AFM01MA Management Accounting Assignment 1: BioTube Ltd. Case Study for Costing, Budgeting & Variance Improvement

Module Assignment Brief

This assignment has been designed to provide you with an opportunity to demonstrate your achievement of the following module learning outcomes:

Assignment Requirements

Overview

This case study involves BioTube Ltd., a company specialising in manufacturing high-quality blood testing tubes. The focus is on applying management accounting concepts to assess and improve BioTube Ltd.’s financial management, particularly in costing, budgeting, and variance analysis.

Assignment task/s to be completed

Assignment Title: Costing and Budgeting at BioTube Ltd.

As an Assistant Accountant of BioTube Ltd., you are required to submit a detailed report covering cost classifications, budget formulation, variance analysis, and recommendations for BioTube Ltd.’s financial management improvements. Please see below for the company’s background information and the suggested report format:

Company’s Background:

BioTube Ltd. is a manufacturing company specialising in producing high-quality blood testing tubes used in medical laboratories. The company is planning a new project to manufacture an advanced blood testing tube model named “VitaTube Pro.” Management needs a detailed budget for effective cost management and optimal resource allocation, emphasising costing, budgeting, and variance analysis.

Scenario:

BioTube Ltd. is preparing for the launch of VitaTube Pro. Using the provided data, demonstrate how BioTube prepares budgets and performs variance analysis using full costing. Additionally, explain activity-based costing (ABC) and discuss how it differs from full costing.

Case Study Data:

VitaTube Pro’s Budgeting and Costing Data:

1. Material Costs:
   • Glass Material: £8 per unit, estimated need: 2,000 units.
   • Rubber Seal: £0.75 per unit, estimated need: 2,000 units.
   • Additive Chemical: £2 per unit, estimated need: 1,800 units.
2. Labour Costs:
   • Machine Operator: £25 per hour, estimated hours: 500.
   • Quality Control Inspector: £30 per hour, estimated hours: 200.
   • Project Supervisor: £40 per hour, estimated hours: 150.
3. Overhead Costs:
   • Factory Rent: £6,000 per month.
   • Utilities: £300 per month plus £0.50 per production hour (estimated production hours: 850).
   • Machinery Depreciation: £3,000 per month.
   • Administrative Expenses: £1,500 per month.
4. Actual Costs (Post-Project Launch):
   • Glass Material: £17,500.
   • Rubber Seal: £1,700.
   • Additive Chemical: £4,100.
   • Machine Operator: £13,750.
   • Quality Control Inspector: £6,600.
   • Project Supervisor: £6,300.
   • Factory Rent: £6,500 per month.
   • Utilities: £1,000 per month.
   • Machinery Depreciation: £3,500 per month.
   • Administrative Expenses: £2,000 per month.

Report Structure

1. Introduction to Management Accounting and Costing Systems: (400 words)
   • What is management accounting? Describe its role in organisations and provide examples.
   • What is the difference between management accounting and financial accounting?
   • What is Full Costing? Describe its role in management accounting.
   • What is activity-based (ABC) costing? Describe its importance in achieving precise cost allocation.
   • Example: Provide examples of how full costing and ABC could be applied by BioTube Ltd. for VitaTube Pro.
2. Cost Classification and Behaviour: (250 words)
   • Define cost classification explaining the different types of costs (fixed, variable, and semi-variable) and how they behave in relation to changes in business activity levels.
   • Example: Provide examples of each type of costs within the context of BioTube Ltd., such as rent, material costs, and utilities.
3. Material, Labour, and Overhead Costs: (300 words)
   1. Material Costs
      1. Define material costs in the context of management accounting.
      2. Application at BioTube Ltd (Calculation):
         Using the data provided, Calculate total material costs for Glass, Rubber Seal, and Additive Chemical.
   2. Labour Costs
      1. Describe labour costs in management accounting, including their classification in Management Accounting.
      2. Application at BioTube Ltd (Calculation):
         Calculate total labour costs for Machine Operator, Quality Control Inspector, and Project Supervisor.
   3. Overhead Costs
      1. Define overhead costs in the context of management accounting and describe their allocation basis under full costing and ABC.
      2. Application at BioTube Ltd.
         Using the data provided, suggest how BioTube Ltd. assigns overhead costs (utilities, depreciation, administrative expenses) to VitaTube Pro. Link these costs clearly to specific activities such as production processes, quality assurance, and administrative tasks.
4. Budgeting and Variances: (400 words)
   • Define the budgeting process within the context of management accounting and discuss its influence on organisational performance, including the controls it impacts.
   • Application at BioTube Ltd. (Calculation):
     Using the provided data, prepare the budget for VitaTube Pro, clearly showing material, labour, and overhead costs in a structured table format. Additionally, conduct a variance analysis in table form to clearly illustrate discrepancies between budgeted and actual figures. Clearly identify and discuss possible reasons for any unfavourable variances. Highlight reasons for unfavourable variances.
5. Conclusions and Recommendations: (150 words)
   1. Summary: Briefly summarise key insights gained from the costing analysis, budget creation, and variance analysis.
   2. Recommendations: Provide strategic recommendations based on the variance analysis findings to enhance BioTube Ltd.’s cost management and budgeting practices.

Additional Information required to support completing the tasks above

• Please include a table of contents and the report title in your report.
• Your report should include a minimum of 10 in-text citations. You are allowed to use one citation for more than once.
• Calculations are not included in the word count.

Mandatory Referencing and Research Requirements

Referencing Style CCCU Harvard Referencing Style.

Mandatory Sources to be included in the Assignment

• Cox, D. and Amos, S. (2022). Management Accounting Techniques: Tutorial: Support as you Learn. London: Osborne Books
• Weetman, P. (2019) Financial Accounting: . An Introduction. 8th edn. Harlow: Pearson Education Ltd.
• BPP. (2023). AAT Level 3 Course Book: Diploma in Accounting Q2022. Management Accounting Techniques Coursebook. London: BPP Learning Media Ltd.
• McLaney, E. and Attrill, P. (2023). Accounting and Finance. An Introduction. 10th edn. Harlow: Pearson Education Ltd.

Format of your submission and how your assignment will be assessed

• Your assignment must be saved in Microsoft Word Format and uploaded on Moodle in only this format.
• Your file must also contain at least 20 words of text, consist of fewer than 400 pages, and be less than 40MB in size.

Marking Scheme / Rubric –

The Marking Scheme (otherwise known as a rubric) is available on the Assignment Information Tab on Moodle.

Submission Requirements

Submission Platform This assignment should be submitted electronically using Moodle to the Module Submission link

Submission Date &Time All submission & resubmission dates and time are as stated at the beginning of this Assignment brief.

You should submit your Assignment for all deadlines earlier than 2:00pm on the date stated.

Late submissions can be accepted for Summative Submissions only up to a maximum of 2 working days after the submission deadline. This does not apply to resubmission deadlines. A 10 mark deduction will be made by CCCU for all late submissions.

Work submitted more than two working days after the deadline will not be accepted and will be recorded as a non-submission.

Assignments submitted to the Resubmissions deadlines will be capped at 40 by CCCU.

If you are affected by events which are unexpected, outside your control and short-term in nature (i.e. lasting one to two weeks), under the exceptional circumstances procedure you may be eligible for:

• A seven day extension to your coursework (via self-certification request).
• A 14 day extension to your coursework (via evidence-based request).
• To defer your exam or time-constrained assessment if you have not yet submitted/attempted it (via self-certification or evidence-based request).
• To re-take an exam/time-constrained assessment, if you feel your performance on your first attempt was negatively impacted (via impaired performance request).

Please note students are only eligible to have a maximum of 2 self-certification requests per academic year.

You can make a self-certification request up to 14 calendar days before your deadline:

• for coursework it must be no later than 2pm on the deadline date
• for exams and time-constrained assessments, the request must be submitted no later than the start time of the assessment.

Table of Penalties

Student Integrity and Academic Misconduct

The values of student integrity expected by CCCU are:

• Honesty – being clear about what is your work and where your ideas come from other sources.
• Trust – others can have faith in you being open about your work and acknowledging others’ work.
• Fairness – you do not try to gain an unfair advantage in using others’ work.
• Responsibility – you take an active role in applying the principle of Academic Integrity to your work.
• Respect – you show respect for the work of others.

Peer-support:

Students might choose to get support from their peers when preparing assessments, such as discussing the subject of the assessment, exchanging ideas, and receiving suggestions for improving the work. This is peer-support, and the University accepts this as a reasonable expectation when completing assessments. However, peers must not make any changes to anyone’s assessments as such actions could lead to allegations of academic misconduct.

Use of English as the medium of assessment:

Students cannot write an assessment in another language and subsequently translate their work into English or have it translated by any form of third-party. Use of translation software or third-party translators is a form of academic misconduct.

Artificial Intelligence (AI):

Students must write the entire assessment without using AI software such as ChatGPT. Submitting an assessment that contains any form of AI is a form of academic misconduct.

Proofreading:

Students can make use of Microsoft Word’s grammar and spell-checking functions but the use of Grammarly is not allowed as it uses AI text generation. If student’s use third-party proofreaders, these cannot make any changes that alter the assessment in anyway including correcting language or citation format errors. Third-party alterations to the assessment are a form of academic misconduct.

Plagiarism

Plagiarism can be defined as incorporating another person’s material from books, journals, the internet, another student’s work, or any other source into assessment material without acknowledgement. It includes:

• Using exactly the same words (sentences, phrases or even expressions not in everyday use, invented or created by an author to explain an idea) as used originally
• Rephrasing by making slight adjustments
• Paraphrasing in a way which may deceive the reader as to the source.
• Plagiarism in whatever form it takes is form of academic misconduct.

Collusion:

If students submit work for assessment that is falsely presented as the student’s own work but was jointly written with somebody else; this is a form of academic misconduct.

Duplication/Self-Plagiarism:

The inclusion in assessments of a significant amount of identical or substantially similar material to that already submitted for assessment by the student and graded for the same course or any other course or module at this University or elsewhere is classed as self-plagiarism. It does not include a resubmission of the same piece of work allowed by the examiners in an improved or revised form for reassessment purposes. Self-plagiarism is a form of academic misconduct.

Further clarification of the above can be found in CCCU’s Academic Misconduct documents below

1. CCCU Student Academic Misconduct Procedures can found below: Please click the link to Open.
   https://www.canterbury.ac.uk/asset-library/policy-zone/Student-Academic-Misconduct-Procedures-staff-students.pdf
2. CCCU Student Academic Integrity Policy can be found below: Please click the link to Open.
   https://www.canterbury.ac.uk/asset-library/policy-zone/Student-Academic-Integrity-Policy.pdf

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