ACC1110 Part C Main Assessment Briefing
ACC1110 Part C Main Assessment Briefing
=========================================================
INSTRUCTIONS TO STUDENTS:
Guidance
You should:
i) Keep a list of every website and source you use to complete this work. These should
be referenced correctly using Harvard referencing.
ii) The work should be done in the form of a report, with subheadings via Word or excel
depending on the requirement of the task.
iii) Refer to appropriate theory, including journal articles and professional and regulatory
body reports where appropriate.
iv) Include detailed references to a variety of literature sources.
v) Include a wide-ranging bibliography, including details of any published financial
statements you have used in your research.
vi) Submit your completed portfolio via Blackboard, using Turnitin.
SUBMISSION POINT
Financial Report 08/03/2024 20% LO 1,
Financial Evaluation and Analysis 22/03/2024 20% LO 2,3
Management Report 26/04/2024 20% LO 4
Reflective Report 10/05/2024 40% LO 5
Learning outcomes assessed
The portfolio assessment covers the following learning outcome:
LO1 Explain and apply the mechanics of recording and processing financial information.
LO2 Locate and interpret financial and other related information for companies in their
Annual Report and show an awareness of the relative significance of non-financial
reported information.
LO3 Calculate, Interpret and Analyse the financial statements of a limited company
using ratio analysis and communicate the results of the analyses on the position,
performance and future prospects of a firm to its intended audience.
LO4 Use a range of approaches and tools to address defined problems and issues
within familiar context and evaluate how financial information is used for the
purposes of rational economic decision making.
LO5 Evaluate academic, personal and employability skills through reflective writing.
Please note that there is no ‘right answers or preferred approach here. The question could
be addressed in a variety of ways and a wide range of reports will be acceptable, provided
that they give a reasoned and coherent answer to the question. When you have written your
reports, re-read the question and consider whether your report has provided an answer to
that question – as not all submissions do. There is an expectation that this report will be
written and formatted in a professional manner.
Learning outcomes assessed: 1, 2, 3, 4 and 5
Section C: Management Accountancy [No word Count]
White Spot Chemicals Ltd is a three-product company registered in the UK and a producer
of chemicals for various industries. White Spot Chemicals Ltd has three large chemical
refining plants [Factory 1, Factory 2 and Factory 3] where it produces three different lines of
products; make-up remover, fertiliser and paint for various other companies which then sell
those on to customers under their own brand. The company has recently set up a hi-tech
engineering system in Factory 1 which uses some of the latest laser equipment in the
production of its make-up remover, while other section of the business, Factory 2 and
Factory 3 continues to use traditional machinery.
The directors (management) of White Spot Chemicals Ltd would like to know the factory
(absorption/production/manufacturing) cost of the various products and the projected profit
for the different products of the organisation. The organisation has recently conducted a
costing review exercise to ascertain the costing involved in manufacturing all its products.
However, only the fixed production costs for factory 2 which manufactures paint has been
collected which amounts to £1,340,000.
You have been helping with various aspect of the business as an intern and have been
asked which overhead of the business should be allocated or apportioned based on your
knowledge in management accounting. Details of factory 1 and 3 are as follows:
Factory 1 uses the ‘hi-tech’ laser equipment which has cost £4,000,000. The factory
has 200 square metres of floor area. There are three machine operators supervised
by the factory manager who spends one-third of his time in this factory.
Factory 3 is a ‘low-tech’ part of the business with machinery which has cost
£1,000,000. The floor area is 300 square metres. There are two workers who spend
all their time in this factory, supervised by the factory manager for two thirds of his
time.
The overheads to be allocated or apportioned are as follows:
Overhead Amount
Factory rates £550,000
Wages of factory manager £699,000
Factory heating and lighting £105,000
Deprecation of machinery £450,000
Building insurance £50,000
Insurance of machinery £25,000
Specialist material for cleaning the laser equipment £105,000
The Make-up remover is made at factory 1, Fertiliser is made at factory 3 and the Paint is
made in factory 2.
The company has current costs which include the following. The figures given are per unit of
output. The unit of output is quoted in litres. Costs associated with the production are as
follows.
Make Up-Remover Fertiliser Paint
Direct Materials
Petrol £0.52 £ 0.98 £ 1.15
Thinners £0.16 £ 0.32 £ 0.86
Bases £0.89 £ 0.78 £ 0.25
Direct Labour
Un-Skilled £2.36 £1.56 £1.10
Skilled £3.56 £2.86 £2.50
The marketing department of the company. Has provided you with the following sales
forecasts for the three products which it makes.
Required:
1. Analyse the profitability of each product and advice the management of White Spot
Ltd on your recommended method for allocating or apportioning each of the
overhead to individual factory (factory 1 and 3) and present the absorption cost (total
production fixed cost) of the two product lines [make-up and fertiliser] choosing
appropriate methods of apportioning the overhead costs.
2. Comment on your findings and any possible ways of the organisation reconciling any
issues which you discovered. Other than the profit information which other
information may be relevant to the organisation’s decision.
The factory is open for 40 hours a week for 47 weeks each year
Required:
- Prepare an analysis of overhead showing the basis of apportionment and
allocation to the three departments of the business
- Re-allocate the service department overheads to production department on the
basis of the value of the machinery.
- Calculate the overhead absorption rate based on direct labour hours for each of
the two production departments
The following guide may be useful:
Present the accounting information in such a way that will be of more use to the
management of White Spot Ltd, to help in day-to-day decision making, planning
and control of their business undertaking.
Start with your recommended method for allocating or apportioning each of the
overhead to the individual factory. This will help you find the total fixed production
overhead for the two factories. If you are unsure, you should discuss these with
your seminar tutor which overheads of the business should be allocated or
apportioned, and which bases are most appropriate.
Then calculate the variable costs of each litre of output for the company, the
contribution per unit and the amount which the organisation has to make at all 3
facilities to break-even with their production levels (in terms of sales of litres of
the three products and in £’s of the products.
The general rule is that, once the fixed cost (factory overhead) are allocated or
apportioned to each individual factory (charged in production). You can then
calculate the projected profit for the different products of the organisation and the
organisations overall projected profit as a whole from given the sales figures of
the three products (Total Profits).
Present the information in a way which analyses the profit of each individual
product.
Additional Information
You are not required to pass each component of the portfolio individually to pass the
module, as long as your combined mark for the module is above 40. However if you fail the
module overall, you are required to re-sit all element(s) during the August resit period. This
has been exceptionally agreed due to pedagogical reasons to meet the learning outcomes
for this module.
You are encouraged to reflect on your own skills and attributes, prepare your own CV,
conduct a basic literature review and carry out research into assigned relevant topics
You are encouraged to use a range of sources to support all sections of your answer. For
example:
You have now reached the end of the portfolio. You should have answered all
sections of the portfolio.