assignment requirment
Project Management Accounting (BBAC501)
Assignment (Group of Four)
(25 Marks)
Due Date: Session 6.1
Colonial Tap Company (CTC) is a manufacturer of taps and fittings for the plumbing trade, located in Brisbane. The Company was established by Ken Hall in 1951, with a workforce of 10, to meet the needs of the post-war housing boom. Its product range was fairly limited but the company had an excellent reputation for quality.
Nowadays, CTC manufacturers an extensive range of high quality brass and chrome taps. The company is managed by Ken’s son, Michael, and employs 20 people. It has annual sales averaging approximately $1million. Although it has been consistently profitable, CTC has experienced increasing pressure from competitors since the early 1990s. The company uses a cost-plus approach to pricing but is having to reduce its markup constantly in order to maintain market share.
Both Ken and Michael qualified as engineers. The business is small and has never been able to employ an accountant. Instead, a bookkeeper calculates monthly profit as sales revenue minus expenses. Prices are based on rough estimates of cost of direct material and direct labour inputs plus a 50% markup.
With the decline in profit and constant pressure on prices, Michael began to feel uneasy about the way costs and profits were calculated. The results for the month just ended were:
Sales
$980000
Less Expenses:
Material Purchased
$300000
Factory Wages-Production line
$250000
Production Supervisor’s Salary $35000
Rent $80000
Council Rates $5000
Sales Staff
$110000
Advertising $18000
Equipment Depreciation $25000
Electricity $12000
Manager’s Salary $80000
Truck Lease $10000
Total Expense
$925000
Net Profit
$55000
Additional Information:
There was virtually no beginning inventory of raw material, work in process and finished goods.
At the end of the month,
Assignment (Group of Four)
(25 Marks)
Due Date: Session 6.1
Colonial Tap Company (CTC) is a manufacturer of taps and fittings for the plumbing trade, located in Brisbane. The Company was established by Ken Hall in 1951, with a workforce of 10, to meet the needs of the post-war housing boom. Its product range was fairly limited but the company had an excellent reputation for quality.
Nowadays, CTC manufacturers an extensive range of high quality brass and chrome taps. The company is managed by Ken’s son, Michael, and employs 20 people. It has annual sales averaging approximately $1million. Although it has been consistently profitable, CTC has experienced increasing pressure from competitors since the early 1990s. The company uses a cost-plus approach to pricing but is having to reduce its markup constantly in order to maintain market share.
Both Ken and Michael qualified as engineers. The business is small and has never been able to employ an accountant. Instead, a bookkeeper calculates monthly profit as sales revenue minus expenses. Prices are based on rough estimates of cost of direct material and direct labour inputs plus a 50% markup.
With the decline in profit and constant pressure on prices, Michael began to feel uneasy about the way costs and profits were calculated. The results for the month just ended were:
Sales
$980000
Less Expenses:
Material Purchased
$300000
Factory Wages-Production line
$250000
Production Supervisor’s Salary $35000
Rent $80000
Council Rates $5000
Sales Staff
$110000
Advertising $18000
Equipment Depreciation $25000
Electricity $12000
Manager’s Salary $80000
Truck Lease $10000
Total Expense
$925000
Net Profit
$55000
Additional Information:
There was virtually no beginning inventory of raw material, work in process and finished goods.
At the end of the month,