题目内容
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importance of communication is therefore an important part of the accountant’s role.
Required:
(a) Explain the importance of good communication. (5 marks)
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(d) Discuss the professional accountant’s liability for reporting on prospective financial information and the
measures that the professional accountant might take to reduce that liability. (6 marks)
37,000 hours were used to complete the work and there was no idle time. The total labour cost for the quarter was $531,930.
At the beginning of the last quarter, the design of the gloves was changed slightly. The new design required workers to sew the company’s logo on to the back of every glove made and the estimated time to do this was 15 minutes for each pair. However, no-one told the accountant responsible for updating standard costs that the standard time per pair of gloves needed to be changed. Similarly, although all workers were given a 2% pay rise at the beginning of the last quarter, the accountant was not told about this either. Consequently, the standard was not updated to reflect these changes.
When overtime is required, workers are paid 25% more than their usual hourly rate.
Required:
(a) Calculate the total labour rate and total labour efficiency variances for the last quarter. (2 marks)
(b) Analyse the above total variances into component parts for planning and operational variances in as much detail as the information allows. (6 marks)
(c) Assess the performance of the production manager for the last quarter. (7 marks)
(c) Discuss the ethical responsibility of the company accountant in ensuring that manipulation of the statement
of cash flows, such as that suggested by the directors, does not occur. (5 marks)
Note: requirements (b) and (c) include 2 professional marks in total for the quality of the discussion.
Why has she changed her mind？
A．Her accountant advised against taking such a trip.
B．Her annual bonus was disappointingly low.
C．The value of the dollar has gone down.
D．She didn't have sufficient funds.
A.The accounting period principle
B.The business entity concept
C.The stable-dollar assumption
D.The realizaton principle
What is the short-coming of the concept？
A．The accountant has to restate the assets and liabilities on the balance sheet.
B．It is difficult to compare the balance sheets of different companies.
C．The balance sheet can not reflect the precise worth of the assets and liabilities.
D．Another company will not decide whether to buy the piece of land.
manager in charge of the audit of the financial statements of Indigo, for the year ending 31 December 2005.
Indigo owns office buildings, a workshop and a substantial stockyard on land that was leased in 1995 for 25 years.
Day-to-day operations are managed by the chief accountant, purchasing manager and workshop supervisor who
report to the managing director.
All iron, steel and other metals are purchased for cash at ‘scrap’ prices determined by the purchasing manager. Scrap
metal is mostly high volume. A weighbridge at the entrance to the stockyard weighs trucks and vans before and after
the scrap metals that they carry are unloaded into the stockyard.
Two furnaces in the workshop melt down the salvageable scrap metal into blocks the size of small bricks that are then
stored in the workshop. These are sold on both credit and cash terms. The furnaces are now 10 years old and have
an estimated useful life of a further 15 years. However, the furnace linings are replaced every four years. An annual
provision is made for 25% of the estimated cost of the next relining. A by-product of the operation of the furnaces is
the production of ‘clinker’. Most of this is sold, for cash, for road surfacing but some is illegally dumped.
Indigo’s operations are subsidised by the local authority as their existence encourages recycling and means that there
is less dumping of metal items. Indigo receives a subsidy calculated at 15% of the market value of metals purchased,
as declared in a quarterly return. The return for the quarter to 31 December 2005 is due to be submitted on
21 January 2006.
Indigo maintains manual inventory records by metal and estimated quality. Indigo counted inventory at 30 November
2005 with the intention of ‘rolling-forward’ the purchasing manager’s valuation as at that date to the year-end
quantities per the manual records. However, you were not aware of this until you visited Indigo yesterday to plan
your year-end procedures.
During yesterday’s tour of Indigo’s premises you saw that:
(i) sheets of aluminium were strewn across fields adjacent to the stockyard after a storm blew them away;
(ii) much of the vast quantity of iron piled up in the stockyard is rusty;
(iii) piles of copper and brass, that can be distinguished with a simple acid test, have been mixed up.
The count sheets show that metal quantities have increased, on average, by a third since last year; the quantity of
aluminium, however, is shown to be three times more. There is no suitably qualified metallurgical expert to value
inventory in the region in which Indigo operates.
The chief accountant disappeared on 1 December, taking the cash book and cash from three days’ sales with him.
The cash book was last posted to the general ledger as at 31 October 2005. The managing director has made an
allegation of fraud against the chief accountant to the police.
The auditor’s report on the financial statements for the year ended 31 December 2004 was unmodified.
Required:
(a) Describe the principal audit procedures to be carried out on the opening balances of the financial statements
of Indigo Co for the year ending 31 December 2005. (6 marks)
Designit pays each of its three sales managers an annual salary of $150,000, plus an individual bonus based on sales targets set at the beginning of the year. There are always two levels of bonus that can be earned, based on a lower and an upper level of fee income. For the year ended 30 November 2012, for example, each of the sales managers was given a lower target of securing $1·5m of fee income each, to be rewarded by an individual bonus equating to 20% of salary. If any of the managers secured a further $1·5m of fee income, their bonus would increase by 5% to the upper target of 25%. None of the managers achieved the upper target but all of them achieved the lower one.
This is the same every year and Designit finds that often the managers secure work from several major clients early in the year and reach the $1·5m target well before the year has ended. They then make little effort to secure extra fees for the company, knowing that it would be almost impossible to hit the second target. This, together with a few other problems that have arisen, has made the company consider whether its current budgeting process could be improved and whether the bonus scheme should also be changed.
Designit is now considering replacing the fixed budget with a monthly rolling budget, which Designit believes will make the budgeting process more relevant and timely and encourage managers to focus on the future rather than the past. It would also prevent the problem of targets being met too early on in the year by the sales managers because the targets would be set for monthly performance rather than annual performance. For example, a manager could be given a target of securing $200,000 fee income in the first month for a reward of 2% of salary. Then, depending on what is happening both within the business and in the economy as a whole, at the end of the first month, a different target fee income could be set for the second month.
Required:
(a) Explain what a monthly rolling budget is and how it would operate at Designit. (4 marks)
(b) Discuss the problems that may be encountered if Designit decides to introduce monthly rolling budgets together with a new bonus scheme, such as the one outlined above. (6 marks)
(c) Discuss the problems with the current bonus scheme and, assuming that the company decides against introducing rolling budgets, describe and justify an alternative, more effective bonus scheme that could be introduced. (6 marks)
(d) Discuss the risk of using the company accountant’s own spreadsheets for budgeting. (4 marks)
