Question 1: Differences between management accounting and financial accounting (15 Marks)
You are the financial controller of a large manufacturing organization and intend to approach the human resources (HR) manager seeking to create two new positions: a financial accountant and a management accountant.
1 Prepare a briefing document for the HR manager which explains the differences between these two roles.
2 Formulate (and answer) the five likely questions that you anticipate the HR manager will ask you about these two positions when you meet.
Question 2: Product cost classification: manufacturer (15 Marks)
The following cost data for the current year relate to Heartstrings Pty Ltd, a greetings card manufacturer:
Service department costsl $ 50 000
Direct labour: wages 242 500
Direct labour: on-costs 47 500
Indirect labour: on-costs 15 000
On-costs for production supervisor 4 500
Administrative costs 75 000
Rental of office space for sales personnel2 7 500
Sales commissions 2 500
Product promotion costs 5 000
Direct material 1 050 000
Advertising expense 49 500
Depreciation on factory building 57 500
Cost of finished goods inventory at year end 57 500
Indirect labour: wages 70 000
Production supervisor’s salary 22 500
Total overtime premiums paid 27 500
Cost of idle time: production employees3 20 000
Calculate each of the following costs for the year:
1 Total prime costs.
2 Total manufacturing overhead costs.
3 Total conversion costs.
4 Total product costs (for external reporting
5 Total period costs.
Question 3: Cost behavior; engineered cost; committed and discretionary costs: manufacturer (10 Marks)
HappyDaze T-shirts manufactures and prints customised designs on T-shirts. Below is a list of some of their major costs.
- Cost of daily radio advertising on the local community radio station.
- Cost of the fabric used to make the T-shirts.
- Cost of the ink used in the designs.
- Salary of the managing director.
- Wages of the production employees who sew and print the T-shirts.
- Cost of movie tickets provided for the Employee of the Month award each month.
- Depreciation of the sewing machines, calculated on a units of production basis.
- Cost of electricity used in the factory building.
- Rent of the building.
- Wages of the staff who package the T-shirts.
- Cost of sewing machine maintenance.
- Cost of the new advertising sign at the front of the
- Cost of the company car used by the managing
For each cost:
1 Indicate whether it is fixed or variable.
2 If the cost is variable, indicate whether it is an engineered cost. Explain why.
3 If the cost is fixed, indicate whether it is committed or discretionary. Explain why.
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