(ACC60204) INTRODUCTION TO MANAGEMENT ACCOUNTING

AUGUST 2023
COURSEWORK (GROUP ASSIGNMENT)

Due date: Week 9, Thursday, 26th October 2023 (BEFORE 5.00 pm)
Weighting: 25%
Submission via MyTIMES
This assignment must be submitted by a group of FOUR (4) students.

Case study

Luminous Radiology Centre (LRC) is a well-established medical institution that specializes in the
provision of X-ray imaging, ultrasound examinations, computed tomography (CT) scans, and
magnetic resonance imaging (MRI) services. With a strong reputation as a premier radiology
centre in the state, LRC has consistently upheld its stature by continuously reviewing and
enhancing its operational processes. Currently, the facility employs a single, facility-wide
overhead allocation rate using direct technician labour costs as the allocation basis.

However, the Chief Executive Officer (CEO), Sarah Thompson is advocating for a more detailed
cost allocation system, believing that more precise cost information will enable LRC to
implement advanced process improvements. The top management had gathered for a crucial
meeting that was about redefining the way they approached cost allocation. After weeks of
discussions and research, they were finally ready to explore the transition from their
conventional single cost allocation method to the more sophisticated Activity-Based Costing
(ABC) method.

Sarah (CEO): Good morning, everyone. Thank you for attending this important meeting. As you
know, we've been pondering the idea of shifting to Activity-Based Costing to gain more detailed
insights into our costs and decision-making processes. David, could you please kick off the
discussion?

David (CFO): Absolutely, Sarah. Thank you. Our current single cost allocation method has
served us well, but as we've grown and expanded our services, it's become clear that we need a
more accurate way to allocate costs. Activity-Based Costing divides costs into various activities
that drive them, allowing us to allocate costs based on the actual resources consumed.

Lisa (Chief Operating Officer): That's a valid point, David. As COO, I've noticed discrepancies
between the costs we allocate, and the actual resources used for specific services. For
instance, our MRI services require significantly more maintenance and support than our X-ray
services. By adopting ABC, we can align our costs more accurately with the complexity and
demands of each service.

Mark (Head of Radiology Service): I couldn't agree more, Lisa. The accuracy of our cost
information is crucial for informed decision-making. Take our ultrasound services, for instance.
They require additional administrative tasks and setup time due to their nature. With ABC, we
can pinpoint these hidden costs and evaluate whether the revenue generated justifies the effort
expended.

Sarah: Mark and Lisa, your insights are spot-on. I believe ABC will empower us to make more
strategic choices. It's not just about getting a clearer picture of our costs; it's about optimizing
our resources and pricing. We can offer competitive rates for services that are less resource-
intensive while ensuring that we're fairly compensated for the more intricate procedures. It's
clear that adopting ABC aligns with our commitment to providing quality care and responsible

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financial management. Before we conclude, I'd like to get a sense of your thoughts on the
implementation process. How should we proceed?

David: I'll work with the finance team to develop a clear timeline for the transition. We'll need to
communicate with our stakeholders about the shift, to ensure transparency and address any
concerns they may have.

Sarah believes the activity-based costing system may assist the company. David immediately
asked to form an ABC task force to help the company with the compilation of data. The following
data is the budget information for the year ending May 30.

X-rays Ultrasound CT scan MRI Overhead Total

Technician 61,440 105,600 96,000 105,000 368,040
labour
Depreciation 32,240 268,000 439,000 897,500 1,636,740
Direct Materials 22,080 16,500 24,000 31,250 93,830
Administration 20,610 20,610
Maintenance 247,320 247,320
Sanitation 196,180 196,180
Utilities 134,350 134,350
Total RM115,760 RM390,100 RM559,000 RM1,033,750 RM598,460 RM2,697,070

Number of procedures 3,840 4,400 3,000 2,500

Minutes to clean after the procedure 5 5 15 35
Minutes for each procedure 5 15 20 45

LRC operates at full capacity. The proposed allocation bases for overhead are as follows:

Administration Number of procedures

Maintenance (including parts) Capital cost of the equipment (use Depreciation)
Sanitation Total cleaning minutes
Utilities Total procedure minutes

Required:

As part of the task force team, you are required to prepare a business report on behalf of the
task force. The purpose of the business report is to provide top management with beneficial
information for a better understanding of the situation.

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AUGUST 2023
COURSEWORK (GROUP ASSIGNMENT)

Part A: 40 marks
Calculations (Show detailed workings) (MLO2)

1. Using the current costing system calculate the following:

a) The budgeted overhead rate for each service (2 decimal points). (4 marks)

b) The total budgeted overhead cost for X-rays, Ultrasounds, CT scans, and MRIs. (4 marks)

c) The budgeted cost per service of X-rays, Ultrasounds, CT scans, and MRIs. (8 marks)

2. Using the activity-based costing (ABC) system calculate the following:

a) The budgeted overhead rate for each activity. (2 decimal points). (10 marks)

b) The total budgeted overhead cost for X-rays, Ultrasounds, CT scans, and MRIs. (7 marks)

c) The budgeted cost per service of X-rays, Ultrasounds, CT scans, and MRIs. (7 marks)

Part B: 50 marks
Analytical Discussion (MLO3)

1. Compare the costs of each service calculated in requirements 1 (c) and 2 (c). Why does the
cost of each service differ between the current costing system and activity-based costing
systems?
(10 marks)

2. The budgeted overhead costs and cost per service differ among the service procedures under
the current (traditional) costing system. Discuss FIVE (5) potential drawbacks of using a single
cost driver for allocation that is currently employed by LRC in the healthcare industry.
(15 marks)

3. Which costing system do you think provides a better reflection of the actual costs incurred for
each service? What are the implications of using each costing system for pricing and
decision-making in the healthcare industry?
(15 marks)

4. Discuss FIVE (5) challenges that LRC might face in transitioning from its current costing
system to activity-based costing system?
(10 marks)

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PART C: WRITTEN COMMUNICATION SKILLS THROUGH REPORTS (10 Marks) -MLO 3

Traits Performance levels Score Wt. Marks
Poor (1 2 3) Fair (4 5) Good (6 7) Excellent (8 9 10) (%)
The organization, The organization, style,
The purpose and the aim The organization, style,
style, and content are and content are excellent
1 Purpose/Aim of the paper are not clear and content sometimes 25
good and explain the and explain the purpose
to the reader. interfere with the purpose
purpose and aim of and aim of the paper very
and aim of the paper.
the paper. clearly.

Most ideas are Explores ideas with sound

Explanation of Presents ideas but the Supports most ideas 25
unsupported and very arguments and evidence.
2 ideas supports are inconsistent. with good evidence
confusing. The reasoningis Reasoning is very
Reasoning is not clear. and reasoning
flawed. effective.

Develops and organizes Develops unified and Develops ideas cogently

Does not develop ideas ideas in paragraphs that coherent ideas within and logically with very
Logic & cogently and logically, are not well connected. paragraphs and the good connection between
3 organization transition from one 20
ineffective organization, There is some evidence of paragraphs.
unclear introduction, and organization. Introduction paragraph to another Organization,
conclusion and conclusions not well is good. Organization, introduction, and
focused. introduction, and conclusion are very good.
conclusion are good.

Uses words that are Word forms and sentence Word forms and
Employs the most apt
Language unclear, sentence structures are adequate to sentence structures
4 words and sentence 20
usage structure lacks clarity, convey basic meaning. are effective. There
structures are concise
errors are seriously However, there are errors are errors but these do
and very effective.
distracting that cause distraction. not cause distraction.

There are minor

Writing contains
Spelling & Frequent errors in spelling errors. But the The writing is error free in
5 numerous spelling and 10
grammar and grammar interfere with general conventions of terms of spelling and
grammatical errors. Very
comprehension. spelling and grammar grammar.
difficult to comprehend.
have been followed.
Note: This is the guideline to mark your assignment report. There is no requirement to prepare any report for Part C.

Total = 100 Marks

 (ACC60204) INTRODUCTION TO MANAGEMENT ACCOUNTING
AUGUST 2023
COURSEWORK (GROUP ASSIGNMENT)

ASSIGNMENT GUIDELINES

Group Members
You are allowed to determine your group members. However, you must ensure that the group is
diversified enough to ensure balanced distribution across nationality, gender and ethnicity. This
is to provide an opportunity for you to expand your connections and understand others outside
your current networks. The lecturer is responsible to ensure this is achieved when finalizing
members for group assignment.

Expectations
The aim of the assignment is to emphasize product-costing concepts and develop student’s
analytical, problem solving and presentation skills. Marks will be awarded based on the accuracy
in computation and the soundness of arguments and comments.

Presentation of Assignment
The assignment must be presented in a formal business report format. You are expected to
present the report neatly and organize the report in a manner that allows the reader to
understand your discussions. Use appropriate headings and subheadings to assist you in
presenting your arguments and comments systematically. A report will normally include all or
some of the followingsections:
• Cover page
• Marking Criteria
• Part A (Calculations)
• Part B (Analytical Discussion)
• Part C (Written Communication Skills rubric)
• Reference List
• Turnitin report (only 1st page that indicate the percentage)

Your assignment must be prepared in at least 1¼ line spacing on single sided page with 1 inch
left and right margins, and 1-inch top and bottom margins. The font size for the characters must
be at least 11 (Time New Roman or Arial).

Length of the Assignment

The report should be limited to a maximum of 2,000 words. Where explanation is necessary, just
answer the question as you think appropriate and support your arguments or comments with
appropriate computation.

All calculations must be included in an appendix to the report, but you should show summaries
and/or use the results of the calculations, where appropriate, in the body of the report.

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COURSEWORK (GROUP ASSIGNMENT)

The word count must be printed on the assignment cover sheet. Marks will be deducted if the
word count is not indicated on the assignment cover sheet. Marks will be deducted if the
assignment exceeds the word count by 10% of the word count limit – 10 marks deduction for
every extra 100 words or part of.

Referencing and Plagiarism

You need to ensure that you comply with Harvard referencing conventions in preparing this
assignment and that plagiarism is not an issue. You are expected to adhere to high standards of
academic integrity and all assignments submitted in this course may be checked for plagiarism,
using text comparison software and other means.
Please submit the assignment scripts into Turnitin before final submission in MyTimes. The
Turnitin similarity index must not exceed 20%.

It is your responsibility, if unsure, to make sure you understand plagiarism, so that you do not
present any assessment containing plagiarism. Plagiarism is regarded as a serious issue within
the university system with severe consequences for students who have been found to have
plagiarized.

Subject to any specific requirements of external validating or professional bodies, where a

student is found to have committed an assessment offence a decision must be taken either to
take no further action or to impose an appropriate penalty which may include failing the student
and determining whether or not the student will be permitted another assessment attempt.

Where it is decided that a penalty is to be imposed, the penalty could include one of the following:

a) the mark for the assignment be reduced; or

b) the mark awarded for the assignment be reduced to zero; or
c) the student be deemed to have failed the module and is not permitted for another
assessment attempt for the module.

Submission of Assignment
Students are expected to present a paper of professional quality. Prior to submission of the
assignment, check to ensure that at the very least all aspects of the requirements have been
addressed and that there are no spelling and grammatical errors.

You are to submit a softcopy of your assignment to the submission box given in MyTIMES latest
by 26th October 2023 (BEFORE 5.00 pm)

(Only one assignment should be submitted on behalf of the group. Please ensure
that the assignment is submitted together with the assignment cover sheet.)

Late submission of assignment

Assignments submitted within 24 hours after the published deadline will be penalized as below:

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AUGUST 2023
COURSEWORK (GROUP ASSIGNMENT)

a) A mark of more than 50% for the assignment will be reduced to 50%. This reduced mark
will be used in the calculation of the overall module mark;
b) A mark of 50% or less will stand and be used in the calculation of the overall module
mark.

Assignments will not be accepted after the 24-hour window and will be recorded as a non-
submission. A mark of ZERO will be awarded. Please see the section on Non-Submission of
Assignment below for more details.

Extension of Deadline
No extension will be granted for the assignment, except in the case of extenuating
circumstances. Please refer to the section on Extenuating Circumstances in this booklet, should
you like to request for consideration of extenuating circumstances.

Students whose application for extenuating circumstances is accepted will not receive their
marks, when the other students who submitted on time receive theirs.

Non-Submission of Assignment
Students who do not submit their assignment will be deemed to have forfeited their right to a
second attempt (resit) of the module. These students will be required to repeat the module with
attendance and undertake all assessments again (as their third attempt (repeat)).

Note that students are granted only four attempts at a module. If you do not pass the module in
the fourth attempt, you will be excluded from the Dual Award programme.

Feedback and Mark for the Assignment

The mark and feedback on the assignment will be provided on a Feedback Form. The purpose of
the feedback is to help you to assess your ability to apply the knowledge and concepts taught in
the module in sufficient depth, as well as your progress toward meeting the module objectives.
The feedback and marks for the assignment will be given to you within four weeks of your
submission of the assignment.

Marking Criteria
Marks
Part A 40
Part B 50
Part C 10
Total 100

PLEASE NOTE: TUTORS HAVE BEEN INSTRUCTED NOT TO DISCUSS THE DETAILS OF
THIS ASSIGNMENT WITH STUDENTS.