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SPD2297 Management Accounting 1

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by

ho chi yat

on 1 October 2016

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Transcript of SPD2297 Management Accounting 1

SPD2297 Management Accounting 1
Agenda
1. Background of company
2. Company situation
3. Problem's solution
4. Problems analysis
The equivalent units for material and conversion
The cost per equivalent unit of material and conversion
The assignment of production costs to the October 31 work-in-process inventory and to good transferred out
Comment on the company’s cost per belt used for planning and control
Discuss this situation, citingspecific ethical standards for managerial accounting

Tutorial Group: A01B (TEAM 3)
Group members:
Chan Tsz Ling, 15060828S
Chen Jun, 15092537S
Ho Chi Yat, 15065154S
Lau Ying Tung, 15060588S
Wong Ching Yee, 15059020S
Yu Wei Bin, 15086149S
COMPANY SITUATION
Company’s name:
Lycoming Leather Company
Manufacture product:
Leather Belts
Location:
PennysyIvania

Manufacture
Lycoming Leather Company
BACKGROUND OF COMPANY
PROFITS
PROBLEM SOLUTIONS
Methods:
Investigate the manufacturing operation of each product
Product Ways:
Product: Belts
Single
Continuous process
Management wants to solve the problem
The equivalent units for material and conversion
The cost per equivalent unit of material and conversion
The assignment of production costs to the October 31 work-in-process inventory and to good transferred out
Comment on the company’s cost per belt used for planning and control
Cost per belt used for planning and control: $11.5
Actual cost of equivalent unit for direct materials and conversion: $13

→ The selling price cannot lower than $24.5
→ The cost that company planned to use is not effective
Comment on the company’s cost per belt used for planning and control
Comment on the company’s cost per belt used for planning and control
How much would Murray’s suggested manipulation lower the unit conversion cost ?
Orignal Cost per equivalent unit of Conversion - Proposed Cost per Equivalent unit of Converison
$13.00 - $12.97 = $ 0.03 (0.23% )
Base on the specific ethical standards for managerial accountant, what should Daley do?
Ethical Standards
Competence
1. Estimate the correct percentage of completion of October inventory
2. Find an appropriate way to reduce the loss
Confidentiality
Should not tell the sitation of the company to outsiders
Integrity
Show all the facts of the company to the president

1. Should be honest to estimation, keeping his reputation
2. Should report the correct estimation to the president
Credibility
THANK YOU !!!
What's Jack need to consider...
Ethical issue:
Percentage of completion of inventory raise to 50%?
Gather all the facts:
Check all the figures carefully
Affected parties:
Jack, President, Board of Directors, Lycoming Leather Company, Shareholders and Investors

Determine whether procedures of conflict resolution exist within the organization

1. Increase the percentage of completion to 50%
2. Discuss further with the president and board of directors
Increase the percentage of completion to 50%
Following the president’s instruction
Integrity is challenged
Conversion cost
Trusted by the president
Possible lawsuit
Discuss further with the president and board of directors
Uncooperative disloyal employee

Conversion cost reduce
Two Courses of Action
Advice to Jack
1. Seeking advice from professional body
2. Choose an appropriate course of action
3. Document the details of all discussions
Full transcript