Lana Roelandts AFM112 Assignment 1 2011 220032777 External

AFM112 Assignment One

Question One Four ethical standards that are part of the Australian Society of Certified Practising Accountants Code of Professional Conduct are included in APES 110 Code of Ethics for Professional Accountants. These include Integrity, Objectivity, Confidentiality and Professional Behaviour. i) Integrity Integrity requires the accountant to be straightforward and honest in all professional and business relationships. This means that the accountant shall not knowingly produce financial information that is misleading, or withhold information, where doing so would indeed be misleading. ii) Objectivity Objectivity requires the accountant to remain objective with regards to professional matters, and not allow their judgment to become impaired due to issues such as conflicts of interest, bias or influences from those around them. Confidentiality Confidentiality requires the accountant to desist from divulging confidential information obtained through the provision of professional services, to a third party outside of the firm, unless there is a professional or legal right or obligation to do so. Third parties to the accountant include business associates, family members of the accountant and prospective clients. Confidentiality also requires the accountant to refrain from disclosing confidential information after termination/ending of the relationship between the accountant and the client. iv) Professional Behaviour Professional behaviour requires the accountant to observe appropriate laws and regulations, and to abstain from actions that have the ability to damage the reputation of the accounting profession.

iii)

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Question 2 Car Toyota Prius
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Research and Development- Toyota has been progressing in the development of hybrid cars which are more fuel efficient and economically sustainable. This is a valuable aspect because, as a consumer I am now more aware of environmental impacts (e.g. global warming) and Toyota has enabled the reduction of greenhouse gas emissions. Design of Products, Services or Processes-The convenience of Bluetooth connectivity for mobile phones is a valuable aspect of the product as it increases safety when talking on the phone as it is a hands-free service. -MP3 connectivity is valuable because it allows for the connection of MP3 players to the stereo system of the car, therefore increasing efficiency and providing a more spacious interior, due to not requiring storage for CDs. Marketing- The ability to test drive the car prior to purchasing is a valuable aspect of the product because it provides the opportunity for the consumer to get a feel for the car and determine whether they would like to proceed with the purchase. -Television promotion is also a valuable aspect as it creates consumer awareness of the product and its capabilities. Customer Service- provision of a manufacturer s warranty after purchase ensures that if the car is faulty, the problem will be rectified. This is valuable because it ensures that consumers are still considered after the initial purchase. - Provision of a free car servicing for the first service is sometimes provided. This is valuable because consumers are saving money on their first service.

E-Toll
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Design- Convenience and efficiency in design. Valuable because the consumer does not have to stop and pay the toll. - The design of different tags for different consumers needs is another important aspect, as it allows for flexibility from consumers, which is valuable when making purchase decisions. Production- Fast production time of e-toll tag for consumers is valuable because it ensures consumers will be able to use the product straight away. - Ability to order duplicates of the e-toll tag when required also ensures flexibility and convenience for consumers. Distribution- application for e-toll is available over the phone, online and in person at the RTA. This caters for a wide range of people, particularly older people who may not have access to a computer. This convenience is valuable, because it also cuts waiting times at an RTA branch if opting to pay over the internet, making it more efficient. Customer Service- Customer service and help providers are available over the phone, making it more convenient as customers don t have to go to the local RTA branch. - The ability to top up your e-toll account online is also a very convenient and efficient tool bringing value to customers.

Lana Roelandts AFM112 Assignment 1 2011 220032777 External

Question 3 Armidale Aluminium Company Schedule of Cost of Goods Manufactured For the year ended 31 December 2011 (in thousands)

Direct materials:

Beginning inventory, 1 January 2011 Purchases of direct materials Cost of Direct materials available for use Ending inventory, 31 December 2011 Direct materials used Direct manufacturing labour Manufacturing overhead costs:

$120 000 500 000 620 000 140 000 480 000 800 000

Indirect materials Indirect labour Depreciation on Plant and Equipment Electricity Other Total manufacturing overhead costs Manufacturing costs incurred during 2011 Beginning work-in-process inventory, 1 January 2011 Total manufacturing costs to account for Ending work-in-process inventory, 31 December 2011 Cost of goods manufactured

20 000 50 000 200 000 50 000 60 000 1 180 000 1 660 000 240 000 1 900 000 230 000 1 670 000

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Armidale Aluminium Company Schedule of Cost of Goods Sold For the year ended 31 December 2011 Cost of goods sold:

Beginning finished goods inventory, 1 January 2011 Cost of goods manufactured Cost of goods available for sale Ending finished goods inventory, 31 December 2011 Cost of goods sold

$300 000 1 670 000 1 970 000 330 000 1 640 000

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Armidale Aluminium Company Income Statement For the year ended 31 December 2011

Revenues Cost of goods sold:

2 210 000

Beginning finished goods inventory, 1 January 2011 Cost of goods manufactured Cost of goods available for sale Ending finished goods inventory, 31 December 2011 Cost of goods sold Gross profit Operating Costs: Selling and administrative expenses Total operating costs Gross Operating income

$300 000 1 670 000 1 970 000 330 000 1 640 000 570 000

220 000 220 000 350 000

Tax

140 000

Net Operating Income

210 000

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Question 4 a) Option 1 (SP-VC) = Contribution Margin per unit = (30 -18) = 12 Therefore, contribution margin per unit is 12. Break-even point in units = fixed costs Contribution margin per unit = 15 000 12 =1250 Therefore, the break-even point in units is 1250 units. Contribution margin percentage = contribution margin per unit Selling price = 12 30

= 40 % or 0.4 Break-even revenue = ________fixed costs_________ Contribution margin percentage

_______15 000______ 0.4

= 37 500 Therefore, break-even revenue is $37 500.

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Option 2 ((SP-VC)-(SP x R%) = Contribution margin per unit = ((30-18)-(30 x 0.1)) = (12 3) =9 Therefore, contribution margin per unit is 9. Break-even point per unit = _______fixed costs_______ Contribution margin per unit

= 9000 9 = 1000 Therefore, break-even point per unit = 1000 units. Contribution margin percentage = contribution margin per unit Selling price

= __9__ 30 = 30% or 0.3 Break-even revenue = _________fixed costs_______ Contribution margin percentage

= 9000 0.3 = 30 000 Therefore, break-even revenue is $30 000.

Lana Roelandts AFM112 Assignment 1 2011 220032777 External Option 3 ((SP-VC)-(SP x 0.2)) = contribution margin per unit = ((30-18)-(30 x 0.2)) = (12 6) =6 Therefore, contribution margin per unit is 6. Break-even point per unit = ______fixed costs_____ Contribution margin per unit

4800 6

= 800 Therefore, break-even point per unit is 800 units. Contribution margin percentage = contribution margin per unit Selling price

= _6__ 30 = 20% or 0.2 Break-even revenue = ________fixed costs__________ Contribution margin percentage = 4800 0.2 = 24 000 Therefore, break-even revenue is $24 000.

Lana Roelandts AFM112 Assignment 1 2011 220032777 External b) For Option 1 and 2 15 000 = 9000 + 3A 3A= revenue + 10% 15 000 9 000 = 3A 15 000 9 000 = 6000 6 000 / 0.1 = $60 000 60 000/30 =2000 units For Option 1 and 3 15 000 = 4800 + 3B 3B = revenue + 20% 15 000 4800 = 3B 15 000 4800 = 10 200 10 200/ 0.2 = 51 000 51 000/30 =1700 units

Lana Roelandts AFM112 Assignment 1 2011 220032777 External References

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Accounting Professional and Ethical Standards Board APES110 Code of Ethics for Professional Accountants http://apesb.org.au/attachments/APES%20110%20Code%20of%20Ethics%20f or%20Professional%20Accountants%20December%202010%20-%20Final.pdf Last accessed 18/08/2011