ACCY 130- Accounting for Accountability and Decision Making, Trimester 1, 2026 | Victoria University

ACCY 130- Accounting for Accountability and Decision Making Assessment

Course learning objectives

Students who pass this course will be able to:

• Explain New Zealand's financial reporting framework, and the regulatory environment within which accounting is practiced
• Explain and apply the key features of bookkeeping and the use of accounting software
• Explain financial reporting concepts and prepare financial statements
• Prepare management and other internal accounting information
• Explain basic assurance processes

QUESTION ONE: THE NEW ZEALAND TAX SYSTEM

New Zealand's tax system is regarded as being one of the simplest and most efficient designs amongst OECD nations.
(a) The design of New Zealand's tax system can be described as "broad-based, low rate" (BBLR). In your own words, explain what BBLR means in the context of a tax system. [5 MARKS]
(b) Jimmy Green works in New Zealand as a charted accountant at KPMG, and his annual salary is $98,000 before tax. On 30 May 2024, the New Zealand Government delivered the 2024 budget, which included personal income tax cuts targeted largely at low-and middle- income earners. The key changes included increasing the personal income tax thresholds, except for the highest band, will take effective from 31 July 2024.
Based on the following information of the NZ tax rate, how much amount of tax would Jimmy Green can save as a result of the tax relief? (Show all workings) [11 MARKS]
(c) Based on the announcement of these tax changes as described in question (b), referring to Adam Smith's Cannons of Taxation, explain whether income taxes are progressive or regressive. In your own words, explain the difference between "progressive" and "regressive" taxes.
[8 MARKS]

QUESTION TWO: COST ACCOUNTING

Mount Victoria is a small bed and breakfast hotel located near the CBD of Wellington. The hotel charges $148 per person for one night's accommodation with a full breakfast in the morning. The retired couple, Derek and Jessie Brown who own and mange the hotel estimate that the relevant costs include in the following table:

a) In October 2024, Mount Victoria accommodate 202 guests for 202 nights in total, calculate the monthly total cost. Show all your workings.
[5 MARKS]
b) Calculate the contribution margin per unit of service (a unit of service is one night's accommodation for one guest). Show all your workings.
[3 MARKS]
c) Calculate the monthly (October 2024) break-even point in units of service and in dollars of service revenue. Show all your workings.
[6 MARKS]
d) Calculate the monthly (October 2024) margin of safety (MOS) and explain why the MoS is important for business decision-making. Show all your workings.
[6 MARKS]

QUESTION THREE: BUDGETING

Wollen Wolly Ltd (WWL) produces sweaters. The managing director, Jason Brown has asked you to prepare the operating budgets for 2025. You are asked to provide with the following information in relation to the company's activities:

The budgets are for the 2025 year and are broken into four quarters. Due to seasonal variation, the target sales for 2025 by each respective quarter of the year (Q) are:
.
Q1: 1,000 units
Q2: 2,500 units
Q3: 3,000 units

The selling price for each sweater is $250 and will be kept constant throughout the year.
The beginning inventory of sweaters at the start of quarter 1 in 2025 is 280 units, which cost $70,000 in total to produce in 2024, and the inventory manager - Aaron Green wants to increase inventory to 580 units at the end of each quarter.

In terms of raw materials, each sweater requires 1 kg of wool.
The opening material inventory is 150 kg of wool at $50 per kg, and Aaron Green wants materials inventory at the end of each quarter to increase to 200 kg of wool at $50 per kg. The material cost is not expected to change for the next year.

Direct labour hours for each sweater are expected to be 2.5 hours, while the hourly wage rate is $28 per hour and are not expected to increase during the period.

Based on last year's information and reasonable forecasts, Kiwi Magic Ltd has determined the following manufacturing overhead costs:

• indirect materials (zip and labels) per sweater: $8
• electricity and water per sweater: $5
• factory rent per quarter: $100,000
• annual depreciation on machinery: $30,000

Jason has also asked you to help the members of the senior management team to produce the following operating budgets.

Required:

You are required to prepare a:
a) Sales budget. Show all your workings.
[5 marks]
b) Production budget. Show all your workings.
[5 marks]
c) Direct materials budget. Show all your workings.
[5 marks]
d) Direct labour budget. Show all your workings.
e) Manufacturing overhead expenses budget. Show all your workings.
[5 marks]

QUESTION FOUR: ETHICS

Judy Hopps has recently been hired as a bookkeeper by Zootopia Polar Imprint Ltd (ZPI). ZPI produced a range of 3D printers and associated peripherals. During her first two months on the job, Judy discovered that ZPI had been overstating expenses through the general and administrative account. Furthermore, Judy found that this practice has been going on three years ago. The resulting financial impact in each year has been favourable and has had a major impact on the ZPI's on the company's profit and tax paid. ZPI does not have an internal audit function and the external auditors have not yet previously discovered this issue.

Before this year's audit, Judy wrote an email to Nick Wilde, the chief financial officer, and asked Nick's permission to make the necessary adjustments. Nick directed Judy not to make the adjustments. Nick replied the email with the following words "Why don't we wait until the external auditors complete the audit and see what they uncover."

Subsequently, the external auditors completed their audit and failed to discover the overstating expenses. Hence ZPI did not make any adjustments. However, Judy knows that these adjustments should be made, and the external auditors should be informed. As ZPI does not have any policies for resolving ethical conflicts, Judy has approached you for advice, knowing that you recently studied ethical decision-making in your ACCY 130 course.

Required:

(a) Identify the four key facts of the case.
[4 MARKS]
(b) Identify and define four ethical principles that likely apply to this case scenario.
[8 MARKS]