I am stuck with schedule 2 and 3 for this assignment. I've tried many times but my answers are always wrong for the two schedules. Please help me. - Schedule 2: ? Calculation of standard costing cost variances relating to the product ?Sneakers" - Schedule 3: ? The Normal Absorption Costing Income Statement for the period, with relevant variances expensed to the period and; recast the Income Statement (with relevant variances expensed to the period) assuming Standard Absorption Costing.

QUEENSLAND UNIVERSITY OF TECHNOLOGY QUT Business School School of Accountancy AYB225 Management Accounting SEMESTER ONE 2014 Assignment (Weighting Total - 20%) Due: Submission: Type: Length: May 24, 2014 at 9pm Electronic assignment submission only via Blackboard-under Assessment Individual or in groups See Submission requirements below This assessment item assesses the following learning outcomes: Have knowledge and skills pertinent to a particular discipline (KS) 1.1 Integrate and apply disciplinary theory and skills to practical situations 1.2 Incorporate the use of technology appropriate to the discipline and context Be critical thinkers and effective problem solvers (CTA) 2.1 Identify, research and critically analyse information relevant to a business problem or issue, be able to synthesise that information in order to evaluate potential solutions, make recommendations or otherwise effectively address the problem or issue Be professional communicators in an intercultural context (PC) 3.1 Communicate effectively through written tasks appropriate to varied contexts and audiences Submission Requirements: 1.Your written report in Word and your schedules in Excel uploaded into the AYB225 Blackboard site via the electronic assignment submission process, and 2.Answers to Excel reports to be entered in the schedules provided on Blackboard. 3. For all assignments: Complete the footer in the Word documents with student/group information Complete the student/group information in the Excel spreadsheet Only the group leader is to complete the answer schedules on Blackboard, no others will be marked or taken into consideration When uploading your assignment, start the file name with the student/group leaders' student number 4. Please register your group via email to AYB225enq@qut.edu.au by 30 April 2014 Academic staff will not discuss or provide assistance with this assignment in any manner. The total assignment will be marked out of 40 and is worth 20%. Late Assessment and Extensions Assessment submitted after the due date without an approved extension will not be marked and will receive a grade of 1 or 0%. Only individual submissions can be eligible for an extension. Groups are not eligible. If special circumstances prevent you from meeting the assessment due date, you can apply for an extension. If you don't have an approved extension you should submit the work you have completed by the due date and it will be marked against the assessment criteria. The Assignment Sneakers Unlimited The firm Sneakers Unlimited is a manufacturer of men's and women's leisure shoes. What began as a small family business has now grown into a firm with a large and very popular product range. The firm produces three lines in the range - Dance, Run and Walk. The firm's products have a relatively short lifetime and often styles popular in one period are out of fashion by the next period. Costing system currently used The firm accounts for its products using standard absorption job costing, applying overhead to products using a plant-wide rate based on direct labour hours. Materials purchases are recorded at actual cost. Work in process and finished goods inventories are recorded at standard cost. All cost variances in the period are transferred to cost of goods sold at the end of the period. This existing costing system was established when only one type of sneakers was produced and when overhead was a significantly smaller proportion of total cost than it is now. Materials for sneakers are fabric, cottons, and depending on the styles, zippers, buttons, Velcro, laces and logos. At the present time the only material which is traced directly to the product is fabric. Cottons, buttons, zippers, laces, Velcro and logos are treated as indirect materials (overhead). All oncosts such as superannuation, payroll tax, provisions for leave on wages are treated as indirect costs (overhead). Standards are determined at the point when the product is initially designed, and are regularly updated to reflect all changes in the manufacturing process. The firm prides itself on its very efficient labour force, and in the past the company seldom had cost over-runs due to labour inefficiency. In the period which is the focus of this review, two changes were made in the manufacturing process. First, a change was made in the layout of the manufacturing space which should reduce the standard time per product in the long run. The direct labour standards have not yet been updated to include this change. Secondly, a new type of material was purchased from the current supplier. The supplier had claimed that the new material (which is of high quality, yet cost a similar price to the old material) is easier to work with in terms of both cutting and sewing. The supplier is known to be reliable in terms of material supply. 2 Review of costing system The firm is commencing an extensive review of its costing system and reporting practices. This review will involve all divisions of the firm. Your task is only a small part of the entire review: One product only (\"Dance\" sneakers), and Selected tasks only - for example, a discussion on implementing Activity Based Costing Some of the issues which have prompted the review are: Various pressures from competitors have alerted the firm to be more cost conscious. The firm has had a number of issues with their product pricing recently. The firm sets prices based on a mark-up on total cost (i.e. inventoriable (product) cost + period cost for each product). Various inconsistencies have been identified when comparing Sneakers Unlimited prices with those of its major competitors. As a result, the firm wants to have more confidence in the product cost generated by the accounting system, in particular the cost of each individual product (Dance, Run and Walk). In addition to product pricing, the costing data provided by the firm is now being used extensively for other decision-making within the firm. This means that the accuracy of costing data is becoming increasingly important. In recent times the firm has been faced with limited storage space at their premises. The firm is unable, at this stage, to consider options involving a significant capital outlay to relocate or rebuild. Further, Just in Time inventory is not an option for this firm. (Note: the recent change in factory layout has no impact in any way on storage capacity.) The requirements of the case begin on the next page. In addition to the tasks management have asked you to complete, they have also indicated that there are a few issues that you are not to include: Ways of reducing costs - You are to take all costs as given, and at this stage not recommend any particular ways of attempting to reduce or eliminate costs. Use all data as given, including all the fixed overhead figures without trying to fine-tune those figures in any way. Management has extensively reviewed the budgeting process of the firm and is happy that all budgets have been appropriately set. Therefore you should not include any issues related to the firm's budgeting process. Management has stressed that your responses to the questions should be based only on the facts with which you have been provided. Do not go outside these facts. The information you provide will be combined with information relating to the other lines (\"Run\" and \"Walk\") for further analysis. This additional analysis and any issues which may result from combining the information are outside the scope of this case. Finally: Be concise Do not include unnecessary padding Use pro-forma Part B on Blackboard to structure your responses 4 Task Description - \"Dance\" Sneakers You are to assist the review process by providing management with the following items related to the product line \"Dance\". 1. Six technical reports with two supporting schedules (Part A). Management is considering various costing system options. To facilitate their decision-making they have requested the preparation of these schedules. The data and the schedules are in the Excel file on Blackboard. 2. Short answers to 3 questions from management (listed below Part B 1-3). Your answers to each of the questions should be complete, but also should be clear and concise, and in a form that is easy for managers to read and understand. You may use bullet points if they assist in the presentation of your answers. Answers must be written in acceptable Business English. 3. A discussion (Part B - 4 below) based on (i) Schedule 6 (ABC), (ii) the facts of the case (iii) and an article from the literature. PART A: Schedules required (12 + 8 Marks) Complete schedules (8) in the appropriate spaces on pro-formas. Do not delete any parts of the proforma. Show all required working in the relevant spaces, and only show required working. Variance report related to units produced. (Schedule 1) Calculation of standard costing cost variances relating to the product \"Dance\". The firm calculates price variances for all manufacturing costs, efficiency variances for all variable manufacturing costs, and a fixed overhead volume variance. The material price variance is calculated on usage. (Schedule 2) The Normal Absorption Costing Income Statement for the period, with relevant variances expensed to the period and; recast the Income Statement (with relevant variances expensed to the period) assuming Standard Absorption Costing. (Schedules 3 and 4, and a schedule to calculate COGS) Show the journal entries for the period under the standard absorption costing system currently used by the firm. Journal entries must be presented in proper form. (Schedule 5) Prepare a comparison of overhead costs per product under the existing costing system (a plantwide rate based on DL hours) with an Activity Based Costing system using the cost pools and cost drivers identified in the data. (Schedule 6 and workings for Schedule 6) Excel To be clear, all worksheets are to be completed using formulas that draw values from the data provided. In each worksheet, students will be deducted 0.5 marks for each cell that contains a numerical value that has not been obtained using an Excel formula. It is not necessary to enter the label \"U\" or \"F\" in the column next to the relevant variance value. If you wish to do so use an \"if\" statement. 6 If you want to be eligible for up to 8 marks, then use formulas in your calculations. The formulas will have to refer to other cells in the worksheet that either contain the original values, e.g. dl cost per hour, machine hours per unit, order times etc. or to formulas from a previous step. This means, every time the values in the data sheet are changed, the results are updated automatically. Each sheet is worth 1 mark, therefore only two errors can be made in each sheet. PART B: Answers to management questions (pro-forma provided) (20 Marks) (1) The firm's labour force has a good reputation. Therefore, management is perplexed at the efficiency variances from this period. Taking each of the variances separately under the headings provided in the pro-forma, suggest possible reasons (deriving from the facts provided in the case) that the firm has used more/less material and more/less DL hours than it should have. Your suggested reason(s) may apply to more than one variance so be very clear here. Be concise and succinct. (2) Management is keen to have more confidence in its product costs. One way to achieve this would be to implement Activity Based Costing (as you will discuss in (4) below). There are other improvements that this firm could make to the way it is currently costing its products. This may provide product costs which the management of the Department can be more confident about (costs which would be less subjective). Identify and explain two improvements that can be made to the costing system based on the facts provided in the case. (50% each). Note that the improvements may be related to each other. (3) Management is uncertain about the meaning of the fixed volume variance. They have commented: \"the fixed OH volume variance is favourable, so this must mean that everything is OK there\". Explain to management the meaning of the variance and why their observation is incorrect. (50%) In addition, following on from that explanation, explain related consequences for the firm in light of the other concerns that management has raised, (50%) (4) Based on your analysis in Schedule 6 and the facts of the case, discuss why you would or would not recommend ABC. Also, provide further evidence for your discussion by referring to an article from the literature (use the Internet or QUT's database). Articles from professional or scientific journals/magazines that report on costing system (e.g. ABC) experiences will serve this purpose well. Textbooks such as Horngren et al. (2011) do not qualify as an article. Use the AREA critical thinking framework document on Blackboard under Lecture 2 to structure your discussion. Your discussion should be no longer than two pages (double line spacing). Requirements of the Assignment Weighting of the assignment: 20% Note that the weighting for each part of a question is an indication of the amount of your answer that should be devoted to that part. This assignment may be done individually, or in a group of 2 or 3 students (i.e. maximum size is 3). Group members are not required to be in the same tutorial. If you work in a group, you submit one assignment only for the group. All group members will receive the same mark. Therefore, all group members are responsible for the work of other group members, e.g. proof-reading for grammar; all errors (typographical, omissions, non-compliance with instructions etc). Due date: Submit via Blackboard on 24 May 2014 by 9.00pm. You should plan and organise your time to ensure that you submit the assignment when it is required (exactly as you would be expected to do if an employer requested this information). If you believe your exceptional circumstances warrant an extension, you must follow the instructions on BB under Assessment 2 \"Assignment Extensions\". However, requesting an extension does not mean that an extension will be granted. Because of the amount of time you have in which to complete this assignment, extensions are unlikely to be granted except in very extreme circumstances. General comments Make sure that you: Answer the question asked, and only the question asked. Provide complete answers. As per the third paragraph of the case study \"The firm accounts for its products using standard absorption job costing....\AYB225 ASSIGNMENT SEMESTER 1_2014 ALL DATA RELATES TO THE PERIOD UNDER CONSIDERATION IN THIS REVIEW, AND ACTUAL AND STANDARD COSTS PER UNIT ARE UNCHANGED FROM THE PREVIOUS PERIOD BUDGET DATA FOR DANCE Production budget standards for: Direct materials (fabric) Direct labour Variable overhead Fixed overhead 2,150.00 units 1.00 metres 1.50 hour $8.00 per metre $19.00 per hour $3.00 per hour $4.50 per hour Overhead costs for Dance have been determined as follows: An overhead budget is determined for a particular period for the Shoe Section as a whole. This cost is shared across the three product lines for budgeting and variance calculation purposes in proportion to the budgeted direct labour hours. The fixed overhead rate is calculated taking standard (budget) data for all three lines of the product into account . Budgeted fixed overhead for the period is $21,000.00 The budgeted fixed overhead for Dance is $14,512.50 Based on the production budget for the total number of units: DL hour per unit Number of units Dance 2,150 1.50 Run 1,250 1.00 Walk 700 1.80 Non-manufacturing costs Budgeted and actual selling and administrative costs related to Dance are as follows: Variable costs per unit are $1.20 ; and Fixed costs for the period total is $1,900.00 ACTUAL DATA There is no opening or closing WIP, and no inventory of direct materials on hand at the beginning of the period. Standard costs in Finished Goods are the same as last period, opening inventory is Number of units produced in the period is 2,100.00 Units sold in the period 2,050.00 at $80.00 Purchases of direct materials for cash Direct materials used in the period Direct labour hours worked in production Actual variable overhead Dance share of actual fixed overhead 2,500.00 metres at 2,200.00 metres 3,100.00 DL hour at $2.80 per DL hour $12,000.00 * * Actual fixed overhead incurred by the Shoe Department is 400 units per unit $7.50 per metre $20.50 per hour $21,000.00 This is shared for the purposes of variance calculation in proportion to the actual direct labour hours incurred. After consulting data related to Walk and Run, Dance incurs actual fixed overhead as stated above. (For the journal entries, credit Accounts Payable for actual overhead incurred.) ADDITIONAL DATA COLLECTED ON OVERHEAD COSTS FOR ABC COSTING CALCULATIONS Run and Walk include features that make them relatively machine intensive and involve considerable time in setting up equipment involved in design, drawing, cutting, tracing etc . The costs can be grouped into four categories: * costs driven by direct labour hours, * costs driven by machine hours, * costs related to ordering and transportation, which are driven by the number of orders, and * costs related to testing, which are driven by the number of product tests in the period. An analysis of the overhead costs for the Shoe Department into those categories results in the following cost pools: OH Cost Pool Budgeted OH Costs DL-related $5,200 Designing $20,000 Purchasing $15,000 Testing $3,740 $43,940 Expected usage of the resources by the different products (based on budgeted production) is reproduced below: Dance Run Walk Budgeted production units 2,150.00 1,250.00 700.00 Current Data Page 1 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 GROUP INFORMATION Students in Group Name Student Number Person Submitting Assignment 1 2 3 When completing the assignment as a group, ensure all group members are identified in your submission, specifically noting the group member responsible for submitting the assignment, including the entering of results into Blackboard. Group Information Page 2 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 ACTUAL COST VARIANCES FLEXIBLE BUDGET VOLUME VARIANCES STATIC BUDGET Activity Levels Hours Direct Labour Direct Materials Variable Overhead Fixed Overhead Total Cost Units Produced Schedule 1 Page 3 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 SUMMARY OF VARIANCES FOR STANDARD COSTING F/U Jenny Staib LRV LEV MPV MEV TOTALS $4,650.00 U F/U VARIABLE SPENDING VARIABLE EFFICIENCY FIXED SPENDING FIXED VOLUME SET UP ALL FORMULAS BELOW AND LINK TO SUMMARY ABOVE The first calculation has been entered as an example of linking formulas. You can follow the way the calculations have been set out in tutorials, or change it to suit your own approach DIRECT LABOUR ACT QTY 3,100.00 x ACT PRICE ACT QTY x x 3,100.00 x $20.50 $63,550.00 LRV STD PRICE $19.00 $58,900.00 $4,650 U DIRECT MATERIAL VARIABLE OVERHEAD FIXED OVERHEAD OVERHEAD VARIANCES FOR NORMAL COSTING VARIABLE OVERHEAD FIXED OVERHEAD Schedule 2 Page 4 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 Calculation of COGS for Schedules 3 and 4 This worksheet will help to complete schedules 3 and 4; the COGS figures should be linked to the relevant schedules ACTUAL NORMAL STANDARD COGS/UNIT ABSORPTION NORMAL COGS/UNIT ABSORPTION STANDARD Activity Levels Hours Direct Labour Direct Materials Variable Overhead Fixed Overhead TOTALS Calculations for 3 and 4 Page 5 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 Jenny Staib SCHEDULE 3 NORMAL ABSORPTION COSTING SCHEDULE 4 STANDARD ABSORPTION COSTING Insert figures in non-shaded cells Insert figures in non-shaded cells # $ $ $ # SALES Less COGS - link to worksheet Gross Margin Less Selling and Administration costs Less Selling and Administration costs Fixed Fixed Variable Variable Net Profit $ Adjustment for variances Gross Margin $ Less COGS - link to worksheet Adjustment for variances $ SALES Net Profit Schedules 3 and 4 Page 6 of 7 pages js2014 AYB225 ASSIGNMENT SEMESTER 1_2014 JOURNALS FOR STANDARD COSTING SYSTEM DR CR Purchase of Materials Materials Cash Usage of Direct Material WIP MPV MEV Materials Usage of Direct Labour WIP LRV LEV Payroll (Payable) Overhead Incurred OH Accounts Payable Overhead Applied WIP OH Recognition of Overhead Variances OH Variable Spending Variance Variable Efficiency Variance Fixed Spending Variance Fixed Volume Variance Cost of Goods Finished FG WIP Cost of Goods Sold COGS FG Disposition of Variances COGS MPV MEV LRV LEV Fixed Spending Variance Fixed Volume Variance Variable Spending Variance Variable Efficiency Variance Schedule 5 Page 7 of 7 pages - js2014