22753 Cost Management and Analysis: Assignment Brief

1. Assignment Overview

You are a consultant hired by the Chief Financial Officer (CFO) of your assigned organization. You have been asked to prepare a report to address issues related to product costing.

Your report is due on Monday 21^st October at 5pm. You will submit your report via Canvas as a Microsoft Word document.

2. Assignment Objectives

This assignment provides students with a number of learning opportunities:

1. Real world application of concepts:  Students are required to apply cost accounting concepts and techniques to solve a practice-based problem. This encourages students to learn about how cost accounting is applied in a real‐world setting and develop problem solving skills.

2. Critical thinking and research skills: Students need to develop an understanding of how to tailor cost accounting techniques to a specific organisational setting. This promotes the development of critical evaluation and research skills.

3. Academic literacy and report preparation: Students must present their findings in the form. of a professional report. 

3. Assignment Requirements

The focus of the assignment is a product division of the organisation. If the organisation has multiple product divisions, you can choose one product category to focus on. For example, if your organisation is Unilever, you could focus on ice creams, deodorants, or another product category (as long as the category contains multiple products).

Your report is to consist of three main components:

1. Business processes and value chain analysis

2. Product costing system design

3. Recommendations

Part 1: Business process and value chain analysis

The aim of this section is to introduce your organisation, who they are, what they do and introduce your chosen product category. The rest of the parts of this assignment will relate to this product category.

You will present an analysis of the value chain of the product category of your organisation. The value chain model should be tailored to the specific industry context, operations and characteristics of your organisation and the selected product category. This section should include a detailed diagram or other figures representing the value chain or aspects of it.

While the full value chain should be briefly outlined, the main focus of this section should be on the operations component of the value chain. The operations stage of the value chain will need to describe: i) describe all relevant activities of the operations stage for the product category, and ii) all relevant indirect costs associated with the product category.

Part 2: Product costing system design

Assume that your organisation currently uses a product costing system with traditional overhead costing (e.g. plantwide or departmental). You are required to design a new system using the principles of Activity Based Costing (ABC). The focus of the product costing system is the allocation of indirect costs (product overheads).

In this part of the report, include the following:

1. A brief description of ABC and how it differs from traditional overhead costing systems.

2. The design of a new product costing system incorporating ABC. The ABC system must be tailored to your company and must relate to the operations processes identified and described in Part 1 of this report. You will need to:

i. Identify the relevant activity cost pools (we recommend no more than 8 activity cost pools)

ii. Identify the driver for each activity cost pool

iii. Classify whether the activity cost pools are at the unit, batch, product or facility level

iv. Explain the main points of your ABC model, including:

· the rationale behind the activity cost pools, cost drivers, cost hierarchy classification.

· how the indirect costs associated with the product category (identified and described in Part 1) are allocated to each activity cost pool. (e.g., for each activity you identify, explain which overhead costs you would expect to incur and in what percentages)

Part 3: Recommendations

In this section you need to outline the possible benefits, costs and disadvantages of ABC for your specific organisation. This should be informed by academic and practitioner literature. You need to clearly state and justifying whether the organisation should adopt ABC.

4. Report format

Your report must not exceed 2500 words (this excludes the reference list and appendices).

The report should be professionally prepared with appropriate format, language, style. and grammar, and a balanced use of visual aids such as charts and images. The report should have a cover page, one paragraph executive summary, introduction, and a well-structured body (with appropriate sub-titles), and a conclusion section which summarises the findings of the report and presents recommendations.

The report is required to be completed as a professional, business report and should follow the format for non-academic reports as described in the UTS Business School Writing Guide (www.uts.edu.au/node/50946/).

5. Referencing

The report must conform. to the referencing policy of the UTS Business School. All sources must be properly acknowledged using the APA referencing style. Any source referenced ‘in-text’ must be listed in the reference list at the end of the report. Any report that contravenes the referencing policy may draw severe penalties and be referred to the student conduct committee. Detailed information can be found here: https://www.lib.uts.edu.au/referencing/apa. For a quick guide to APA referencing, see this document: https://www.lib.uts.edu.au/sites/default/files/2020-10/APA%20Quick%20Guide.pdf 

Journals that you might consider reviewing are as follows:

1. Accounting, Organizations and Society

2. Management Accounting Research

3. Journal of Management Accounting Research

4. Journal of Cost Management

5. Accounting Horizons

You are expected to conduct your own independent research. To help you get started, the following recommended readings are provided. You can download these articles by searching for the journal (in italics below) through the UTS library.

1. Cooper, R. & Kaplan, S. 1992. Activity‐based systems: Measuring the cost of resource usage. Accounting Horizons, 6, September, 1–13.

2. Krumwiede, K. R. 1998. The Implementation Stages of Activity‐Based Costing and the Impact of Contextual and Organizational Factors. Journal of Management Accounting Research, 10, 239–277.

3. Al‐Omiri, M., & Drury. 2007. A survey of factors influencing the choice of product costing systems in UK organizations. Management Accounting Research, 18, 399–424.

4. Anderson, S. W., & Sedatole, K, L. 2013. Evidence on the Cost Hierarchy: The Association between Resource Consumption and Production Activities. Journal of Management Accounting Research, 25, pp 119-141.

6. Assignment late submission policy

Assignments submitted after the due date without approval from the subject coordinator or an approved special consideration application will be penalised 10% of the total assignment mark for each calendar day in which the assignment is late. A calendar day is defined as 24-hour period or part thereof following the published due date and time of the assignment. This rule applies until the 5th calendar day in which the assignment is awarded a zero mark. For example, if the assignment is worth 20 marks and it is submitted 2 days late without an approved special consideration, the student will have 4 marks deducted from their assignment score. If they score 16/20, then their adjusted mark will be 12/20.

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