why fixed overhead included in closing inventories is added, while fixed overhead included in opening inventories is subtracted in the reconciliation statement shown above.

UBAM1013 FIM (May 2016) One-Day Group Assignment Page 1 of 3 UNIVERSITI TUNKU ABDUL RAHMAN UBAM1013 FINANCIAL INFORMATION FOR MANAGEMENT MAY 2016 ONE-DAY GROUP ASSIGNMENT Objective: The objective of this assignment is to allow students to connect what they have learnt in the classroom and applied them to the real life working environment. Besides, the group assignment also aims in allowing students to have more practices in attempting theory questions. Students are strongly encouraged to discuss and work through the assignment questions with their own group members using the resources available in the library. Instructions: 1. Each team: 5 to 6 students 2. Date & time of submission: 1 August 2016 (Monday), latest by 12pm LATE SUBMISSION WILL BE REJECTED! 3. Mode of submission: (a) Submit the hardcopy answers to Ms. Ng Yen Hong's room at H2-279. (b) Email the softcopy answers to ngyh@utar.edu.my 4. Total marks for this group assignment: 50 marks 5. The group assignment should be based on a team effort. Students are therefore required to work on the assignment questions with their own group members. 6. Students are hereby forewarned of the heavy consequences if plagiarism of work is found. Students are NOT allowed to share or show their answers to other students apart from their own group members. 7. The group assignment should be: (a) Bound using tape binding with two punch holes on the left side. Please refrain from using plastic cover sheets when binding the assignment. (b) Printed on A4 size paper, Times New Roman font, font size 12 and single spacing. (c) Top and bottom margin: 1 inch; Left and right margin: 1 inch. (d) Arranged in the following sequence: i. 1st page - Group assignment cover page ii. 2nd page onwards - Assignment answers (Do NOT attach the questions) UBAM1013 FIM (May 2016) One-Day Group Assignment Page 2 of 3 Question 1 The following is the reconciliation statement for Benson Sdn. Bhd. The reconciliation statement reconciles the net profit of marginal costing to absorption costing for the year ended 31 December 2015: Net profit as per marginal costing Fixed overhead included in closing inventories Fixed overhead included in opening inventories Net profit as per absorption costing RM 10,000 2,500 (1,200) 11,300 Required: Explain why \"fixed overhead included in closing inventories\" is added, while \"fixed overhead included in opening inventories\" is subtracted in the reconciliation statement shown above. (12 marks) Question 2 In relation to the following businesses: Retail store that sells music CDs Dental clinic Fast-food restaurant Automobile repair shop Required: Discuss extensively on the following points: (a) Which business has the lowest ratio of fixed cost over variable cost? (b) Which business has the highest ratio of fixed cost over variable cost? (c) Which business' profit would be the most sensitive to changes in activity level? (d) Which business' profit would be least sensitive to changes in activity level? Note: Reason(s) should be provided to justify your answers. (8 marks) UBAM1013 FIM (May 2016) One-Day Group Assignment Page 3 of 3 Question 3 Assuming in year 2015, Company A's production units are greater than the break-even point units. However, the sales units equal to the break-even point units. Required: Discuss, with reasons, the bottom-line results for the income statements for year 2015 under marginal costing and absorption costing basis. Note: Answers should be discussed without resorting to the preparation of income statements. (12 marks) Question 4 Discuss the usefulness of cost behaviour analysis to managers. (8 marks) Question 5 Discuss scenario(s) in which companies should adopt blanket overhead rate over departmental overhead rates. Note: Example(s) should be provided to further illustrate your answers. Your answer should also discuss the implication of unsuitable use of blanket overhead rate by these companies. (10 marks) [Total: 50 marks]