B292 TMA B292 TMA

Arab Open University
B292: TMA – 2nd Semester 2014-2015
Cut-Off Date: April 30, 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:
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 Part C
Marks 35 31 24 5 5 100

                         


                          The TMA Questions
PART A: What Management Accountants Do?
There was once a girl in Year 16 who did not know what to do when she finished school. All she knew was that she eventually wanted to work in a multinational firm in Sydney and be financially successful in an illustrious career. One day, a handsome young man in a nice suit, representing one of the Big 4 accounting firms of the world, spoke to students in the girl’s school. He spoke of a traineeship which enabled students to work full-time for his firm while studying part time at university for an accounting degree. This was perfect, thought the girl. After submitting her resume and booking an interview she dreamt of working at one of the top floors in the city, looking down at the other office blocks, the harbor and the parks. The interview process consisted of three different interviews and a tour of the firm. It was all very exciting until the last interview, when a bored manager asked the girl what area of accounting she wished to work in. ‘What areas are there?’ she asked. He gave her an exasperated, perhaps even surly, look, and listed areas such as audit, tax, business services, financial accounting and management accounting, ‘which is the area I work in,’ he said. ‘Ooooh,’ exclaimed the girl. ‘That one sounds interesting. Management accounting is the area I’d like to work in.’ the girl’s application was unsuccessful. Dictionaries provide overly simplified definitions of accountants. They focus on the financial accounts or records kept by businesses. Of course this is one of the most featured areas of accounting but it belies the depth and scope of the field of accountancy. Accountants communicate financial information in the form of accounts, advice and reports. They are important when times are good to monitor profits and advise how to make them even bigger but also when times are bad to help businesses from the brink of disaster or to break up a business that is beyond saving and possibly bankrupt. Accountants are employed by accounting firms, private businesses, governments and other institutions, across all industry sectors.
Instructions:
1- Jobs for Management Accountants: Undertake a search for management accounting jobs on Google. List examples of positions that could be filled by management accountants.
2- Management accountants are often hired as consultants for a contracted period. List the most common roles that managerial accountants play.
3- Discuss in an essay form how financial and managerial accounting interface. Is one more important than another? Discuss the rationale for your answer.
4- Describe the personal characteristics you would need to be effective as a management accountant.
5- External Focus of Management Accounting: Historically, finance professionals have tended to concentrate internally within their organization and rather ignored the external environment. Strategic management accounting (SMA) has begun to change this emphasis and many of the techniques in your handbook have strategic management accounting elements. Describe three issues or concerns that have an external focus from the Management Accountants.
                     [Marks: (7 each point) = 35]


PART B
Cost Concepts and Classifications
a- Amer has a garage that was constructed at a cost of $8,000 several years ago. Amer decided to produce and sell surfboards in his spare time. Accordingly he can use the garage for construction purposes. The garage will be depreciated over a 20-year life. Amer has determined that each surfboard will require $60 in wood. He will hire students to do most of the work and pay them $70 for each surfboard completed. He will rent tools at a cost of $400 per month. Amer has drawn money out of savings to provide the capital needed to get the operation going. The savings were earning interest at 6 percent annually. An ad agency will handle advertising at a cost of $200 per month. Amer will hire students to sell the surfboard and pay a commission of $40 per board.
Required:
From the foregoing information/text, identify all the examples you can of the following types of costs (a single item may be identified as more than one type of cost):
Cost Item Your Answer
Variable cost
Fixed cost
Selling or administrative cost
Product cost
Manufacturing overhead cost
Sunk cost
Opportunity cost
Differential cost (between the alternatives of producing or not producing surfboard)

            [Marks: 3 marks for each point = 24]

b- “The easiest way to distinguish between relevant and irrelevant costs is by cost behavior; variable costs are relevant costs and fixed costs are irrelevant costs.” Explain why you do or do not agree with this statement.
                 [7 Marks]


Part C: CVP from Different Points of View
Assume that you are preparing a seminar on cost-volume-profit 'CVP' analysis for non-accountants. Several potential attendees have approached you and have asked why they should be interested in learning about your topic. They need to be guided and motivated. The individuals include:
1- A factory worker who serves as her company's labor union representative in charge of contract negotiations.
2- A purchasing agent in charge of ordering raw materials for a large manufacturing company.
3- A vice president of sales for a large automobile company.
4- A director of research and development for a pharmaceutical company.
Instructions:
Write a small memo to each of the above individuals explaining the reasons why they should attend the seminar.
              [Marks: (6 marks each case) =24 Marks]






                                              Good Luck
                                               Salam Nakfour