UGB393 Strategic Management Accounting Assessment Brief Jan 2025 (For Student) | University Of Sunderland

Assignment Requirements

You are required to  SELECT 2 questions out of 3 presented below . Each question accounts for 50% of a total of100%. You CANNOT select only one questions. In the event you do, you will forfeit all the marks for the second question.

Question 1.

Limiting factors and optimal production programme. VIẾT THƯ FROM TÊN MÌNH +MA FROM HARRY SMITH MDThe Managing Director of Gamma Flooring Ltd. emailed you, as a Management Accountant, with someconcerns about the current production mix and inability to meet customer demand. Please see his emailbelow.

The Managing Director of Gamma Flooring Ltd. emailed you, as a Management Accountant, with someconcerns about the current production mix and inability to meet customer demand. Please see his emailbelow

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To: Management Accountant From: Harry Smith,

Managing DirectorRe: Gamma Flooring optimal production plan

Date: 15 Nov 2024“

Dear Management Accountant,I have recently reviewed Gamma Flooring’s plans for production and the raising product demand; and I amincreasingly concerned about our production line ability to fulfil all the orders on time. The machinery inour factories is not the newest and may be limiting us in achieving the full demand. According to theanalysis provided by the Production Manager las week, the machinery can operate at maximum 2,500hours per week.  I am, therefore, writing to ask you to:

a) Review the below product details and demand and propose the optimal production plan that will helpGamma Flooring to maximise profits along with the profit statement.

b) As we have a limited factor of machine hours, if we are unable to fulfil demand for all products withinthe limit, please can you calculate the net benefit (if any) that we could achieve by asking our staffto work overtime.  The  overtime   would   be   paid   at   50%   above  normal  labour rates, and   variableoverhead costs would be expected to increase in proportion to labour costs. 

c) As the production capacity is our limiting factor, can you please critically evaluate the benefits andlimitations of outsourcing some of Gamma Flooring’s production to external suppliers. – 350 words(15 marks)Please do let me know your findings (both quantitative and qualitative) in a  written memo  as to theexpected  contribution  and any  issues that  could  arise that   we would   need to review in the  future. (5marks)Many thanks,Harry Smith, Managing Director, Gamma Flooring Ltd.

Question Guide:In your answer you can include (in your logical order and approach):

• The  calculations of  the  product contribution  (per limiting  factor) and the production   plan  for theavailable machine hours.The calculation of the net benefit (if any) when the overtime is offered to staff, including informationon the additional cost per unit and the revised contribution per unit.
• A memo-style response to the Managing Director to indicate your findings (points a & b) and includesuggestions to overcome the production limitations (c)

Question Background:

Week   2 (Lecture) and Week 3 (Seminar), Measuring Relevant Costs and Revenues,   UGB393 StrategicManagement Accounting Canvas 2023/4. University of Sunderland.Drury   C  &   Tayles   M   (2022),   Chapter   4  Measuring   Relevant   Costs   and   Revenues   for   Decision-Making,Management Accounting for Business 8th edition. Available to read Online (login details required) at: Fulldetails and actions for Management accounting for business. (vlebooks.com)

Question 2:

BudgetsStrong Bond Ltd is preparing its annual budget for the year ending 31st  December 2024. The companymanufactures and sells one product (strong-bond glue) which has a selling price of £420. The marketingteam of Strong Bond Ltd believes that the selling price of the glue is marketed too low and should beincreased to £460 with  effect from 1st  July 2024. If  the price is  increased, the sales volumes for  eachquarter of 2024 will be as below.

Sales Volume

Quarter 1 28 000Quarter 2 23 000Quarter 3 17 000Quarter 4 32 00

For 2025, sales for each quarter are expected to be 45,000 units.Each   unit   of   strong-bond   glue   requires   4   units   of   component   R   and   3   units   of   component   T.  

Bothcomponents are purchased from the external supplier at below prices:

Component R   ,£4.50 each
Component T     £2.50

It takes 5 labour hours to assemble the two components (R & T) into a finished product.Labour is paid at £6 p/hour and a 7% increase in salary costs is expected from October 2024.

Variable Overhead costs are expected to be £9 per unit for the whole year of 2024.Fixed Production Overhead costs are excluded from the budget.Stocks / Inventories on 31st December 2023 are expected as follows:Finished units – 8,500 units

Closing stocks / inventories at the end of each quarter are to be as below:Finished units 10% of next quarter’s sales

Requirements:

As a Management Accountant for Strong-Bond Ltd., you are required to:

a) Prepare the following budgets of Strong-Bond Ltd for the year ending 31st December 2024, showingvalues for each quarter and the year in total:
i) Sales Budget (in £’s and in units)
ii) Production Budget (in units)
iii) Material Usage Budge (in units)
iv) Production Cost Budget (in £’s)

b) Budgeting has been criticized as:

• A cumbersome process that takes a lot of management time
• Concentrating in majority on short-term financial control
• Having undesirable effects on the motivation of manage

Requirements:

i) Explain these criticisms.
ii) Explain what changes could be made in response to these criticisms to improve the budgetprocess.

Question Background:

Week     5   (Lecture)   and   Week   6   (Seminar),   The   Budgeting   Process,   UGB393   Strategic   ManagementAccounting Canvas 2023/4. University of Sunderland.

Drury C & Tayles M (2022), Chapter 9 The Budgeting Process, Management Accounting for Business 8thedition.   Available   to   read   Online   (login   details   required)   at:   Full   details   and   actions   for   Managementaccounting for business. (vlebooks.com)

Question 3. Contemporary Cost Management

“Modern   techniques   of   cost   accounting   assist   strategic   management   of   contemporary   organization   toachieve their strategic objectives. External versus internal, long-term unlike short-term perspective is whatdifferentiates the strategic cost management approach from the traditional cost management system.i”

As   the   author   of   the   article   suggests,   modern   cost   management   techniques   help   management   withachieving their  goals and aspirations. Taking this  into   consideration,  critically  discuss   the  benefits andlimitations of:

• Quality cost management 
• Activity-based costing 
• Target costing  

Question Guide:

In your answer you can include (in your logical order and approach):

• The short section with an explanation of each of the contemporary cost management methods.
• The analytical discussion on benefits and limitations of each of the contemporary cost managementmethods and its impact on the strategic goals of the company.
• Supporting evidence of your argument in the form of case studies, calculations and references torelevant articles and studies.
• Summarise   your   findings   and   suggestions   and   provide   a   concise   conclusion   that   highlights   keytakeaways   from   your   analysis   of   the   contemporary   cost   management   methods   in   achievingorganizational goals.

The aim of the assignment is to help you understand how key areas of strategic management accountingare demonstrated in practice by large, international companies. This will include investigating topics fromthroughout the course linked to the above issues. Some of the principles, concepts and models will bemore relevant to your chosen approach than others and so it is likely that different students will formulatedifferent approaches to the problems.

This is normal, it is not expected that all of the course content willbe used in the analysis, concentrate on that which you feel is most important.As part of your work, you might find it helpful to briefly explore the underlying theory behind the key areasof investigation that you identify before applying them to report.With a total of 3,000 words (for both questions), you do not have a lot of room for long introductions soassume   you   are   writing   to   a   sophisticated   audience   who   has   a   working   knowledge   of   strategicmanagement   accounting   and   is   well   versed   in   business   theory.   Numerical   examples   for   illustrativepurposes may be of use but should not be the main thrust of the work. If used, they should be to provideevidence to support your findings from your other analysis of position and policies.

If other sources areused remember to reference everything!Please  avoid  relying too  heavily on   descriptive  sections reproducing   information  available  from  coursematerial or the set text. It is your own logical, evaluation of the situation, the interpretation of coursematerial and presentation, with critical analysis, and a coherent strategic plan that will attract high marks.