The assignment may be completed manually, or with the use of an electronic spreadsheet

FormatThe assignment may be completed manually, or with the use of an electronic spreadsheet, word processing software or with the use of accounting software. Marks may be deducted for illegible or partially illegiblepapers.• Assignments (or parts thereof) prepared using MS Word can be lodged in MS Word 2003, MS Word 2007, or MS Word 2010format.• Assignments (or parts thereof) prepared using MS Excel can be lodgement MS Excel 2003, MS Excel 2007, or MS Excel 2010format.• Assignments (or parts thereof) prepared using any format other than indicated above (eg manually, wordprocessing software or accounting software etc) must be provided in PDF format.Documents prepared in formats other than indicated above will not beaccepted.You may prepare different parts of your assignment in different (approved) formats and lodge each part as separate documents, provided you comply with the format requirements shownabove.University PlagiarismpolicyPlagiarism is the unacknowledged use of material written or produced by others or a rework of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend. For more details please refer to PRBA007 Learnlinesite.PreparationguidelinesAssignment preparation and presentation guidelines, instructions on lodgement of the assignment, are provided with and/or separately to this document and are available on the PRBA007 CDU Learnlinesite.Students are required to comply with theserequirements.FAILURE TO COMPLY WITH THESE REQUIREMENTS WILL RESULT IN YOUR ASSIGNMENT BEING REJECTED WITH SUBSEQUENT LOSS OFMARKS.Late Assignments andExtensionsLATE ASSIGNMENTS WILL GENERALLY NOT BEACCEPTED.Exceptions will only be made where assignments are late due to special circumstances that are supported by documentary evidence, and may be subject to a penalty of 5% of assignment marks per day. Partially completed assignments will be accepted with appropriate loss of marks for the incomplete portion.Should students foresee potential difficulties with submission of assessment items, they should contact the lecturer immediately the difficulties come to notice, to discuss suitable arrangements etc for the submission of those assessment times. An Application for Assignment Extension or Special Considerationshould be completed and provided to the Head of School, School of Law and Business. This application form, explanation and instructions is available on the PRBA007 CDU Learnline coursesite.Leaving a request for an extension, special assessment or special consideration until the last moment, based on grounds that students could have reasonably been able to foresee, may result in the application being rejected.3PRBA007Requirements for AssignmentTwoProblem ONE (8marks)MT is a manufacturer of children’s Mobile Phones. Inthe Budget-setting process, Budget X was prepared by lower and middle management. Budget Y was prepared by senior management.XYUnitSales2000030000DollarSales$600,000$900,000Less: Variableexpenses:Directmaterials260,000360,000DirectLabour40,00060,000VariableOverhead60,00075,000Variable Selling and administrativeexpenses60,00060,000Total Variableexpenses$420,000$555,000Contributionmargin$180,000$345,000Less: Fixedexpenses:ManufacturingOverhead$60,000$50,000Selling andadministrative100,00080,000Taxes andInterest10,00010,000Total fixedExpenses$170,000$140,000Net Profit(Loss)$10,000$205,000Requireda) Calculate the cost per unit for the Variable costs (2marks)b) Why do you think budget X has high costs and low sales forecasts? (2marks)c) Why do you think budget Y has low costs and high sales forecasts? What are the behavioural of this top-down approach? (2marks)d) How should the two groups participate to come to a consensus on the budget? What are the advantages of this approach?(2marks)Problem TWO (18marks)WJ Company manufactures a unique model winter jacket sold throughout Australia. Sales in units for the first five months of 2014 are projected asfollows:July35,000August20,000September15,000October8,000November6,000Information relates to WJ’s production and inventory policies and balances are as follows:1.Finished goods inventory is maintained at 80% of the following month’s sales. Finished goods inventory at 1 July 2014 was 28,000units2.Two materials are required for each Jacket manufactured, asfollows:DirectMaterialsmeter perUnitCost permeterPolyester5$8LiningMaterial3$2Raw materials inventory is maintained at 10% of the following month’s production needs. Inventory at 1 July 2014 was 17,000 meters of polyester and 10,200 meters oflining.3.Direct labour used per unit is two hours. The average rate for labour is $15 perhour.4.Overhead each month is estimated using flexible budget format, with direct labour hours used as the basis for variable costs. A summary of expected overhead costs is as follows:Fixed Cost VariableCostComponent ComponentFactorysupplies$1.00EnergySupplies0.75Shopmaintenance$30000.50Supervision4,000Depreciation60,000Taxes5000Other 10,000 2.00Total $82,000 $4.255.Selling, general, and administrative expenses are also calculated on a flexible budget basis based on the number of units sold. Cost estimates are asfollows:Fixed Cost Component Variable CostComponentSalariesCommissions$18,000$3.00DepreciationShipping22,0000.75Other10,0001.50Total $50,000 $5.256.Each Jacket sells for$85.7.All purchases are made in cash. All sales are on account. Collection of accounts receivable is planned as follows: 90% in the month of sale; 10% in the month following the month of sale. The accounts receivable balance at July 1, 2014, is $145000, all of which is collectable. The cash balance at July 1, 2014, is$202000.RequiredA. Prepare the following portions of the operating master budget, bymonth, for thefirst quarter of2014:A) Sales Budget (2marks)B) Production Budget (2marks)C) Direct Materials budget (4marks)D) Direct labour budget (2marks)E) Overhead budget (2marks)F) Selling, general and administrative expense budget (2marks)G) Cash Budget (2marks)H) Suppose WJ’s management believes that unseasonably warm weather in September and October could cause its sales in units to differ from the original projections as follows:June35,000July20,000August10,000September6,000October 6,000Explain how these fluctuations in sales will affect the other portions of the master budget developed in the previous requirements. What are the implications for the importance of forecasting sales accurately? (2marks)Problem THREE (14marks)TCC Industries Ltd produces speciality tyres in a variety of sizes and tread designs for use on trailers and farm equipment. TCC is planning to implement a standard cost accounting system. Valerie Siewert, the accountant, has accumulated the following information on the standard cost of a particular bias tractortyre.Each tyre requires 15 kilograms of carbon black, the basic tyre component, which is added in the mixing department. Other materials, such as zinc and sulphur, which are added in the moulding department, are required in such small quantities that they are treated as indirect materials and included as part of overhead. Each tyre requires 15 minutes of processing time to mould and cure. An additional 45 minutes of time is required to mix the ingredients in the mixingdepartment.The standard cost for carbon black is $3.50 per kilogram. The standard cost of direct labour in the mixing department is $10 per labour hour, while the standard cost of direct labour in the moulding department is $11 per hour.Requireda) Develop the standard cost of materials and labour for the tractor tyre. The standard cost should identify the standard quantity, the standard rate and the total standard cost per unit. (3marks)b) Identify the advantages of implementing a standard cost system. (2marks)c) Explain the role each of the following people would have in developing the standard costs: (5marks)1- PurchasingPower2- Mixing departmentsupervisor3- Moulding department supervisor 4- Costaccountant5- Product engineerd) Assume that a batch of tyres has been completed and the following actual amounts were used to produce thebatch:1-Actual output: 4500tyres2- Actual carbon black utilised: 68000kilograms3- Carbon black purchased: 75000 kilograms at a cost of$2580004- Direct labour in mixing department: 3220 hours at a cost of$310736- Direct labour in moulding department: 1075 hours at a cost of$12384Calculate the materials price variance and the material usage variance. Also, calculatethe labour rate variance and labour efficiency variance for each department. (4marks)