a) Analyse the links between management accounting, customers, suppliers and sources of external information and assess what is relevant to business decision-making

b) Apply costing techniques and be explain their strengths and limitations in specific circumstances

c) Analyse accounting information and present reports in various formats using appropriate systems and software

d) Critically evaluate and apply relevant management accounting concepts and management control systems to organisational settings

Topic: Management Accounting Problem.

Task Details: Students are to analyse the given information, make calculations where relevant and draw relevant, supported conclusions and make justified recommendations. Responses are to be formatted into a professional report for each part of each question, as would be expected of someone working in a modern accountant's office.

Research requirements Students must support their analysis and recommendations with references for the text and include references to other academic resources recommended by the Lecturer. It is recommended that students refer to peer-reviewed academic journals.Background and information provided Sail-away Sports Limited design and manufacture small sail craft (boats). They manufacture three different model boats as follows:

Model 3DSB - 3m Dinghy Sail Boat

Model 36THS - 3.6m 2-handed Sail Boat

Model 40CSB - 4.0m 2-handed Sports Boat

The following information is known about Sail-away Limited:

Sail-away's boats are made in three stages:

The HULL (the bottom part of the boat that goes in the water) and the DECK (a cover that is glued to the HULL to make it water-tight) are made from fibreglass. To make the Hull and Decks, the fibreglass is formed in a MOULD one mould for each component which can be re-used many times. This operation is performed in the Moulding Department. Once the hull and deck components are formed and set, they are then sent to the Fitting Department for "FITTING"

In the FITTING Department buoyancy devices (foam blocks to prevent the boats from sinking in case of capsize) are fitted and the Hull and Decks are glued together to form the final boat shape (called a ‘HULL UNIT') along with final fibreglass forming. The Fitting Department pass these HULL UNITS along to the storage facility to be held for later use. As each unit is supervised by a separate team leader and there may be a separation of time between MOULDING and FITTING, separate Production Process Reports are used for each of the Departments and the finished ‘HULL UNIT' is considered ‘completed at this stage of production.

The sails for the boats are standardised designs however each model boat has a different-sized sail. The sails are made in a second production line as the skills required to make sails are quite different to those for moulding and fitting the boats. As the sails are standardised in size and materials, Sail- away Sports runs a separate production line for the making of the sails. The Sail cloth is quite ‘high- tech' and must be cut carefully by experienced sail-makers and each section is carefully labelled to avoid unnecessary wastage and is batched according to sail-type then passed to the Stitching and Gluing Department. The Stitching and Gluing Department assembles the sail, using various glues and heat-fusion techniques and some stitching processes to complete each sail. Once finished, the completed sails must be handled carefully to ensure they are not damaged and are passed to the Packaging Department for careful packaging, labelling and storage ready for sale.

Once Sail-away Sports receives the orders from the Schools for their boats, finished Hulls and sails are taken from the Storage Facility and sent to the Rigging Department where final RIGGING (The aluminium masts, pulleys (blocks), cleats (components to hold adjustable ropes in place), rudders, centreboards and other necessary components are fitted to the boats in batches according to the number required for each customer order.

With a storage facility that can hold many ‘completed' HULL UNITS and many SAILS, Sail-away Sports can more evenly space production throughout the year to maintain the labour force over the ‘quiet months' (typically during Winter) and have plenty of stock ready for the busy periods during Spring and Summer when the ‘Sailing Season' is fully underway.

Finally, each order is sent to the Packaging and Logistics Department where it is given a final quality check, cleaned and packaged for shipping to the Customer with all components packaged together as complete boat sets in ‘ready-to-sail' condition for use by the schools.

Sail-away Sports has a small sales team and a customer service and training team which are available to visit schools that order their sail boats. These teams are trained in both sailing and can also make small warranty repairs and train school staff on the maintenance and upkeep of the boats. This level of service is highly valued by schools and has led to increasing demand for their products as their reputation for a good quality product and great service has spread among schools so that advertising is rarely required apart from some sponsorship funding to regattas that are often held when inter-school competition occurs.

Recently, due to the great success and popularity of their product, the Australian Sports Commission, keen to expand on Australia's recent success in sailing at the recent Olympic Games, is looking for ways to satisfy increased community interest in the sport of sailing. Along with Yachting Australia (the Sport's governing body) they are considering offering support to local sailing clubs around Australia to buy small fleets of standardised but competitive sail-boats. Like most Government bodies however, before they agree to offer contracts to supply to any company, they want to be sure these potential suppliers are well-run and financially stable.

Sail-away Sports have been approached and offered an opportunity to participate as a ‘Preferred Supplier'. To obtain this status however they must submit (in confidence) full costing reports to a ‘Review Panel' who will assess the management and viability of the business before accreditation can be granted.

You are the Management Accountant at Sail-away Sports and for this reason you have been asked to generate full costing reports (including variations from STANDARD COSTS) based on the past year's production.

Direct Material:

Each boat uses a different quantity of materials which include fibreglass matting and resin products to make the hull, decks and the same materials also used in the fitting department where buoyancy blocks (waterproof foam blocks) are also fitted therefore a single Standard Price or Quantity Variance cannot easily be calculated.

What you are required to do:

Your task is to calculate the Standard Material and Labour Variances for all three models. You are then to prepare a BRIEF report which includes a summary of the results of Sail-away's production over the past year.

This should include a FULL analysis of the Actual Results compared to the Standard Costs. How do you calculate the variances for Material if a product has different quantities of different material all at different prices?