pitt St Sydney NSW 2000 P 02 8959 6340 F 02 9955 3888 Sydney CBD Campus: Level 11, 307 Pitt St Sydney NSW 2000 P 02 8034 6431 Canberra Campus: Suite 1, Level 4, 40 Cameron Avenue, Belconnen, ACT 2617 P 02 6253 5184 If the parts were purchased from an outside supplier, the following additional costs would be incurred: Freight $0.50 per unit Indirect labour $5,000 Required: (a) A statement comparing the costs of manufacturing the parts with the costs of purchasing them from the outside supplier. (b) A brief discussion dealing with matters other than cost factors of which management should be made aware. Question 7 DWD Manufacturing manufactures two products, A and B. Data relating to the two products follow