Parker Ltd Management Accounting

This assignment is about Parker Ltd, a company that produces and sells pens and pencils. The company has been facing increasing competition and has requested an analysis to determine the monthly profit, consider accepting orders from educational institutions and government contracts, and decide whether to enter a foreign market or accept an offer from an outside supplier.

ACC202 MANAGEMENT ACCOUNTING GROUP ASSIGNMENT Due Week 10
Assignment topic:
Parker Ltd produce quality pens and pencils and it has been producing and selling 10,000 sets
per month . It provides the following information because it has been facing increasing competition
both in the local market and from imported products:
Manufacturing costs
Direct material $1.00 per unit
Direct labour 1.20 per unit
Variable overhead 0.80 per unit
Fixed overhead $10,000
Marketing costs
Variable $1.50 per unit
Fixed $15,000
Parker has been selling these pen and pencil sets for $7.50 each and has asked you to provide
answers to the following. Each part is to be considered independently of the others.
Required:
(a) Assuming that all 10,000 pen and pencil sets produced in a month are sold calculate the monthly
profit .
(b) A request has come from an educational institution for Parker to supply an extra 2,000 pens per
month at a price of $5.50 per set. The educational institution wants their logo inscribed on the pen
and pencil set. This would cost an extra $0.60 per set. Should this one off request be accepted based
on profit alone? Should any other factors be considered before accepting the order? What other
factors should be considered?
(c) Another request has come in the form of a long term government contract which wants you to
supply 5,000 pen and pencil sets per month on an ongoing basis for $4 per set and a one off
payment of $4,000.Should this offer be accepted? Provide reasons for your decision.
(d)Parker is trying to enter a foreign market .It believes it can sell an extra 10,000 pen and pencil
sets in this market .If it produces this extra 10,000 sets it will be producing at maximum capacity.
What is the minimum price it could enter this market in the short term? What is the minimum price
in the long term?

(e)Parker has an offer from an outside supplier which has offered to supply the 10,000 pen and
pencil sets at $4.20 per set. Should you accept this offer? There are no alternative uses for the
facilities and while the variable manufacturing costs would be saved you would only save
$3000 per month on your fixed manufacturing costs and $0.40 per set off the variable marketing
costs. Show calculations to support your answer.
(f) Assuming the same situation as in part (e) above with the same savings in costs except that the
facilities (building and car park) can be rented out and you receive $5,500 per month from this,
should you accept the offer from the outside supplier now? Show calculations to support your
answer..
Instruction:
The case study will have some theoretical aspects AND some practical aspects (typically some form
of calculations to be completed in an electronic spread sheet and then imported or copied into a
Document for submission.). The student should complete any “tables” or calculations using the
spread sheet application and then copy and paste these into a ‘document’ to allow better formatting
into a report format submission.
Tips for submission:
1. For ease of formatting within a MS Word document, either ‘pastes’ the selected sections of the
Excel Worksheet as a ‘PICTURE’, or copy and paste smaller sections.
Task Details:
Make a submission in a business report format and with a word count of 2000 words + 10%.
Some cases may require more emphasis on calculations (requiring full tables to be submitted) and
others may have more written component. Research Students need to support their analysis with
reference from the text and requirements: minimum of six (6) suitable, reliable, current and
academically acceptable sources. Student seeking Credit or above grades should support their
analysis with increased number of reference sources comparable to the grade they are seeking.
Presentation:
Student should include suitable headings and subheadings, conclusions/recommendations,
reference list (Harvard – Anglia style)
Marking Guide: Total marks will be scaled to a score out of 20 subject marks. The criteria will be
related specifically to the case study report topic itself however as a guide: 20% will be awarded for
the clear presentation of your findings and material within the written submission; 40% will be
awarded on the depth and completeness of coverage of each of the specified ‘requirements’; 20%

will be awarded based on the written analysis of the topic and the links formed between the
practical and theoretical aspects of the case submission topic; 20% on extent and use of references
and correct referencing