BAAC 2204 Modern College of Business and Science Accounting Management Study Cases see files attached ……………………………………………..

BAAC 2204 Modern College of Business and Science Accounting Management Study Cases see files attached ………………………………………………………………… HIGHER COLLEGE OF TECHNOLOGY
DEPARTMENT: BUSINESS STUDIES
Final Examination
Assignment Based Assessment
Semester: II
A. Y.: 2019 / 2020
Diploma: II Year
Start Date: 04.06.2020
Time: 9:00 AM
Due Date: 06.06.2020
Time: 9:00 AM
Student Name
Student ID
Specialization
Section
Accounting
Level
Diploma II Year
Course Name
MANAGEMENT ACCOUNTING 1
Course Code
BAAC2204
For official Use Only
Question No.
Max. Marks
CS 1 – Q1
CS 1 – Q2
CS 2 – Q1
CS 2 – Q2
CS 2 – Q3
CS 3 – Q1
CS 4 – Q1
CS 5 – Q1
CS 5 – Q2
CS 5 – Q3
Grand Total
Marks
5
5
5
5
5
5
10
4
4
2
Obtained
Marks
Question No.
CS 1 – Q1
CS 1 – Q2
CS 2 – Q1
CS 2 – Q2
CS 2 – Q3
CS 3 – Q1
CS 4 – Q1
CS 5 – Q1
CS 5 – Q2
CS 5 – Q3
50
Max.
Marks
5
5
5
5
5
5
10
4
4
2
50
First Marker:
Second Marker:
Date:
Date:
Obtained
Marks
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https://www.hct.edu.om/about/the-college/announcements/final-assessment-timetable041620
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Case Study 1
The evolution of management accounting coincides with the importance of financial information
in organization’s decision making. The evolution of financial accounting can be traced to ancient
times, where merchants began keeping an account of their cash and complex business transactions.
The post-industrial revolution saw the emergence of cost accounting and highlighted the
importance of standard practices in cost ascertainment and cost control. Standard costing, marginal
costing, budgeting etc., evolved as part of the emphasis given to the cost and financial data in
organization’s survival and growth. To a great extent, all these developments is the result of
increased competitive pressure in the post-industrialization era.
Management accountant plays a strategic role in the corporate organization, and often use ‘past’
data to predict ‘future’. Management accountant, as the name shows, support the management in
providing necessary data that are useful for their decision making. Firms became larger and more
decentralized, and this increased the need for management accounting. Management
accounting/costing was a necessary tool of the new industrial capitalism of the late nineteenth
century, developing to ‘evaluate a company’s internal processes’ measuring efficiency in mainly
single activity firms.
Although some of the management accounting’s key techniques and approaches were admittedly
quite well established (i.e. old and taken from financial accounting and cost accounting), more
tools and techniques emerged that highlight the significance of management accounting over the
years.
Based on the above, answer the following questions
Question No. 1
What are the major differences, evidenced in the above case, between management accounting, cost
accounting and financial accounting? Do you think that management accounting is essential for all types of
organization? Briefly explain.
[5 Marks]
Question No.2
1. It is mentioned in the case that management accounting is ‘future’ oriented. Do you agree to this
statement? Justify your answer.
[2 Marks]
2. A management accountant plays a major role in today’s organization. What are the major functions
of a management accountant in an organization? Explain your answer by citing the information
provided in the case.
[3 Marks]
Case Study 2
UniTech LLC is specialized in producing high range of mobile, tablet and laptop. These products
use the same raw materials, though the quantity differs. Details of quantity required to produce
each unit is provided as given below: Prime Cost Detail: (i)
RO 25.00 per unit on direct materials and RO 15.00 per unit on direct labour paid for
mobile.
(ii)
RO 35.00 per unit on direct materials and RO 25.00 per unit on direct labour paid for
tablet.
(iii)
RO 45.00 per unit on component materials and RO 35.00 per unit on direct labour paid
for laptop.
Production Details: The budgeted production for a year of three products is 10,000 mobile, 5,000 tablets, and 7,000
laptops.
Overheads, Activity and Cost Driver Details: (i)
The labour hour per units 0.30 for mobile; 0.45 for tablet; and 1.00 for laptop.
(ii)
The procurement costs incurred RO 40,000. Number of purchase order 250 times for
mobile; 200 times for tablet; 400 times for laptop.
(iii)
The machine set-up costs incurred RO 15,000. No. of machine set-up for mobile 45
times, tablets 55 times and laptop 65 times.
(iv)
The machine running costs incurred RO 32,000. Machine running hours per unit is 0.20
hours for mobile, 0.30 hours for laptop and 0.30 hours for tablet.
(v)
After sales services cost incurred 15,000. No. of visits customer made 80 times for
mobiles, 60 times for tablets and 40 times for laptops.
For many years, the company has been using absorption costing for allocating overheads. The
basis of allocation used was the total labor hours.
Now company ask you make compare with ABC system to switch over it if it is beneficial.
Requirements: 1. Calculate total cost and cost per unit of each product by applying absorption costing.
[5 Marks]
2. Calculate the total cost and cost per unit of each product by applying ABC system.
[5 Marks]
3. Calculate the selling price by adding 30% mark up on cost for all products. Also, analyze
over costing and under costing for all products.
[2.5 + 2.5 Marks]
Case Study 3
Ali LLC Trading Company has produced 25,000 units which is 50% capacity level in the factory.
The company has used raw material to make the production worth of RO 35 per unit. The company
has incurred direct labour cost at RO 33per unit along with direct expenses RO 28 per unit. The
company spent RO 250,000 on fixed expenses in the factory with per unit cost of RO 10. Other
factor expenses for the total production of 25,000 units has arrived at RO 11 per unit.
Administration expenses were incurred RO 12 per unit out of which fixed expenses belongs to
55%. Company has appointed a salesman for selling the products produced in the company at RO
13 per unit produced out of which 25% belongs to fixed. The company has also incurred
distribution expenses of RO 11 per unit out of which 40% are variable.
Requirements: The company has approached the you and ask to prepare the flexible budgets for
two more required capacity levels; 1. 20,000 units and
[2.5 Marks]
2. 30,000 units
[2.5 Marks]
Case Study 4
Hasan Trading Company is dealing in different kinds of buying and selling of building materials
to vast range of customers in Muscat region and provided the following data to understand the
cash position every month start from January to July. The sales book reported the sales amount
for seven months as below: January
February
186,000
196,000
March
April
May
June
195,000
205,000
219,800
225,000
July
219,700
The sales reported every month including cash sales and credit sales. Cash sales constitute 20% of
total sales collected in the month of sales and the balance is credit sales received in the month
following the month of sales.
The detail of goods purchased in cash during seven months reported in purchase book as below: –
January
February
22,250
21,500
March
23,500
April
26,500
May
26,500
June
July
21,800
23,000
Company also purchased goods on credit from different suppliers. The detail of credit purchase
from the month January to July is given below: January
February
110,000
115,000
March
April
May
June
105,000
116,000
112,500
109,000
July
101,000
Cash purchases payable in the month of purchases and credit purchases are payable to supplier in
two months following the month of credit purchase.
It is also found from the accounting records that the company purchased plant and equipment for
RO 45,000 in the month of March and it is payable in three equal instalments starting from April.
Tax department has sent a notice to the company to pay taxes of RO 7,500 each in the month of
April and June.
The wages and office expenses are paid in the month following the month in which wages and
office expenses incurred. The detail of wages and office expenses is given below: January
February
March
April
May
June
July
Wages
3,250
3,200
3,100
3,400
3,560
3,580
3,300
Office Expenses
2,250
2,100
2,300
2,500
2,400
2,600
2,200
The selling expenses of the company recorded for the seven months are as follows: January
February
1,850
1,950
March
1,900
April
1,800
May
1,650
June
1,750
July
1,950
The company also incurred administrative expenses for the period January to July. The detail of
administrative expenses is given as below: January
February
2,250
2,650
March
2,850
April
2,650
May
2,450
June
2,600
July
2,800
The company is paying the selling and administration expenses in two months following the month
in which such expenses incurred.
The cash balance as on 1st April is RO 37,500.
Requirement: The Company has requested you to prepare Cash budget for the period of April to
June.
[10 Marks]
Case Study 5
Idris Company Ltd. is a wholesaler of processed food in the Sultanate of Oman. The following
information is furnished by the company in order to assess its performance by using different ratios
for the year 2019: Company started its business with a share capital and debts of RO 3,000,000 consisting of 300,000
shares of RO 8.00 each and bank loans RO 600,000. Company’s assets including cash available in
the office RO 12,500 and at bank 75,000, building worth RO 165,000, machinery worth RO
75,000. At the end of 2019, the inventory reported worth RO 84,650. Later in the year company
purchased furniture worth of RO 21,430. In the year 2019, company has made the sale of RO
2,350,400 by incurring cost of goods sold RO 1,690,250 and operating expenses RO 132,500. The
income from other sources reported RO 15,800. Company paid interest of RO 8,400 on bank loans
in the year 2019. The total outstanding expenses and accounts payable reported RO 15,300 and
RO 144,500 at the end of the year 2019.
Company also paid taxes at 15% on net profit. The dividend declared and paid 20% on PAT. The
market value of the shares at the end of the year RO 11.200 each.
Requirements: – Calculate the following ratios: a. Shareholder’s Ratios by showing all required calculations and formulas.
[4 Marks]
b. Profitability Ratios by showing all required calculations and formulas.
[4 Marks]
c. Current and Quick Ratio by showing all required calculations and formulas.
[2 Marks]

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