HA2011 Management Accounting

Question 1

a) Explain the value chain concept and discuss two (2) ways the value chain concept benefits organisations.
b) Based on the organisation that you have selected, evaluate the organisation using the value chain concept. This explanation should include:

i. An identification of the company’s mission and objectives.
b) ii. A description of the competitive strategy (i.e. cost leadership, differentiation or focus) of the company.
b) iii. Draw the value chain model for the company. i.e. Tailor the model to your company’s operations, identifying its value-adding processes and support departments.
b) iv. Choose any 2 value-adding processes of your company from the diagram in (iii), and for each, explain the process. Give some specific examples on what value it contributes to the company’s products/services, leading to business decisions for improving customer and shareholder value.
b) v. Finally, comment on the relevance and usefulness of the information that you find in relation to your theoretical knowledge of the value chain concept.

Question 2

a) What are the estimated allocation rates for fixed and variable overhead for the current period?
b) What is the total overhead cost allocated to Job 20 in October?
c) What is the total cost of Job 20?
d) Calculate the amounts of fixed and variable overhead allocated to jobs in October.
e) Why would the accountant choose to use two cost pools instead of one? Will this method make a difference in client bills when the job includes more equipment and less labour than other jobs? Explain.

Question 3

a) Identify cost pools and assign costs to them, considering the three cost objects of interest.
b) Determine a cost driver for each cost pool and explain your choice.
c) Calculate the allocation rates for each cost pool and cost driver. Interpret the allocation rate for each cost pool.