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UKAM3043 MANAGEMENT ACCOUNTING III

UNIVERSITI TUNKU ABDUL RAHMAN

ACADEMIC YEAR 2019/2020

MAY FINAL ASSESSMENT

UKAM 3043 MANAGEMENT ACCOUNTING III

DATE: 4 MAY 2020 DURATION: 12.00 noon - 8.00 p.m (8 HOURS)

BACHELOR OF ACCOUNTING (HONS)

INDIVIDUAL OPEN-ENDED FINAL ASSESSMENT (100 MARKS – 60%)

Instructions to students:

1. This final assessment consists of THREE (3) questions.

2. You are required to answer ALL questions, and submit the ANSWER SCRIPT by 4th MAY
2020 before 8.00 p.m. A penalty of 10% reduction of the maximum marks applicable to the
assessment will be levied for each day of late submission.

3. Format
The final assessment must be typed. The report should be word-processed, with 1.5 spacing,
font size of 12, format in Times New Roman and justified alignment.

The final assessment report should include the following:

1. Cover page. Refer to Appendix I.

2. Declaration statement. Refer to Appendix II.
3. Marking scheme. Refer to Appendix III
4. Report text
All pages in the report should be numbered except for the cover page, declaration statement
and marking scheme. A copy of Appendix II and III must be attached immediately after the
cover page of the assignment. Page is limited to minimum 10 pages and maximum 15
pages only. (Excluding cover page, declaration statement, marking scheme, references and
appendices).

4. Submission guidelines

Please COMPILE your assignment together with cover page and appendixes into ONE (1)
Word document then CONVERT the file to PDF and UPLOAD on WBLE. Name your
Final assessment answer script as: UKAM3043 [subject code] – 190xxxx [Your exam
index number] for submission. For example, UKAM3043 -1900000.

5. Plagiarism

This final assessment is “open book,” which means you are permitted to use any materials
handed out in class, your own notes from the course, the text book and anything on the MAIII
course website. The final assessment must be attempted completely individually. Showing it
or discussing it with anyone is forbidden.

This question paper consists of 3 questions on 4 printed pages.

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UKAM3043 MANAGEMENT ACCOUNTING III
Plagiarism is defined as the submission or presentation of work, in any form, which is not one's
own, without acknowledgment of the sources. If a student obtains information or ideas from an
outside source, that source must be acknowledged. Another rule to follow is that any direct
quotation must be placed in quotation marks and the source immediately cited.
Plagiarism is also defined as copy of all or part of the work of other student(s) of current or
previous batch of this University or another higher learning institution. The University's degree
and other academic awards are given in recognition of the candidate's personal achievement.
Plagiarism is therefore considered as an act of academic fraudulence and as an offence against
University discipline.

Answer scripts will be uploaded to Turnitin for similarity check. In the case of plagiarism being
suspected, the evidence will be submitted to the University Examination Disciplinary Committee
for further action. Disciplinary action will be taken against any candidate who is found
plagiarized in the answer submitted. Hence, candidates are advised to comply strictly with the
University Examination Rules and Regulations and any other guideline/policy relating to
University examinations.

6. Mode of Referencing
Students are advised to incorporate proper academic modes of referencing. The normally
acceptable mode of academic referencing is the APA referencing system.

______________________________________________________________________

This question paper consists of 3 questions on 4 printed pages.

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UKAM3043 MANAGEMENT ACCOUNTING III

FINAL ASSESSMENT TASK

Answer ALL the THREE (3) questions. [Total: 100 marks]

Q1. The Bayu Green Nature Garden has been established very long since 1950s and located in
Klang. The company’s mission statement as the followings:
"The Bayu Green Nature’s mission is to increase knowledge and appreciation of flora and
fauna, their importance and their conservation, by managing and displaying living and
preserved collections and through botanical and horticultural research for the nation"
Despite charging admission, the gardens are regularly visited throughout the year by many
local people as well as foreign tourist and are well known as one of the top five
international tourist attraction in the country. Besides that, it receives thousands of
inquiries from universities and research establishments yearly, including pharmaceutical
companies from all over the world. There will be charges for advice and access to its
collections. Inquiries include requests for access to the plant collection for horticultural
work, seeds for propagation or samples for chemical analysis to seek novel pharmaceutical
compounds for commercial exploitation. Apart from that, Bayu Green Nature Garden
receives an annual grant in aid from Federal Government, which is fixed once every five
years. The grant is due for review in three years' time.
The finance director, En. Ahmad, has decided that, in order to strengthen its case when
meeting the government representatives to negotiate the grant, the management board
should be able to present a balanced scorecard demonstrating the performance of the
gardens. As a result, En. Ahmad who is unfamiliar with the concept of a balanced scorecard
has approached you as the senior management accountant, to help him.
Required:
(a) Explain about Balanced Score Card. Discuss the different perspectives of Balanced
Score Card for Bayu Green Nature Garden and its benefits. (20 marks)

(b) Discuss the process you would employ to develop a suitable balanced scorecard for
the Bayu Green Nature and give examples of measures that would be incorporated
within it. (10 marks)

Q2. Mr. Veloo, managing director of Millennial Watch Sdn. Bhd., assembles and sells many
types of wrist watch. It is considering extending its product range to include digital wrist
watch. Offering superior battery life, durability, and improved smart features, the modern
digital watch is fast shaping up to be the accessory of the future. The company now aims
to produce digital watch for every lifestyle and look, from the outdoor enthusiast to the
corporate professional, with an equally inclusive budget range. These watches produce a
better quality than traditional analogue watches and have a large number of potential
additional features not possible with the previous technologies. Assembly workers will
assemble a variety of components of the watch and production overheads are absorbed into
product costs on an assembly labour hour basis. Mr. Veloo is considering a target costing
approach for its new digital watch product.

This question paper consists of 3 questions on 4 printed pages.

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UKAM3043 MANAGEMENT ACCOUNTING III
Required:

(a) Target costing is the process of translating a customer’s view of a product into an
engineer’s view of a product. Briefly describe the target costing process that Mr.
Veloo should undertake in the establishment phase of target costing. Provide
specific examples of activities undertaken for each of the steps. (20 marks)

(b) Assuming a cost gap was identified in the process, outline possible steps Mr Veloo
could take using value engineering to close the gap between allowable and
achievable target costs for the digital watch. Include in your discussion how Mr
Veloo could design costs out or reduce costs through design improvements.
(10 marks)

Q3. Bersatu Bhd. is a retail company that operates five stores. The CEO of the company puts
unrelenting pressure on his store managers to deliver growth. Each year the CEO sets
targets on how much each manager must increase his or her store earnings in the coming
year. He has set the budgets for each store and the store managers’ performances have been
measured against their respective budgets even though they did not actively participate in
their preparation. The targets are coupled with a powerful incentive system. If they meet
or exceed these targets, managers are promised a bonus that can be many times their salary.
The goal for each manager is to continually increase return on investment (ROI) and
residual income (RI) over time.
Thus Bersatu Bhd. should compare ROI for each division to prior periods and reward
division managers for significant increases from one period to the next.The company has
recently appointed a new Finance Director who has questioned this previous practice and
suggested that each store manager should be involved in the preparation of their own
budget. He feels that if the top managers set profit targets too high or turn a blind eye to
how managers achieve them, the incentives for managers to cut corners is enormous. The
Finance Director is very concerned about this. She also thinks that the store managers will
overstate their costs and resource requirements in order to make it easier for them to
achieve their budget targets.
Required:
(a) Identify the problems which appear to exist in budgetary control system and explain
how budgetary control system could be revised to improve the effectiveness.
(20 marks)

(b) Discuss the behavioural issues that could arise if excess costs and resources are
removed from the store managers’ budgets. (5 marks)

(c) Although ROI is commonly used as a divisional performance measure, some

division managers dislike this measure. Why do some division managers prefer not
to use ROI as a performance measure and how RI helps to prevent the conflict
associated with ROI? (10 marks)

(d) “Although financial measures are important for evaluation purposes, many
organizations use a mix of financial and nonfinancial measures to evaluate
performance”. Discuss this statement using examples for Bersatu Bhd.
(5 marks)
[Total 100 marks]

This question paper consists of 3 questions on 4 printed pages.