Arab Open University B292: TMA – Fall Semester 2015-2016 Cut-Off Date: Dec 17, 2015 About TMA: The TMA covers the management accounting concepts and practices in the businesses. It is marked out of 100 and is worth 2

Arab Open University
B292: TMA – Fall Semester 2015-2016
Cut-Off Date: Dec 17, 2015

About TMA:
The TMA covers the management accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within units 1, 2, 3, 4 and 6 beside the supplementary material. This TMA requires you to apply the course concepts. The TMA is intended to:
 Assess students’ understanding of key learning points within units 1, 2, 3, 4 and 6.
 Increase the students’ knowledge about the reality of the Managerial Accounting as a profession.
 Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.
 Develop the ability to understand and interact with the nature of the managerial accounting tools in reality.
 Develop basic ICT skills such as using the internet.

The TMA:
This TMA is based around one case of “NIDEC Corporation Annual Report for the year ended March 31, 2014” & also questions on budgeting and breakeven analysis. Marks will be awarded for blending the context of the case with relevant theory by means of your own interpretation. In addition to this, some research is required.
The TMA requires you to:
1- Review various study sessions beside the supplementary materials.
2- Conduct a simple information search using the internet.
3- Present your findings in not more than 2,000 words ± 10%.
4- You should use a Microsoft Office Word and Times New Roman Font of 12 points.
5- You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.








Criteria for Grade Distribution:
Criteria Content Referencing Structure and Presentation of ideas Total marks
Part A Part B
The case of Nidec Corporation Budgeting & Breakeven point for Marina Industries
Marks 56 44 (5) (5) 100




The TMA Questions
Part A
Financial Reporting on the Internet
(The case of NIDEC CORPORATION)
The internet is a good place to get information that is useful in your study of accounting. For example, you can find information about current events, professional accounting organizations, and specific companies that may support your study.
Download Nidec Corporation annual report for the year ended March 31, 2014 from Google
Instructions:
Use the annual report to answer the following questions:
1- Is Nidec’s Annual Report primarily a financial accounting document or a managerial accounting document? What evidence supports your conclusion?

2- "Value chain refers to the sequence of business functions in which customer usefulness is added to products or services of a company". Provide evidence of management concerns about the value chain.


3- It is mentioned in the annual report under the risk factors that Nidec plans its production & inventory levels based on advance customer orders, commitments or forecasts as well as the internal assessment and forecasts of customer demand.
a- State the risks that might be encountered by Nidec if actual demand is significantly different from the projections.
b- What might in your opinion cause this change in the demand?
c- Is Nidec able to reduce its expenses quickly in response to any revenue shortfalls resulting from a decrease in demand? Justify your answer.


4- The company relies on monthly financial data for operating segments that are not prepared on a US GAAP basis and thus are not comparable between segments.
Does this in your opinion constitute a difficulty to the management accountant in evaluating the relative performance of individual segments? What are the consequences under these circumstances?


5- What elements of manufacturing overhead can you identify using the annual report?


6- Is allocation of manufacturing overhead to products necessary for external reporting purposes? Internal purposes? Provide explanations for your answers.

7- Identify several cost drivers that Nidec Company might consider in allocating overhead using the ABC method of overhead allocation.


[Marks: (8 marks each point) = 56]







Part B

Budgeting and Break even in Marina Industries


Marina Industries is making industrial products. The company has been growing nicely in terms of revenue and its customer base. The Board of Directors of Marina Industries has been insisting that they should have one management accountant for their company to achieve better performance in the coming periods. The role of management accountants has been well-known to the corporate world as they widely contribute for performing planning, controlling and decision making functions effectively and efficiently through providing solid accounting information with good analysis.

Production and Cost Details

Marina Industries manufactures and sells a single product that has following cost and selling price structure:

Information $ per unit
Selling Price 500

Direct Material
300
(per unit of material) 150
Direct Labour cost 50 per hour 300

Number of labor hours needed to manufacture one unit of product 6 hours
Fixed Costs for the company
$ 40,000

Estimations for the next year 2016

The company has estimated the following for the next year for one of its products (Gava).

(i) Sales Estimations

First Quarter Second Quarter Third Quarter Fourth Quarter
Number of units to be sold (Units) 1000 1100 1200 1300




(ii) Inventory estimations

Inventory Beginning
(first quarter) Ending
Finished Goods 200 units The company desires to have an ending inventory each quarter equal to 25% of the next quarter’s sales. The first quarter’s sales for the following year (2017) is expected to be 1400 units
Materials $ 120,000 The company desires the ending balance in materials inventory to be 45% of the next quarter’s cost of materials. The cost of materials for the first quarter in the following year (2017) is expected to be $ 170,400

Required

(1) As the company wants to hire a management accountant, the company wants to know more about management accounting.

In light of the above, discuss the importance of management accounting for today’s business environment (12 marks)

(2) Based on the estimated information given above, prepare
(i) Sales Budget
(ii) Production Budget
(22 marks)

(3) Calculate the BEP in units for this company based on the cost and sale per unit information given above. If their current operating level is 900 units, is this company making profit or not? Prove your answer (10 marks)





End of TMA
Good luck