MODULE TITLE : BUSINESS MANAGEMENT TECHNIQUES TOPIC TITLE : COSTING TECHNIQUES TUTOR MARKED ASSIGNMENT 2 NAME....................................................................................................................................... ADDRESS................................................................................................................................ .................................................................................................................................................. .................................................................................................................................................. ...................................................... HOME TELEPHONE ..................................................... EMPLOYER............................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. ...................................................... WORK TELEPHONE...................................................... BMT - 2 - TMA (v1) © Teesside University 2011 THIS BOX MUST BE COMPLETED Student Code No. .................................................................................................... Student's Signature .................................................................................................. Date Submitted ........................................................................................................ Contact e-mail ......................................................................................................... Published by Teesside University Open Learning (Engineering) School of Science & Engineering Teesside University Tees Valley, UK TS1 3BA +44 (0)1642 342740 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the Copyright owner. This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out or otherwise circulated without the publisher's prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser. IMPORTANT Before you start please read the following instructions carefully. 1. This assignment forms part of the formal assessment for this module. If you fail to reach the required standard for the assignment then you will be allowed to resubmit but a resubmission will only be eligible for a Pass grade, not a Merit or Distinction. You should therefore not submit the assignment until you are reasonably sure that you have completed it successfully. Seek your tutor's advice if unsure. 2. Ensure that you indicate the number of the question you are answering. 3. Make a copy of your answers before submitting the assignment. 4. Complete all details on the front page of this TMA and return it with the completed assignment including supporting calculations where appropriate. The preferred submission is via your TUOL(E) Blackboard account: https://eat.tees.ac.uk 5. Your tutor’s comments on the assignment will be posted on Blackboard. 1 Teesside University Open Learning (Engineering) © Teesside University 2011 1. The firm of Rowlands Plc makes pipe flanges and the works has two departments, fabrication and finishing. There exist, as well as tradesmen and labourers, supervisory staff. The following overheads need to be apportioned between its two departments. (a) From the list shown below complete the column ‘Basis for apportionment’. As an example, Factory Buiding maintenance is apportioned on the basis of factory floor area. • Floor Area • Number of employees • Amount used • Number of job repair cards completed • Number of claims in last 10 years. £ Basis for apportionment 42 000 1200 7000 930 2800 7550 875 Factory floor area Supervision salaries Canteen costs Factory rates Insurance Machinery maintenance Energy supply Factory building maintenance 2 Teesside University Open Learning (Engineering) © Teesside University 2011 (b) The following information is needed to enable the apportionment of overheads: Complete TABLE 1 showing the apportionment of the overheads to each department. TABLE 1 Finishing Dept Supervision salaries Canteen cost Factory rates Insurance Machinery maintenance Energy supply Factory maintenance Basis of apportionment Overhead Fabrication Dept Total Floor areas in m2 Number of employees Electricity in kW h Number of maintenance cards Number of insurance claims Fabrication department 10 000 40 42 640 20 2 Finishing dept 4000 20 10 660 8 1 3 Teesside University Open Learning (Engineering) © Teesside University 2011 2. (a) State why a ‘What if’ analysis may not be appropriate for a risk analysis. (b) Complete the following steps in a ‘what if’ analysis for the introduction of a ‘just in time’* form of production materials supply to a car production unit. • Explanation of the Activity • Area of interest • Sub-systems. (*‘Just in time’ is a method of ordering and delivery of stock parts employed by a company, where the company has delivered on a regular, often daily, basis only enough parts for a short period of production. Thus capital that would otherwise be tied up in large stockpiles of production materials is released and cost of storage is avoided.) (c) Complete TABLE 2 by the generation of: • ‘What if’ questions • and solutions to potential problems. 4 Teesside University Open Learning (Engineering) © Teesside University 2011 TABLE 2 (d) State briefly what the analysis shows as a major disadvantage when there is only a sole supplier and what can be done to overcome it. 3. (i) What is the purpose of marginal costing? (ii) Why cannot all of a firm’s production be on a marginal cost basis? 4. A company manufactures a portable electric generator. In a financial year it sold a total of 850 generators at a price of £350 each. The variable costs were £200 per generator and the fixed costs were £60 000. Determine: • total sales revenue • profit obtained • break even point in terms of sales and sales income. Immediate Recommendations consequence Ultimate consequence What if Subsystems 5 Teesside University Open Learning (Engineering) © Teesside University 2011