Page 1 of 4
Australian National Institute of Management and Commerce
Master of Professional Accounting
TACC607 Managerial Accounting
Term 1, 2021
(29 March 2021 – 11 June 2021)
Lecturer: Dr. Gerry LI
Group Assignment
(Due on 4 June 2021 by 11:59 pm)
Read carefully the following Case information before planning to write the Report
Fantastic Sky Tours Pty Ltd is a small sightseeing tour company in Sydney that specialises in
aerial tours of the New South Wales area. Until recently, the company had not had an accounting
department. Routine bookkeeping tasks, such as billing, had been handled by a person who had
little formal training in accounting. As the business began to grow, however, the owner recognised
the need for more formal accounting procedures. Miranda Jenkins, a CPA, was recently hired as
the new management accountant, and she has the authority to hire an assistant.
During her first week on the job, Miranda was given the performance report on the next page. The
report was prepared by Robert Smith, the company’s manager of Aircraft Operations, who was
planning to present it to the owner, David Lowry, the next morning.
‘Look at these favourable variances for fuel and so forth,’ Robert pointed out as he showed the
report to Miranda. ‘My operations people are really doing a great job.’
Later that day, Miranda looked at the performance report more carefully. She immediately realised
that it was improperly prepared and would be misleading to the company’s owner.
See next page: Performance Report prepared by the manager of Aircraft Operations
Page 2 of 4
| Fantastic Sky Tours Pty Ltd Performance Report for the month of April 2021 |
||||
| Formula flexible budget (per air-km) |
Actual (32 000 air-km) |
Static budget (35 000 air-km) |
Variance | |
| Passenger revenue | $3.50 | $112 000 | $122 500 | $10 500 U |
| Less Variable costs: | ||||
| Fuel | 0.50 | 17 000 | 17 500 | 500 F |
| Aircraft maintenance | 0.75 | 23 500 | 26 250 | 2 750 F |
| Flight crew salaries | 0.40 | 13 100 | 14 000 | 900 F |
| Selling and administration | 0.80 | 24 900 | 28 000 | 3 100 F |
| Total variable expenses | $2.45 | $ 78 500 | $ 85 750 | $ 7 250 F |
| Contribution margin | $1.05 | $ 33 500 | $ 36 750 | $ 3 250 U |
| Less Fixed costs: | ||||
| Depreciation on aircraft | $2 900 | $ 2 900 | $ 2 900 | $ 0 |
| Landing fees | 900 | 1 000 | 900 | 100 U |
| Supervisory salaries | 9 000 | 8 600 | 9 000 | 400 F |
| Selling and administrative | 11 000 | 12 400 | 11 000 | 1 400 U |
| Total fixed expenses | $23 800 | $ 24 900 | $ 23 800 | $ 1 100 U |
| Net profit | $ 8 600 | $ 12 950 | $ 4 350 U |
AssignmentTutorOnline
Page 3 of 4
Assignment Tasks and Report Requirements
Assuming the role of Miranda Jenkins at Fantastic Sky Tours Pty Ltd, prepare a report to the owner
of the company providing explanations and revised reports in relation to the operating performance
in April 2021, and address her ethical obligations arising from the response from the manager of
Aircraft Operations. Your report should contain the following three parts:
Part I
1. Explain why the company’s April net profit was only about two-thirds of the expected level,
despite several favourable variable expense variances shown in the above performance report.
2. Explain why the original performance/variance report prepared by the manager of Aircraft
Operations is misleading.
Part II
1. Prepare flexible budgets for the company based on the following activity levels:
(a) 32 000 air-kilometres.
(b) 35 000 air-kilometres.
(c) 38 000 air-kilometres.
2. Prepare a revised performance report showing the proper variances for April, based on the
flexible budget that you prepared above.
Part III
Miranda Jenkins presented her revised performance report to Robert Smith, along with the
explanation why the original performance report was misleading. Robert did not take it well. He
complained of Miranda’s ‘interference’ and pointed out that the company had been doing just fine
without her. ‘I am taking my report to the owner tomorrow,’ Robert insisted. ‘Yours just makes us
look bad.’
What are Miranda’s ethical obligations as a CPA in this matter? What should she do?
Page 4 of 4
Format and Submission of the Group Assignment Report
1. Each group should consist of 3 to 4 members.
2. The assignment report format, contents and structure should be decided by your group, but it
must include the three major parts listed on the previous page. The report should be presented in
a professional and quality manner.
3. Apart from the flexible budgets and revised performance report required, the report must also
discuss the relevant qualitative issues of static/flexible budgeting and variance analysis under the
standard costing system in organisations.
4. Relevant headings/sub-headings/sections in the report should be designed appropriately to cover
the relevant issues in the Case. Credit will be given for identification and organisation of the
relevant issues discussed in the report.
5. The entire report should contain a cover page, a table of contents, an introduction, the main report
body, a conclusion, and the references.
6. The number of references should be between 5 and 10 (maximum one page) for any materials
(academic, business, professional) referenced and cited to support your arguments / concepts /
examples addressed in the report. 10% of the assessment is allocated to proper research efforts
on relevant topics.
7. The cover page of the report must follow the format provided by IMC, and each member of the
group must submit the Peer and Self-Assessment of Teamwork on individual basis.
8. The report is to be submitted (by one member in your group) on Moodle link through Turnitin
checking for plagiarism on or before 4 June 2021 by 11:59 pm.
9. Report body length: Approximately 1,800 words (excluding the flexible budgets and
performance report with variance analysis) containing proper page numbers with the following
settings:
• Font style/size: Times New Roman “12”
• Line spacing: 1.5 lines (except tables with numbers using single line spacing)
• Margins: Top (2.5 cm), Bottom (1.5 cm), Left (2.5 cm), Right (2.0 cm)
• Paper size: A4
