110229 Management Accounting Assignment 2 Booklet 2026 | Massey University

Management Accounting Assignment 2

IMPORTANT INFORMATION 

Assignment 2 covers material from weeks 1 to 8 inclusive and relates to the following learning outcomes:

1.  Demonstrate the ability to measure and interpret accounting data.

2.  Apply appropriate management accounting principles and concepts to solve practical management problems.

3.  Critically evaluate the relevance and applicability of traditional management accounting techniques to the management of modern organisations in both the manufacturing and service sectors.

4.  Discuss contemporary issues, including sustainability in management accounting and likely future developments.

Assignment 2 contributes 15% towards your final grade for  110.229 and it  is  an  electronic assignment, which consists of two COMPULSORY parts: Parts A and B. Both parts must be attempted and submitted.

• Part A: Group Submission and Self & Peer Review Evaluation  

•  Part A requires the submission of a group analysis in a Microsoft Word or Pdf format.

•  You will also be required to submit an individual Self and Peer Review form.

•  Please note Part A is NOT assessable as part of your individual marks for the course but is compulsory for quality control and accreditations to various professional accountancy bodies. Therefore, a submission for Part A must be made before Part B of the assignment will be marked.

•  Due on or before 5 pm, New Zealand time, 4 May 2023.

• Part B: Individual Submission  

•  Part B requires all students to submit their own individual work.

•  Complete Part B in the provided Microsoft Excel workbook.

•  Due on or before 5 pm, New Zealand time, 11 May 2023.

Part A - Group Work and Self & Peer Review Evaluation

1.  One of the goals of Assignment 2 is that students can work effectively in small teams. This will be achieved through Part A of Assignment

2. You will work with a small group of other students to achieve a common goal, and you will be required to think about how that process worked and what you can learn from the experience.

For Part A of this assignment, each student will be randomly assigned to a specific group by course teaching staff. You will not be allowed to choose your own group for teamwork; this is to replicate the business situation where you must work collaboratively with other people because of job responsibilities, not because they are your friends.

The following are examples of ways your group can meet:

•  Each group will be given a private discussion forum on Stream.

•  Using Zoom. This will allow you to see and speak to each other physically. One team member will create a free Zoom account and share the link with the group members. Follow this link to create a free account: https://zoom.us/signup

3. Other methods, e.g. Facebook that does not involve meeting in person and allows all members to be able to contribute.

4. Your team is responsible for identifying and allocating its own tasks, setting its own deadlines, and arranging and managing its own meetings. Postings to the forum may have attachments, which is a simple way of sharing documents among team members. It is strongly recommended to keep all the information gathered by the team in a place, preferably in the forum for course 
teaching staff’s inspection if necessary (i.e. to facilitate the resolution of disputes).

5. Your team is self-governing: course teaching staff will not assign roles to the team members, but they can access the group forums. However, the course teaching staff will not participate in group forums unless we become aware of problems. You must work out for yourselves who will contribute in what way to the overall goals, and how you will work together. No student has the 
power to give orders to any other student, and so the goal must be achieved by cooperation and persuasion. (Again, this is deliberately analogous to many business situations.) 
 
Examples of roles that you may wish to assign:

•  Arrange/schedule meetings.

•  Ensure that decisions are recorded and that the information base is accessible.

•  Document the activities to be undertaken, who is responsible for them, and the dates for completing them.

•  Monitor progress against the plan and ensure that variances are brought to the group’s attention in time for corrective action.

•  Research and assemble the information required on the set topic.

•  Facilitate the resolution of disputes. 
 
Often, in a group situation different expectation, attitudes, knowledge, and cultures influences are  expected,  as  a  result,  cooperation,  negotiation,  persuasion  and  even  compromise  are needed and used to achieve a common goal. This may require you to be mindful of your group members’ expectations and  circumstances. Communication plays  a  key  role  in coordinating 
group activities and planning around various expectations. 

This would involve setting targets with dates and actions, setting out a plan of how to complete this group assignment during the first meeting and the deadline for completing the group assignment, assigning a person to monitor  the  progress  against  the  plan  and a  person to  facilitate  and  resolve  disputes  and 
conflicts. If your group has an action plan as such, this should motivate each of you to complete the group work on time or even before the deadline. 
 
Each student is required to complete and submit a Self & Peer Review form, where you rate yourself  and  team  members  in terms of contribution  to  the  assignment.  This  is  a  private submission that only the teaching staff will have access to. It is used to evaluate if all team members fully contributed to the assignment.

Part B – Individual Submission

Part B of the assignment must be your own work and will require you to INDIVIDUALLY apply your knowledge to the scenarios as provided in each question.

Before attempting this assignment, it is strongly recommended that you read both instructions and the assignment details thoroughly. You should also study the relevant material in the text and make sure you understand the concepts covered by practising the weekly review questions.

Please note the discussion on STREAM or in study groups is fine but comparing or suggesting answers as opposed to concepts may lead to marks being deducted to the extent of receiving zero marks if answers are identical.

ASSIGNMENT 2 DETAILS

Part A: Group Submission  

Case Study: Smith and Associates

Smith and Associates is a firm of chartered accountants specialising in the preparation of income tax returns for medical practitioners. The firm has been able to build up expertise in accounting for medical practices, as well as charge a healthy fee because of its in-depth knowledge in the area. Among the firm's clients are Dr Macdonald and Dr Dawson, two general practitioners from rural practices of approximately the same size and business structure.  
 
Macdonald and Dawson were at medical school together but had not kept in touch. Recently they bumped into each other at the New Zealand Medical Association's Christmas party. During the evening, the conversation turned to tax, and then to tax returns. Macdonald and Dawson were amazed to find that they paid significantly different amounts to have their tax returns prepared. 
They use the same accountants and have the same billing system, roughly the same number of patients and even the same number of staff.  
 
The next day Macdonald, who last year paid nearly 50 per cent more than Dawson, challenged the managing partner, R.J. Smith, over the charges. He assured Macdonald that the firm uses a very accurate costing system that tracks costs for five different categories of professional labour to individual clients. Professional labour costs are marked up by 150 per cent to cover other costs 
and generate a profit. He promised to investigate the problem.  

The following are the records for Macdonald and Dawson for last year: 

Smith investigated both jobs and found that they had involved similar work, but that Macdonald's job had used more senior staff because, at the time, junior staff was tied up on other projects. Both projects had also made similar use of resources other than professional labour. 
 
Required: 

As a group:

•  Discuss and write an analysis of the following issues:  

•  Does the costing system used by Smith and Associates provide a reliable or unreliable estimate of:  

▪  professional labour costs  

▪  cost of other resources used in preparing clients' tax returns Explain your answer in each instance.  

•  Does the costing system provide a reasonable basis for estimating the charges to clients? Explain.  

•  How could Smith and Associates improve their costing/charge-out system?  

•  Your group analysis should not exceed 2 pages (A4) in length.

•  Only one group member needs to submit a file.

•  Please note if you use an Apple computer to complete the group analysis, please save the file in a format that will be recognized by Microsoft Word or a Pdf format before submitting it.

• Name your group assignment “A2_Group#” (The # being your group number). 

Individually: 

This is a private submission that only the teaching staff will have access to. It is used to evaluate if all team members fully contributed to the assignment. 
 
• Name your Self and Peer Review form “A2_Review_Surname_#” (The # being your student ID number). 

•  Please note that the Self and Peer Review Form does NOT need to be shared with your group members.

Part B: Individual Submission  [100 marks]

Question 1: Cost Allocation   [Total: 28 marks]

Copy House Ltd produces two types of computer printers, model A and model B, which pass through two production departments, Production and Assembly. The following data relate to the year just ended:

•  Your group analysis should not exceed 2 pages (A4) in length.

•  Your group analysis should not exceed 2 pages (A4) in length.

•  Complete and upload the Self & Peer Review form.

•  Complete and upload the Self & Peer Review form.

o  You rate yourself and team members in terms of contribution to the assignment.

Note: Actual overhead costs for the year were $450,000.

Required: Show all your workings
 
i. Calculate the predetermined plantwide overhead rate based on direct labour hours.   
(4 marks)

ii. Calculate the per unit cost of each of the two models of printers, based on a plantwide overhead rate assuming that direct labour hours is the cost driver.  
 (6 marks)

iii. Calculate predetermined departmental overhead rates, assuming that machine hours is the cost driver in production and direct labour hours is the cost driver in assembly.  
(4 marks)

iv. Calculate the per unit cost of the two models of printers, based on the departmental overhead rates.  
(6 marks)

v. Estimate the amount of underapplied or overapplied overhead using

a. Plantwide overhead rate.    
(2 marks)

b. Departmental overhead rates. 
(3 marks)
 
vi. Which approach is best for Copy House Ltd: a plantwide overhead rate or departmental overhead rates? Why?  
(3 marks)

Question 2: Variable and Absorption Costing   [Total: 22 marks]

Perfect Ltd had the following operating data for its first year of operation ending on 31 December 2022: 

There are no work-in-process inventories. Normal production capacity is 60,000 units. Expected and actual overhead costs are the same. 

Required: Show all your workings. 
    

i.  Prepare an absorption costing income statement for Perfect Ltd for the year ending 31 December 2022.
(6 marks)

ii.  Prepare a variable costing contribution margin statement for Perfect Ltd for the year ending 31 December 2022.
(6 marks)

iii.  Reconcile the differences between the profits under the two statements.
 (2 marks)

iv.  Discuss two advantages and two disadvantages of using variable costing for internal reporting.
(8 marks)

Question 3: Activity Based Costing

[Total: 18 marks]  

The accountant for Click Photography Ltd has estimated the following cost pools and relevant activity drivers for the coming year:

An order of 1,000 boxes of film development chemicals has been received, and the order has the following requirements:

Required:

Show all your workings.

i.  Applying Activity Based costing:

a. Calculate the total overhead cost that should be assigned to the order.  
(5 Marks)

b. Calculate the overhead cost per box ordered.  
(2 Marks)

ii.  Applying a plant-wide predetermined overhead rate based on machine hours:

a.  Calculate the total overhead cost that should be assigned to the order.
(4 Marks)

b.  Calculate the overhead cost per box ordered.  
(2 Marks) 
 
iii.  Explain why these two product costing systems results in such widely differing costs. 
Which system do you recommend and why?

 (5 Marks)