students to practice various theories

students to practice various theories
B392 TMA, Spring 2021 – 2022| P a g e 1Arab Open UniversityB392: TMA – 2nd Semester 2021 – 2022Cut-Off Date: TBAMarking GuideAbout TMA:The essence of this TMA is to allow students to practice various theories and concepts of the B392course. Case studies allow students to demonstrate their understanding of the studied materials. Since allquestions depend extensively on student’s justification, there is no typical answer for TMA questions. Thismarking guideline offers general framework to mark TMA where a tutor needs to apply his personaljudgment in grading each question.The TMA covers the management accounting concepts and practices in the businesses. It ismarked out of 100 and is worth 20% of the overall assessment component. It is intended to assessstudents’ understanding of some of the learning points within Units 2, 3, 4, 5 and 6 beside thesupplementary material. This TMA requires you to apply the course concepts. The TMA is intended to:➢ Assess students’ understanding of key learning points within the first four units.➢ Increase the students’ knowledge about the reality of the Managerial Accounting as a profession.➢ Develop students’ communication skills, such as memo writing, essay writing, analysis andpresentation of material.➢ Develop the ability to understand and interact with the nature of the managerial accounting tools inreality.➢ Develop basic ICT skills such as using the internet.The TMA:This TMA is based around two parts of “Transfer Pricing and Variances” and “Controlling cashflow for business growth”. Marks will be awarded for blending the context of each case and withrelevant theory by means of your own interpretation. In addition to this, some research is required.The TMA requires you to:1- Review various study sessions beside the supplementary materials.2- Conduct a simple information search using the internet and the e-library.3- Present your findings in not more than 1,500 words ± 10% (700 words for part A and 560 forpart B).4- You should use a Microsoft Office Word and Times New Roman Font of 12 points.5- You should read and follow the instructions below carefully. Each part of the process willcarry marks for the assignment.B392 TMA, Spring 2021 – 2022| P a g e 2TMA instructionsPlease read these instructions carefully, and contact your tutor if you require any furtherclarifications. You should submit your completed assignment to your tutor to arrive no later thanthe cut-off Date mentioned above.This tutor-marked assignment accounts for 20% of the total grade assigned to the course. Thisassignment will be graded out of 100 marks.General Marks (Up to 20% Deduction)Marks distribution: This assignment will be graded out of 100 marks, which will be allocatedto your answer for the two mini cases’ questions. 20% will be deducted based on the followingcriteria:• 10% for improper referencing (5% in-text referencing and 5% end-textreferences).• 5% for improper presentation (using PT3 form with a clear presentation).• 5% for not adhering to the word count (when applicable)Please use standard A4 size paper for submitting the hard copy of your TMA. Your name,personal identifier, course and assignment numbers must appear at the top of each sheet. A softcopy of your TMA must be uploaded to the university moodle within the indicated cut-off date.The hard & soft copies must be identical. Please leave wide margins and space at the end of eachsheet for tutor comments. It is better to use double spacing so that you can easily handwritecorrections to your drafts and tutors have space to include their feedback on the script. Start eachquestion in the assignment on a new page.Completing and sending your assignmentsWhen you have completed your TMA, you must fill in the assignment form (PT3), taking care tofill all information correctly including your personal identifier, course code, section & tutor, andassignment numbers. Each TMA and its PT3 form should be uploaded on the AOU branchmoodle within the cut-off date. Late submissions require approval from the branch coursecoordinator and will be subject to grade deductions. All assignments are treated in strictconfidence.PlagiarismThe Arab Open University Definitions of cheating and plagiarismAccording to the Arab Open University By-laws, “The following acts represent cases of cheatingand plagiarism:• Verbatim copying of printed material and submitting them as part of TMAs withoutproper academic acknowledgement and documentation.• Verbatim copying of material from the Internet, including tables and graphics.• Copying other students’ notes or reports.• Using paid or unpaid material prepared for the student by individuals or firms.• Utilization of, or proceeding to utilize, contraband materials or devices in examinations.”B392 TMA, Spring 2021 – 2022| P a g e 3Penalty on plagiarismThe following is the standard plagiarism penalty applied across branches as per Article 11 of theuniversity by-laws:1) Awarding of zero for a TMA wherein more than 20% of the content is plagiarized.2) Documentation of warning in student record.3) Failure in the course to dismissal from the University.All University programmes are required to apply penalties that are consistent with theUniversity by laws.Examples of PlagiarismCopying from a single or multiple sources, this is where the student uses one or more of thefollowing as the basis for the whole, or a good part, of the assignment:• Published or unpublished books, articles or reports• The Internet• The media (e.g.TV programmes, radio programmes or newspaper articles)• An essay from an essay bank• A piece of work previously submitted by another student• Copying from a text which is about to be submitted for the same assignmentThe TMA QuestionsPART A: Transfer Pricing and VariancesGamma Company produces cars. Two of the profit centers, Tires center and Assembly center,were in conflict over the price of tires. External suppliers of tires offered Rania, the manager ofthe Assembly center, the same type and quality of tire for $200. Rania used to buy these tiresinternally for $300 each.Jamil the CEO of the company called for a meeting with the managers of both centers in order tosolve the issue. Kamil the manager of the Tires Centre explained that:“The tires we produce have been a trusted brand for over 60 years and are distributed by GammaCompany to members all over the globe. Our tires have long been recognized as a leadingprivate brand since 1954.”B392 TMA, Spring 2021 – 2022| P a g e 4Tires Center: Cost per tire


Direct materials

Direct labor

Variable overheads

Fixed overheads

Total cost

Rania answered that the external suppliers offered the same specifications and quality for a $100less, and that she should be able to buy them internally at least at the same price.Required:1. Advise and justify whether the Assembly Centre should to buy tires from inside or outside the firm.(130 words)2. Based on your answer in the previous requirement, provide and justify a proper transfer price. (130words)3. The Tires Centre had a capacity of 40,000 tires per year, and the Assembly Centre use around 90,000tires per year. The Tires center could sell all of its production externally for $300. Based on thesespecial circumstances provide a recommendation for Gamma Company whether these two centersshould buy/sell internally or externally. Justify your answer. (50 words)4. Explain why setting transfer prices by Gamma can be controversial when a product is beingtransferred between two profit centers. (130 words)5. Gamma Company provided you, as a consultant, the following information:

Profit Plan



B392 TMA, Spring 2021 – 2022| P a g e 5

Sales Data

Sales cheese (volume in litres)

Sales ‘yogurt’ (litres)

Total sales

Cost of Goods Sold

Cost of cheese

Dairy ingredients (litres)

Other ingredients (100gr.)

Labor (hours)

Cost of yogurt

Dairy ingredients (litres)

Other ingredients (100gr.)

Labor (hours)

Contribution margin

Other costs

Supervision, energy, maintenance


Operating margin

Selling and Administrative Expenses

Delivery expenses

Depreciation of trucks

Selling expenses


Administrative salaries and expenses


Allocates central office expenses

Profit before interest and taxes

Required:Discuss the performance of the company for the past year. Show your workings. (400 words)[Marks: (8+8+6+8+40) = 80]B392 TMA, Spring 2021 – 2022| P a g e 6Case Study B: Controlling cash flow for business growthCash flow is of vital importance to the health of a business. One saying is: ‘revenue is vanity,cash flow is sanity, but cash is king’. What this means is that whilst it may look better to havelarge inflows of revenue from sales, the most important focus for a business is cash flow.Required:1. Describe what is meant by ‘cash flow budget’. (130 words)2. Explain how a cash flow forecast can help a business now and in the future. Give examples.(100 words)3. Analyze why cash is considered to be more important to a business than revenue or profit.(250 words)4. Evaluate the importance of cash flow to a business of your choice. Explain how a recessionwould most likely affect this business. (170 words)[Marks: (4+6+12+8) = 30]Total Marks: 70 + 30 – 10 Marks of deductions for general presentation and references]In your answer, you should explain each point or inquiry separately.All answers should be supported by examples.Use the following headings (below) to make up the different sections of your work:

The PT3 form

Title and contents page

Part A
Transfer pricing and Variances

Part B
Controlling cash flow for business growth

References (Recorded according to the Harvard style – Available on LMS)

END of Questions

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