ASB 2507 and 3507 代写Assignment 2
JB Ltd is a small specialist manufacturer of electronic components and much of its output is used by the makers of aircraft for both civil and military purposes. One of the few aircraft manufacturers has offered a contract to JB Ltd for the supply, over the next 12 months, of 400 identical components.
The data relating to the production of each component is as follows:
(1) Material requirements
3 kg material M1 – see note (i) below
2 kg material P2 – see note (ii) below
1 part no. 678 – see note (iii) below
Notes:
(i) Material M1 is in continuous use by the company. 1,000 kg are currently
held in stock at a book value of £4.70/kg but it is known that future purchases
will cost £5.50/kg.
(ii) 1,200 kg of material P2 are held in stock. The original cost of this material
was £4.30/kg but, as the material has not been required for the last two years,
it has been written down to £1.50/kg scrap value. The only foreseeable
alternative use is as a substitute for material P4 (in current use) but this would
involve further processing costs of £1.60/kg. The current cost of material P4
is £3.60/kg.
(iii) It is estimated that the part no. 678 could be bought for £50 each.
(2) Labour requirements
Each component would require five hours of skilled labour and five hours of semiskilled.
An employee possessing the necessary skills is available and is currently paid
£5/hour. A replacement would, however, have to be obtained at a rate of £4/hour for
the work which would otherwise be done by the skilled employee. The current rate
for semi-skilled work is £3/hour and an additional employee could be appointed for
this work.
(3) Overhead
JB Ltd absorbs overhead by a machine hour rate, currently £20/hour, of which £7 is
for variable overhead and £13 for fixed overhead. If this contract is undertaken, it is
estimated that fixed costs will increase for the duration of the contract by £3,200.
Spare machine capacity is available and each component would require four machine hours.
A price of £145 per component has been suggested by the large company which
makes aircraft.
Required:
As the management accountant for JB Ltd, you have been asked to:
1. State whether or not the contract should be accepted. Your conclusion must be supported by the appropriate figures for presentation to management, with a clear explanation of how you calculated each amount and your reasons for it. (60%)
2. Comment on three factors which management ought to also consider and which may influence their decision. (15%)
3. The board of directors of JB Ltd have very little accounting knowledge, especially management accounting. They have asked that you explain to them the theory you have used to come to your conclusion. (25%)
Note
代写assignment The marks available for question 1, will be divided between the numerical answer and the explanation, as to why the amount has been included
Word guideline
There is a word guideline of 1500 words.
Submission date
Wednesday 6th April 2011, 5pm