HI5017 - Tik Tok Company manufactures customized coffee tables - Accounting and Finance Assignment Help

Assignment Task

Unit Learning Outcomes Assessed: 
1. Synthesize and critically analyse information from various sources and provide recommendations to improve the operations of organisations through the application of management accounting techniques; 2. Critically evaluate the various approaches to performance measurement and control in various types of organisations, and devise and evaluate indicators of performance. 3. Demonstrate the need for a balance between financial and non-financial information in decision making, control and performance evaluation applications of management accounting. 4. Analyse a company’s financial statements and/or management reports and identify the strengths and weaknesses of the company and articulate these to the various stakeholders. 
Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions and submit these answers in a single document. 
The questions to be answered are: 
Question 2 - Week 3 (7 marks) 
Tik Tok Company manufactures customized coffee tables. The following relates to Job No. X10, an order for 150 coffee tables: 
Direct materials used $22 800
Direct labour hours worked 600
Direct labour rate per hour $16.00
Machine hours used 400
Applied factory overhead rate per machine hour $30.00
Required:
a) What is the total manufacturing cost for Job No. X10? (3 marks)
b) Calculate the cost per coffee table for Job No. X10? (2 marks)
c) List two uses of this unit cost information to the managers at Tik Tok Company. (2 marks)

Question 2 - Week 5 (11 marks)

TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for $1,600. The production cost computed per unit under traditional costing for each model in 2019 was as follows:

In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.

Required:
1. Calculate the activity rates for each of the overhead items using the four cost drivers. (3marks)

2. Using the rates in (1) determine the unit cost for TRI-X. (4 marks)
3. Calculate the gross profit of each model of TRI-X based on ABC costings and recommend whether or not TRI-X should be discontinued. (4 marks)

Question 3 - Week 6 (11 marks)

A new company, is being established to manufacture and sell an electronic tracking device: the Trackit. The owners are excited about the future profits that the business will generate. They have forecast that sales will grow to 2,600 Trackits per month within five months and will be at that level for the remainder of the first year.

The owners will invest a total of $250,000 in cash on the first day of operations (that is the first day of July). They will also transfer non-current assets into the company.

Extracts from the company’s business plan are shown below.
Sales
The forecast sales for the first five months are:

Direct materials:

Payment for purchases will be made in the month following receipt of materials. There will be no opening inventory of materials in July. It will be company policy to hold inventory at the end of each month equal to 20% of the following month’s production requirements. 
Direct labour will be paid in the month in which the production occurs. Variable production overheads: 65% will be paid in the month in which production occurs and the remainder will be paid one month later. 
Fixed overhead costs

Fixed overheads are estimated at $840,000 per annum and are expected to be incurred in equal amounts each month. 60% of the fixed overhead costs will be paid in the month in which they are incurred and 15% in the following month. The balance represents depreciation of noncurrent assets. 

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