Running head: EMBA 7010 Lesson 4 Assignment

EMBA 7010
Financial and Managerial Accounting
University of Fredericton

P6.2

EMBA 7010 Lesson 4 Assignment

a. The employees of Hadden respect their employer and always try to make a high quality
product. It is a not a control system, as the employees always try to make a high quality
product through having respect for their employer. It does not look like it is a policy, the
statement is not definitive enough
b. Benjamin Quarin always checks the works of his employees before he allows them to
send it off to shipping. Benjamin is making use of a control system to detect errors in his
employees work before it leaves his unit
c. The quality control manager for Gulam Clothing Corporation checks every 5 out of 100
shirts to ensure that they meet the companys pre-set standards. Any faulty shirts are sent
back to manufacturing to be redone. The quality control manager is making use of the
company pre-set standard to verify if the clothes meet the set standards, so he is making
use of a control system
d. Adam Grant must make 100 toasters each day to receive his incentive compensation at
Kitchen Inc. There is an objective or target for Adam to meet, which is the 100 toasters he
has to make per day for him to be compensated with an incentive, so that is a form of a
control system
e. Celia, the owner of Celias Fine Meats, asks her staff to pack only food product that they
will take home to their own family. This is a control system, because there is a rule here,
The owner says only take food product that staff will take home to their family
anything outside of that is not allowed. So there is control here.
f. The supervisor of Holiday Trailers Inc. signs the sales order of all RV sold off the lot.
Because the supervisor signs the sales order of all RV from the lot he has in place a sort
of check, which is a control system

EMBA 7010 Lesson 4 Assignment

P6.6 (Balanced Scorecard) Goodall Corporation makes a wireless computer keyboard called the
Blackbird. The following information was compiled for 2010 and 2011.

Number of keyboards sold

Plastic used (kilograms)
Direct materials costs per kilogram
Manufacturing capacity
Spoilage
Total manufacturing costs
Total customer service costs
Number of customers
Cost per customer

2010
28,000
14,000
$7
35,000
18%
$495,000
$152,000
608
$250

2011
29,500
15,100
$10
35,000
25%
$585,000
$161,650
610
$265

Due to increases in direct materials costs, Goodall is concerned that the profitability of its Blackbird line is decreasing. The company would like to reduce manufacturing costs and also reduce
the amount of materials that are spoiled in a given year. Goodall also wants to grow its customer
base more rapidly, as the industry market size for wireless keyboards increased over 25% from
2010 to 2011, but its results did not reflect this growth. Identify three measures that you could
use to help the company achieve its plans in each of the BSC perspectives.

Perspective
Financial

Measures
1. Reduce direct material cost by making use of just-intime (JIT) production and inventory control system, they
purchase materials and produce units only as needed to
meet actual customer demand. By doing this they reduce
materials inventory and prevent them from spoiling
2. In order to increase sales Goodall has to increase the
customer base. By conducting a customer survey, and

EMBA 7010 Lesson 4 Assignment

getting the feedback, the company can find out how to

add value, thereby getting a share of the growing market.
1. In order to increase sales Goodall has to increase the

Customer

customer base. By conducting a customer survey, and

getting the feedback, the company can find out how to
add value, thereby getting a share of the growing market.
2. Once the customer base has been improved on, the
company has to develop a strategy to retain these
customers. This can be done by remaining consistent in
Internal Business

providing quality product

1. Goodall can improve the product quality by initiating an

Process

internal continuous improvement drive by studying their

current process to identify where the cost is high in the
production chain, a survey of a similar product by a
competitor could also serve a benchmark
2. The company can also improve the manufacturing and
delivery cycle hence attaining efficiency

P 7.1 Gabriels Guacamole

Opening stock of raw material

25,000

Raw material purchased

Cost of raw material
available
Closing stock of raw
material

68,000
93,000
45,000

EMBA 7010 Lesson 4 Assignment

Cost of raw materials

used

48,000

Labour cost

98,000

Manufacturing overhead per labour

73,500

DIRECT COST

219,500

Opening stock of WIP

52,000

Closing stock of WIP

COST OF GOOD
MANUFACTURED

15,000

37,000
256,500

CALCULATION OF COST OF GOODS

SOLD

P7.4

Opening stock of finished goods

Cost of goods
manufactured

32,000

Cost of goods available for sale

288,500

closing stock of finished goods

COST OF GOODS
SOLD

58,000

256,500

230,500

Mammoth Product Company

Opening stock of raw material

100,000

Purchase of raw material

250,000
350,000

EMBA 7010 Lesson 4 Assignment

Closing stock of raw

materials

150,000

Cost of raw materials consumed

200,000

Direct Factory Labour

450,000

Prime cost of production

650,000

Factory
Overhead
Factory Rentals
Depreciation of plant and
machinery

75,000

Factory lights and power

25,000

Salaries of factory labour

100,000

50,000

250,000
900,000

Opening stock of WIP

300,000
1,200,000

Closing stock of WIP

COST OF GOODS
MANUFACTURED

400,000
800,000

COST OF GOODS
SOLD STATEMENT
Opening stock of finished goods
Cost of goods
manufactured

150,000
800,000
950,000

Closing stock of finished goods

250,000

COST OF GOODS SOLD

700,000

EMBA 7010 Lesson 4 Assignment

STATEMENT OF COMPREHENSIVE INCOME

Sales revenue

900,000

Cost of goods sold

700,000

Gross profit
Selling and administrative
expenses

200,000

Profit

125,000

75000

VALUATION OF
INVENTORY
INVENTORY
Raw materials
Work in
progress

150,000

Finished goods

250,000

400,000

800,000

P 7.17

Fared Construction

Calculations of percentage of
completion

12,900,000
47,500,000

27.157894
74
X 100%

Amount to be recognized on income tax

EMBA 7010 Lesson 4 Assignment

27.15789474

P8.1

X
5200000
0

1,412,210,
526

Gobblers Restaurant

Cost

Variable

Fixed

Mixed

Food
Napkins
Tablecloths
Server wages
Kitchen manager
salary
Electricity
Rent
Depreciation on
kitchen
equipment
Telephone
Oil for deep
fryer
Internet service

P8.5 The Cook Co.

EASTERN

WESTERN TOTAL

Sales

550,000

500,000

1,050,00
0

Variable cost

275,000

200,000

475,000

Contribution

275,000

300,000

575,000

Step

EMBA 7010 Lesson 4 Assignment

Divisional fixed cost

80,000

150,000

230,000

Attributed corporate cost

170,000

135,000

305,000

Operating profit

25,000

15,000

40,000

Calculation of profit after

closure
Sales

500,000

500,000

Variable cost

200,000

200,000

Contribution

300,000

300,000

Divisional cost

150,000

150,000

Allocated corporate cost

170,000

135,000

305,000

Operating profit

(170,000)

15,000

(155,00
0)

The division should not be closed down because it would result into
a loss of $155,000 in operating profit
Sales revenue
increase in sales
Variable cost
Divisional fixed cost

500000
200000
700000
200000
150000

Allocated corporate cost

305,000

Operating profit

45,000

The fixed cost of the division can still be covered by the contribution made by
division; therefore, the division should be closed.