ASSESSMENT DETAILS You are a newly appointed Cost and Management Accountant with Bake Ltd. report to the directors of Bennett Plc which should...

ASSESSMENT DETAILS

You are a newly appointed Cost and Management Accountant with Bake Ltd. report to the directors of Bennett Plc which should include the following (see next page):

Background

Bake Limited manufactures a variety of electric motors in Singapore and is solely owned and operated by Christy. There are 5 branches around the region. Each of the branches operated fairly autonomously and is headed by a manager.

The manager at each branch is responsible for the revenue generated, costs incurred and the profits derived. All capital expenditure decisions are made by the head office located in Singapore. There are various performance measurement systems in place as well as incentives for each branch team to outperform the other.

There are three (3) models offerings are the same across the branches while a system is in place to ensure the same levels of quality management be maintained at all branches. The models, their quality and their price are aimed at different markets.

Operations

One of the models the company manufactures with a selling price of $28 per unit. Variable production costs per unit of product are:

Direct material         $6.10

Direct labour            $5.20

Variable overhead  $1.60

Fixed production overheads are $30,000 per month. Administration overheads are semi-variable in nature: variable costs are 5% of sales and fixed costs are $13,000 per month.

Production and sales quantities over a two month period are: