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Management Accounting Case Study

Introduction to management accounting.

In today’s competitive and rapidly changing environment, it is essential for the organizations to decide effective course of action. In order to effectively plan business course of action, the varied range of management accounting information is required. The financial information tends to support effective decision making within the organization. It is through access to wide range of financial information that the business unit is able to decide effective course of action. The report into consideration develops deep understanding of manner in which management accounting information helps in business decision making process. Moreover, the manner in which management accounting techniques helps in supporting strategic management decisions. Moreover, it throws light on manner in which budgeting and forecasting techniques is considered to be effective decision making tool. It also helps in understanding ways through which management accounting techniques can be used in the current competitive era of business.

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Be Able To Analyze Cost Information Within The Business Of Buccaneers Ltd.

Direct cost: The cost that results due to production process is termed as direct cost. Direct labor and direct materials are the main part of direct costs. Expenses related to manufacturing activities are called direct costs (Anderson, 2011).

Indirect cost: The cost that is incurred due to administrative and other expenses within the organization is termed as indirect costs. Costs related to depreciation and insurance come under this section. These are the supportive expenditures of the company.

Factory overhead: It is the part of manufacturing costs. It includes expenditures such as electricity, rent etc.

Non manufacturing costs: These types of costs are the expenditures which are not related to the production. It includes administrative expenses, selling and distribution expense (Anderson, 2006).

Cost by element: Element of cost are material, labor and expenses. Hence cost of the company can be classified on the basis of element of expenditures.

Cost by function: The cost incurred by every function of the business such as production, administration, finance, selling, distribution etc, are known as cost by function.

Cost by nature: In this kind of cost, management can divide cost into three parts such as material, labor and other expenses.

Cost by behavior: In this part cost can be classified into fixed cost, variable cost and mixed costs. Buccaneers Ltd is using cost classification by behavior in its business. They are included fixed, variable and mixed costs in business operations.

Multiple costing: The methodology emphasizes on application of minimum of two approaches for calculation of costs for the organization. The methodology is suitable for calculation of costs in automobile sector, telecom industry and so on.

Activity based costing: The activity based costing emphasizes on allocation of costs within the business based on activities for optimum allocation of resources. It is useful for the production industries (Arai, Kitada and Oura, 2013).

Batch costing: In this method, the whole process of production is divided into batches. The expenditures are also distributed on the basis of batches. It is useful for big companies.

Job costing: In this technique cost of the production is calculated as per the expenditure incurred by a specific work or job.

Contract costing: The costing methodology is applicable in businesses that are conducting operations on the basis of contracts such as construction of dams and buildings.  Expenditures are calculated on the basis of every contract.

Process costing: Many companies go through different processes to produce the particular goods. Such companies use process costing. Costs are calculated on the basis of the every process (Banks, 2008). In the present case study, Buccaneers Ltd is using process costing because company has ranges of process of production such as forming, machining, finishing etc.

Evaluation of Projects

On the evaluation of case presented herewith, it is seen that Buccaneers plc evaluates the processes of production that includes forming, machining and finishing. They can use process costing method for cost calculation. The raw material is converted into finished goods by entering into different process of production. It can be therefore said that the process costing is one of the best options for the organization because it is the easiest technique and matches with the production style of the company. The company is using process costing technique for its business and operations (Birnberg and Sisaye, 2010). Besides, some tools of costing that can be adopted by the organization are described underneath in detail.

Standard costing: The costing methodology emphasizes on comparison of actual expenditure incurred to that of budgeted expenditure. This in turn helps in estimating variances that can be minimized by taking appropriate measures. It is the most famous classical tool of costing.

Marginal costing: In this method, marginal cost of products is computed by estimating a difference between fixed and variable expenditure incurred on part of the organization. It is therefore considered to be one of the easiest techniques for costing.

Uniform costing: The costing methodology emphasizes on adoption of similar costing techniques and principles by which expenditures can be controlled and regulated in a continuous manner (Budgetary control. 2011).

Buccaneers Ltd. can apply job costing method so as to estimate cost for every department.  The below table 3 represents total cost estimated for different departments of the business.  It is seen that the highest cost is incurred within forming department.  It can be therefore said that the huge amount of money is invested in this department. Direct labor and material costs result in difference between forming department cost and other departments. On the other hand, maintenance cost of the machining department is higher than others. It can be therefore concluded that the cheapest of all the departments is finishing department (Burns, Hopper and Yazdifar, 2004). Company is implementing absorption costing so as to allocate cost appropriate on the basis of labor hour. Henceforth, the organization is suggested to monitor the cost associated with forming department. This in turn results in reducing the total cost of production.

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Be Able To Propose Method To Reduce Costs And Enhance Value Within The Business

Cost report of Buccaneers ltd shows the money incurred on each element of cost such as production cost, material cost, labor cost etc. By using effective method they can reduce their production cost. The report is prepared by using all the financial information of the business. Information or data should be accurate and correct. It should be collected in an effective manner. After proper collection of data, it should be organized, summarized and arranged according to the use of this information. After compiling of all the data, reports of cost should be developed. There are many problems which may arise during the report formulation (Hopwood, 2007). Issues related to inadequacy, irrelevancy, nu-authenticity and shortage must be avoided by the managers. Moreover, the organization should make appropriate estimation of facts and figures since these decide achievement of goals and objectives of the organization. Managers must find out the all errors of report perfectly.

Generally, there are two types of indicators of performance of the business which are as follows:

Financial statements: There are basically tree types of financial statements which show the financial position and performance of the enterprise such as income statement, balance sheet and cash flow statement. These statements help in evaluating financial performance and position of the business unit. It can be said that the profitability, liquidity and efficiency position of the organization is judged through the analysis of statements. These statements will assist in identifying the growth opportunities that exist for the organization (Kastantin, 2005).

Ratio analysis: It is the scientific way of finding out the exact efficiency, effectiveness, profitability, liquidity etc. of the associates. They can compare their performance with existing years as well as with the other enterprise to find out new development, growth and expansion opportunities for the company.

Non financial indicators: Efficiency of the labor, satisfaction level of consumer etc are included in non financial performance indicators, and these can be found out with the help of effective use of research tools and techniques. Company can conduct market research in order to find out valuable and significant data regarding consumers, employees etc.

Cost incurred, value offered and quality delivered of the product are considered to be interrelated elements. The approach of value enhancement emphasizes on rising level of profits and reducing cost of production. However, the approach ensures maintenance of adequate level of quality (Kate-Riin Kont, 2012). They can use many cost controlling techniques and value enhancement methods so as to develop business activities. Moreover, the list of expenditures which have high value can be prepared. This in turn helps in finding out efficient ways to reduce the expenditure. The organization should pay wages as per the nature and quality of work completed by distinct set of employees. The business unit can employ stock and cash controlling techniques such as just-in-time, economic order quantity and so on. These techniques help in reducing cost of holding, insurance and damages. They also can set the priority of different set of expenditures according to the respective prices. Moreover, the top management is responsible to control the high level of expenditure. The organization can adopt the latest technology so as to produce quality products at reasonable price. Moreover, the implementation of novel and fast machinery and equipment can make the production process faster (Kinney and Raiborn, 2012).

• Cost can be reduce with by using just in time, EOQ etc method of inventory control. It is also helpful in improving value of products and services.
• Effective and efficient use of human resource is helpful in improving quality or value and reducing expenditures such as wastage etc.
• Effective cash management and working capital management is also helpful in improving efficiency of the business and finally it is helpful in value enhancement and cost management.

Be Able To Prepare Forecasts And Budgets For a Business

The process of budgeting initiates with the stage of formulation whereby the future forecast for income and expenses are made. The forecasting is done on the basis of past performance of the organization. Once the forecasting is done and budget is prepared; the actual performance is compared to that of budgeted values. This in turn helps in identifying variances which are removed through adoption of appropriate measures. It can be said that the budgeting process helps in quantifying the future performance of the organization. The key purposes of budgeting process are as follows.

• Optimum utilization of financial resources  
• Implementation of strict control mechanism within the organization  
• Motivating individuals.
• Communicating.
• Forecasting income and expenditure.
• A tool of decision making.
• Monitoring business performance.

Budgeting will help to manage limited resources effectively. It provides an appropriate way of allocation of economic resources in an effective manner. The basic purpose of budgeting is decision making and planning (Lillis, 2008). The main aim behind the process is to efficiently plan financial operations of the organization.  Moreover, the adequate level of co-ordination is established in allocation of resources and cost of production. It will help to predict the outcomes of an adjustment before action.

Following are the key methods of budgeting which can be used in the case study.

Incremental budgeting: It is classical and one of very simple methods of budgeting. Moreover, the budget as per incremental budgeting is prepared by continuously increasing financial figures of past years at constant or increasing rate. It will be prepared on consistent basis. The main limitation of this kind of budgets is considered to be its approach to ignore the impact of changes within organization. Moreover, limited amount of efforts are involved in development due to lack of innovation. It can be therefore said that the approach is not considered to be valuable in present dynamic environment (Obura and Bukenya, 2008).

Zero based budgeting: It overcomes the disadvantage of incremental budgeting. This approach says that the managers should start their budgeting with zero bases. They should consider the changes and make a new budget every year by starting with zero level. It is the modern method through which they can allocate resources efficiently. This type of budgeting may be used by the big companies because it requires trained and expert employees.

Top down budgeting: It provides importance on the priority of work done. It says that they should estimate the expenditure of raised level tasks introductory and use this approximation to constrain the calculation for subordinate level. This way takes very fewer time frames than others and appraises upper level loyalty (Standard Costs and Variance Analysis. 2007). This is the method utilized by the company in the present case. Hence, it can be said that it is the best way of controlling and managing variance as it includes less involvement of low level workers of the entity.

Bottom up budgeting: In this technique, budgets are formed by incorporating the input of subordinate level administration. The counsel and procedure are developed by strategic level but budgets are prepared by the individual departments. It is also a good method which can provide full information of activities easily. The company can use this kind of budgets with experienced employees.

Antonio Ltd. can set up their budget with the help of the following procedure.

• Preparation of budget: The process outset with the preparation stage where they estimate the income and expenses within the company (Thomas, 2009). It is the first step of the budgeting.
• Budget implementation: After formulation of various budgets, it's should be implemented in the work environment for decision making and planning.
• Monitoring and evaluation: It is the most important stage of this process. They must monitor their budget’s performance from time to time for modification. The results of budget are evaluated in this step.
• Assessment and computation of variances: After finding out the result of the budget, they will find out the variances by analyzing the budgeted amount and actual performance.
• Modification for better results: Managers can modify the budgets by calculating the variances for better results in near future (Wildavsky, 2006).

Be Able To Monitor Performance

Variances may be characterized as the deviation between the planned and the existent outcomes of the business. This in turn raised positive variance and higher negative variances show the weak budgeting coming of the institution. Positive discrepancy of cost shows that activities are enforced in the aforesaid manner as they are expected. They are performing very well and the methods of controlling of cost are working in the organization. Positive discrepancy of sales, revenue, profit etc. shows that activities are not implemented effectively (Arai, Kitada and Oura, 2013). Minimum variance shows the effectiveness and efficiency of the business as well as their management team.

As per the accumulation, it can be inferred that there are unfavorable discrepancy for the company in the month of May due to wrong estimation of expenses and incomes for this month.  They suffer from the job of proper application of suitable budgeting method which can give them valuable results (Budgetary control. 2011). As per the analysis, it can be said that the work force of the enterprise is not supportive and is not able to achieve the sales target of the business effectively. They should hire efficient employees to achieve the long term objective of the company.

Discrepancy in income is also a huge content. The grounds behind it are that expenditure of labor hours and intermediary are not projected effectively. All the swings show that pricing and costing strategies of the firm are not suited according to the nature of the products and business. They must adopt appropriate pricing schemes for their product. They should accept time series analysis techniques for forecasting because it consider time value of money and can examine the several trends of market. It can also respond to the outlook of the customers in an proper manner (Standard Costs and Variance Analysis. 2007).

The above study is related to application of management accounting in the business environment. In above report it can be reason out that there are various sorts of causes which can fluctuate the result of budgeting. Company should use suitable method for budget preparation to reduce variances. They can control their cost by using cost control models for example just in time, profitable order quantity etc. to cut down the general cost of manufacture. Information collected for budgeting and costing should be accurate and correct to achieve the objective of analysis.

Visit the sample section of our website and enjoy more such informative write-ups written by our Australian assignment help professionals.

• Budgetary control. 2011.
• Burns, J., Hopper, T. and Yazdifar, H., 2004. Management accounting education and training: putting management in and taking accounting out. Qualitative Research in Accounting & Management.
• Hopwood, A.G. 2007. Handbook of management accounting research. Oxford University Press.
• Kastantin, T. J., 2005. Beyond earnings management: Using ratios to predict Enron's collapse. Managerial Finance.
• Kate-Riin Kont, 2012. New cost accounting models in measuring of library employees' performance. Library Management.

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Management Accounting - Assignment Sample

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Management Accounting Assignment - ABC Limited lg ...

Management accounting: techniques and systems lg ..., various aspects of management accounting report lg ..., management accounting techniques and budgetary control lg ..., role of management accounting system lg ..., managing accounting lg ....

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A Complete Accounting Assignment Guide: Format, Sample, And Examples

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The field of accounting is vast, and so is its study. When a student is enrolled in this discipline, they generally deal with topics like a ledger, profit, and loss account, LIFO, trial balance, ratio analysis, FIFO, balance sheets, income statements, etc. Many students are stuck with these accounting topics and need accounting assignment examples to clarify doubts.

If you are among them, you have come to the correct destination. Here, you will find details like examples of accounting assignments, formats, and specific writing tips explained by our subject matter experts.

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Examples of accounting assignments and their formats.

During the study of accounting, students are required to undergo several assignments. Some of the accounting assignment examples are defined below for your reference.

While dealing with an accounting essay, the writer uses facts and data to support their argument. The structure of an essay includes the following –

Introduction

The introduction gives your audience some context and illustrates why it is significant. It also provides a general summary of your approach to responding to the query. Students who face issues writing the introduction part can consult our accounting experts to get an example of an introduction for an accounting assignment.

• You must answer the essay question in the body.
• You must carefully plan out this section of the assignment so that you may include the details that will support your answer.
• Usually, you have to examine a distinct point of view, which calls for combining numerous concepts from various sources.
• This section reaffirms the essay's central theme and offers an overview of the crucial ideas discussed.
• Additionally, you could be asked to provide suggestions or quickly discuss any ramifications of the arguments you've made in your essay.
• All of the resources you referenced in your essay are in the reference list.
• It always appears on a different page.

A report offers information that has been organized concerning a topic or issue that is being looked at. The knowledge may be gleaned via personal experience, reading, study, experimentation, or measurements.

Report Structure

Contingent on the field and goal, reports might have various structures. A sample report structure is provided below, but you must go through the assignment guidelines and instructions to determine the structure or format you need to follow.

Literature Reviews

A literature review might form an assignment in which the goal is to summarise the most critical studies pertinent to your subject. If it is a component of a more extensive work, such as a research report or thesis, the goal is to justify the necessity for more study on the subject you have selected.

In a brief literature review, the opening typically consists of one paragraph, whereas in a lengthier study, it may consist of many sections defining the organization, topic, and scope of the review.

• Each section in a literature review typically addresses one main subject or subtopic.
• A summary that connects the topic to the primary goal of the study area concludes each section.
• The essential ideas that emerged from the literature review are summarised in the conclusion.

Are you a student encountering trouble writing the example conclusion for the accounting assignment (literature review)? If yes, then join hands with our accounting professionals. They will assist you in the best possible manner.

How To Frame A Management Assignment Professionally

Easy tips for writing accounting assignments.

Once you have understood the types of accounting assignments covered under our  accounting assignment help , the time has come to know the practical tips to deal with your work. Let's read!

Developing A Theory:  Writing an accounting assignment sample requires addressing the significance of the components that aid in comprehending how the topic is built and implemented. The approach employed to validate the topic sentences must also be developed.

Discover More About Accounting Systems And Applications:  Students can learn about accounting and its applications while completing an accounting assignment answer. They better understand the issues and solutions for the financial accounting assignment in this way.

Knowing The Subject:  Some tasks need accounting assignment help. You must comprehend the subject and seek assistance if you experience any problems or need help to finish the example of an introduction for an accounting project on time. They are accessible at all times to give you the finest advice.

Exercise Work:  It may be more complex than it first seems to write accounting assignments. Accounting and finance books should be read, and one requires a lot of practice.

Perfect Outline:  For the accounting task, you must write a flawless overview. It is simple for a writer to accomplish the project thanks to its structure and layout. To ensure that the assignment is read correctly, you must effectively provide all the data and facts.

Discussion:  The conclusion of the assignment depends heavily on a solid discussion and evaluation.

Proofread:  After doing its work, you must invest some time proving it. During reviewing, you must fix any spelling, grammar, or punctuation errors that may have occurred.

Following the above tips will help you write your accounting assignment. In case you need further assistance, then avail our  assignment writing services . This service is available 24 hours in your region so that you can avail of  assignment help anytime.

ILM Level 3 Assignment With Examples

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Management accounting in Excel with examples

Management accounting is designed to represent the actual state of the enterprise business. Managerial decisions are made on the basis of management accounting data. This is a system of tables and reports with a convenient daily analysis of cash flows, profits and losses, payments to suppliers and buyers, cost of production, etc.

Each firm chooses a way of conducting the Management accounting and the data necessary for analytics. Most often, the tables are compiled in Excel.

Examples of management accounting in Excel

The main financial documents of the enterprise are a statement of cash flows and a balance sheet. The first one shows the level of sales, the cost of production and sales of goods for a certain period of time. The second one shows the assets and liabilities of the company, equity. The manager notices positive and negative trends and makes managerial decisions comparing these reports.

Directories

Let's describe the work accounting in a café. The enterprise sells its own production and purchased goods. There are non-operating incomes and expenses.

The Excel management accounting table is applied to automate the data introduction. It is also recommended to compile directories and journals with initial values.

• Types of counterparties. The café cooperates with suppliers of sanitary clothes, table linen, dishes food products, equipment for storage, processing, sorting and packing of goods. In the same list you can bring in banks, utilities providers, etc.

• Expenditures. The list depends on the work of a particular catering point.

If the economist (accountant, analyst) plans to record income items, then the same directory can be created for this purpose.

Convenient and easy to understand reports

You do not need to contain in one report all the figures for the café activity. Let these be separate tables and each takes one page. It is recommended to use such tools as "down lists". Let's consider an example of the café management account tables in Excel.

Income recognition

Let's take a closer look. The resulting indicators are found using formulas (conventional mathematical operators are applied). Filling the table is automated using drop-down lists.

Refer to the Income Generated Directory when creating a list (Data - Data verification).

Expense recognition

We used the same methods to fill out the report.

Profits and Losses Report

Most often the income statement is used for the purposes of management accounting, instead of using separate income and expenses reports. This provision is not standardized. Therefore, each company chooses source reports independently.

In the created report you use formulas to calculate results. This process includes AutoFill of items using drop-down lists (links to Directories) and grouping of data

Analysis of the structure of cafe property

The source of information for analysis is the Balance Sheet (1 and 2 sections).

Let's draw up a diagram for better understanding the information:

The table and figure shows that the main share in the property structure of the analyzed cafe is occupied by non-current assets.

Download management accounting example

The liabilities in the balance sheet is analyzed by the same principle. These are the sources of resources through which the cafe operates.

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Unit 9 Management Accounting Assignment Sample

Introduction

Budgeting is an essential element for the smooth conduct of the business in an organization. The budgets are prepared for determine the needs of the companies regarding the requirement of funding and the effective allocation of the available resources in the operations of the company. The report has been prepared indicating the impact of various types of costs on the business of the organization. The report includes the explanation of the nature and behaviour of the costs along with the description of the various methods of costing. The favourable and adverse variance of cost has been determined and analysed along with the specification of the purpose for which the budgets are prepared in the organizations

AC 3.1 Explain the purpose and nature of the budgeting process

Budget is the process of planning the expenses of the company. The budgeting is done in an organization to determine whether the company has sufficient funds to meet the expenses of the organization. The budget has been prepared by the finance department of the company and help in the forecasting of the financial resources requirements of the organization. The budget is the plan of the sales and revenues to be generated for a given period of time (Alino & Schneider, 2012). There are several purposes for the preparation of the budget;

• The major purpose of budgeting is to forecast the sales, cost and expenses of the organization.
• The performance of the company can be measured with the help of budgeting.
• Decision making process can be possible to be performed effectively and efficiently in the organization.
• The budget makes the organization possible to evaluate the availability of the funds in the company (Alino & Schneider, 2012).
• The prior planning of the budget is done to allocate the resources of the organization in an effective manner.
• Control can be maintained and monitored in the organization for the betterment of the operations in all departments.
• The budget prepared in the organization provides the direction to the company for the achievement of the organizational goals and objectives.
• The cash flow of the company can be predicted in advance so that the company can utilize the available resources in the organization (Alino & Schneider, 2012).
• With the effective budget process, coordination among the managers in an organization can be developed in order to maintain the minimum cost in the production process.
• One of the important elements of budgeting process is to eliminate or reduce the risk in the business of the company.

AC3.2 Budgets can be produced for different purpose and needs. You are required to select appropriate budgeting methods for the organization and its needs.

There are different budgeting methods that are used in an organization. The companies select the appropriate budgeting methods according to the needs and nature of the organization. Some of the methods of budgeting are; Zero based budgeting: The budget in the zero based budgeting starts from the zero. The process of budgeting in this method starts from zero bases and determining the allocation of the resources in each department of the organization along with the review of the budget on regular intervals. There are several steps that are performed in the zero based budgeting which includes the decision making activities of the managers and the efforts of the managers are focused on the reduction in the costs as well as elimination of duplication of activities (Glass & Prinzivalli, 2014). The needs of zero based budgeting are ;

• The zero based budgeting ensures the accuracy and efficiency in the preparation of budget.
• The method of zero based budgeting is helpful in the determination of the cost effective operations in the business of the organization.

The decision making process of the organization is improved as the managers are involved in effective decision making regarding the reduction of cost. Incremental budgeting: For the purpose of the preparation of the incremental budget, the previous budget and the actual performance of the organization is taken into consideration in order to prepare the forecasted budget for the company which focuses on the increments in the cost and the added amount in the budget. The process for the preparation of the incremental budgeting is simple as only incremental changes are added in the new budget in comparison to the budget of the previous year. The incremental method of budgeting is suitable only to those organizations which have the fixed costing and there are not many deviations of cash flows in the operations of the organization (Alino & Schneider, 2012).

The needs of incremental budgeting are;

• The incremental budgeting process is simple as it does not contain the process of preparing a fresh budget and the new budget is prepared taking into consideration the previously prepared budget.
• The departments of the organization have the stable operations and this benefits the organization in performing the operations effectively.
• The funds are available for the organization on the continuous basis.
• The changes that affect the business of the organization can be detected timely (Alino & Schneider, 2012).

AC 3.3 various kinds of Budgets

Ac 3.4 cash budget.

Notes to cash budget

• It is given that total sales are converted 60% into cash in the month of sales and rest 40 % is received in the month succeeding the sales.
• Regarding purchase units is was given that purchases are made for the next month production to be made, that is there is lag between purchases and transferring the raw material to the production department.
• Purchases payment is made in the succeeding month of purchase
• Depreciation cost of 400 per month is reduced from the total overhead cost as it is a non cash cost

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AC 4.1 Variance statements

Ac 4.2 reconciliation statement, ac 4.3 report findings to management in accordance with identified responsibility centres.

The budget prepared can’t be chosen because the overall variance is unfavourable. The organisation has to increase its budgets in labour and sales units and price respectively such that we can there do not exist budget deviation or labour has to work efficiently and management require skilled labour which in turns reduces labour hours and actual performance get increased and company will get closer to budgets (Lidia&T.G.2014).

The report concludes that budget planning plays an important role in the successful planning of the business strategy . The report explained the performance indicators with the analysis of the variance and the needs and the purpose of the budgets has been explained. The report focuses on the methods that are used for the purpose of preparation of the budgets that depends on the nature of the organizations. The report has also determined the liquidity position of ABC Limited and the uses of the standard costing have been specified. Presentation of data with the uses of tables and graphs has been presented in the report.

"Job costing software simplifies quoting process", 2016, MoldMaking Technology, vol. 19, no. 7, pp. 13. Alino, N.U. & Schneider, G.P. 2012, "Conflict reduction in organization design: budgeting and accounting control systems", Academy of Strategic Management Journal, vol. 11, no. 1, pp. 1. Butt, M. 2010, "Variance analysis", Accounting, Auditing & Accountability Journal, vol. 23, no. 6, pp. 816-816. Ciftci, M., Mashruwala, R. & Weiss, D. 2016, "Implications of Cost Behavior for Analysts' Earnings Forecasts", Journal of Management Accounting Research, vol. 28, no. 1, pp. 57-80. Citrin, L. & Blath, R. 2013, "Critical management tools for getting costs under control", Physician executive, vol. 39, no. 6, pp. 28. Frow, N., Marginson, D. & Ogden, S. 2010, "“Continuous” budgeting: Reconciling budget flexibility with budgetary control", Accounting, Organizations and Society, vol. 35, no. 4, pp. 444-461. Gamsakhurdia, T. & Maisuradze, K. 2015, "THE THEORETICAL AND PRACTICAL ASPECT OF SELECTING THE CAPITAL BUDGETING METHODS", European Scientific Journal,  . Glass, V., Stefanova, S. & Prinzivalli, J. 2014, "Zero-based budgeting: Does it make sense for universal service reform?", Government Information Quarterly, vol. 31, no. 1, pp. 84. Hernandez, L., Jonker, N. & Kosse, A. 2016, "Cash versus Debit Card: The Role of Budget Control: Cash Versus Debit Card: The Role of Budget Control", Journal of Consumer Affairs,  . Jesswein, K.R. 2010, "The changing LIFO-FIFO dilemma and its importance to the analysis of financial statements", Academy of Accounting and Financial Studies Journal, vol. 14, no. 1, pp. 53. Lidia, T.G. 2014, "Difficulties of the Budgeting Process and Factors Leading to the Decision to Implement this Management Tool", Procedia Economics and Finance, vol. 15, pp. 466-473. Pompilio, D. 2010, "The choice between LIFO, FIFO and mark-to-market accounting in the estimation of securities damages", Company and Securities Law Journal, vol. 28, no. 4, pp. 243. Ray, P. & Jenamani, M. 2015;2016;, "Mean-variance analysis of sourcing decision under disruption risk", European Journal of Operational Research, vol. 250, no. 2, pp. 679. Sedgwick, P. 2011, "Sampling methods I",  BMJ : British Medical Journal (Online), vol. 342.

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• Module 0: Personal Accounting— Assignment: Creating a Budget
• Module 1: The Role of Accounting in Business— Assignment: Lopez Consulting
• Module 2: Accounting Principles— Assignment: Accounting Principles
• Module 3: Recording Business Transactions— Assignment: Recording Business Transactions
• Module 4: Completing the Accounting Cycle— Assignment: Completing the Accounting Cycle
• Module 5: Accounting for Cash— Assignment: Accounting for Cash
• Module 6: Receivables and Revenue— Assignment: Manilow Aging Analysis
• Module 7: Merchandising Operations— Assignment: Merchandising Operations
• Module 8: Inventory Valuation Methods— Assignment: Inventory Valuation Methods
• Module 9: Property, Plant, and Equipment— Assignment: Property, Plant, and Equipment
• Module 10: Other Assets— Assignment: Other Current and Noncurrent Assets
• Module 11: Current Liabilities— Assignment: Calculating Payroll at Kipley Co
• Module 12: Non-Current Liabilities— Assignment: Non-Current Liabilities
• Module 13: Accounting for Corporations— Assignment: Collins Mfg Stockholders’ Equity
• Module 14: Statement of Cash Flows— Assignment: Kachina Sports Company Cash Flows
• Module 15: Financial Statement Analysis— Assignment: Coca Cola FSA

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• Module 0: Personal Accounting— Discussion: Winning the Lottery
• Module 1: The Role of Accounting in Business— Discussion: The Crafty Coffee Crook
• Module 2: Accounting Principles— Discussion: SoftSheets
• Module 3: Recording Business Transactions— Discussion: Baker’s Breakfast Bars
• Module 4: Completing the Accounting Cycle— Discussion: Closing the Books in QuickBooks
• Module 5: Accounting for Cash— Discussion: Counter Culture Cafe
• Module 6: Receivables and Revenue— Discussion: Maximizing Revenue
• Module 7: Merchandising Operations— Discussion: Inventory Controls
• Module 8: Inventory Valuation Methods— Discussion: LIFO, FIFO, Specific Identification, and Weighted Average
• Module 9: Property, Plant, and Equipment— Discussion: Cooking the Books
• Module 10: Other Assets— Discussion: Other Assets
• Module 11: Current Liabilities— Discussion: Current Liabilities
• Module 12: Non-Current Liabilities— Discussion: Off-Balance Sheet Financing
• Module 13: Accounting for Corporations— Discussion: Home Depot
• Module 14: Statement of Cash Flows— Discussion: Facebook, Inc.
• Module 15: Financial Statement Analysis— Discussion: Financial Statement Analysis

Alternative Excel-Based Assignments

For Modules 3–15, additional excel-based assignments are available below.

Module 3: Recording Business Transactions

• Module 3 Excel Assignment A
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Module 5: Accounting for Cash

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Module 6: Receivables and Revenue

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Module 7: Merchandising Operations

• Module 7 Excel Assignment

Module 8: Inventory Valuation Methods

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• Module 8 Excel Assignment B
• Module 8 Excel Assignment C

Module 9: Property, Plant, and Equipment

• Module 9 Excel Assignment A
• Module 9 Excel Assignment B

Module 10: Other Assets

• Module 10 Excel Assignment

Module 11: Current Liabilities

• Module 11 Excel Assignment

Module 12: Non-Current Liabilities

• Module 12 Excel Assignment A
• Module 12 Excel Assignment B

Module 13: Accounting for Corporations

• Module 13 Excel Assignment A
• Module 13 Excel Assignment B
• Module 13 Excel Assignment C

Module 14: Statement of Cash Flows

• Module 14 Excel Assignment A
• Module 14 Excel Assignment B

Module 15: Financial Statement Analysis

• Module 15 Excel Assignment

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Unit 5 Management Accounting

P1. explain management accounting and give the essential requirements of different types of management accounting systems, p2. explain different methods used for management accounting reporting, p3 preparation of income statement by using marginal and absorption costing.

Management accounting is the process by which financial statistical information are put together. Management accounting is used to produce reports annually which are used by managers on a day to day basis to make decisions for the company.

• Cost analysis in a company day to day decisions need to be made. For example a company is unsure where to focus and how to sell their products etc then they need to see the financial side of their business. This is where management accounting assignment helps in financial decision making.
• Management accounting provides a data-driven look at how to grow a small business budgeting. Management accounting is very beneficial to a company in providing the financial side of the business which helps the company to always improve their business by making decisions and changes.
• Inventory accounting systems are used to plan and track inventory levels and inventory related activities. One of the most common inventory system is bad code tracking this is where each of the item is tagged with a bar code. As the inventory items are brought into a warehouse the bar codes are scanned to add or subtract from inventory. Bar code systems can be also used to track for and account for items as they are moved around the warehouse.
• Industry-specific accounting- Accounting systems also include industry-specific applications. A retail accounting system, for example, has different requirements than in other industries. Sales are captured at the point of sale using computerized point-of-sale cash registers. When items go on sale, the retail accounting system must track and properly report on merchandise markdowns. Legal accounting software has other specific requirements as well, including the tracking of time spent by attorneys, dollar amount of time billed out based on an hourly rate and the utilization rate of each attorney.

The benefits of management accounting systems

• Management accounting is very beneficial to every business JJD gets many benefits from management accounting. Management accounting helps JJD carry out planning for its future. Management accounting reports contain detailed reports of specific products, market research and regional information therefore JJD knows which area of their business they were to invest in.
• Management accounting is also beneficial because it gives JJD greater control over their business. Due to the analyzed report, JJD knows which area to focus on and which areas they need to improve in.
• Management accounting helps JJD lower their operational expenses. JJD uses management accounting information to review the cost of economic resources. In the past JJD has used valuable information from JJD accounting and changed the way of shipping in order to cut down on shipping costs. In the past JJD had only one warehouse from which it had to ship all over the u but now it has 5 warehouses which cuts down on their petrol usage and saves their shipping costs.
• JJD has also used management accounting in order to improve cash flow. Their management accounting reports created have given them a superb budget for their entire company. This has helped JJD to save some of those extra unnecessary expenses that are not really needed in the company.
• Cost accounting is an approach to evaluate the overall costs that are associated with conducting business. Cost accounting is used in general by managers in order to utilize to determine what type and how many expenses with maintaining the current business model.
• Performance reports are calculated every year however some companies create it monthly and quarterly as well. Managerial accountants use budgets to compare actual budgeted amounts. The differences calculated are analyzed calculated when determining new budgets and all information regarding these amounts is listed in a performance report.
• Throughput accounting is a new concept relating to the basic principles of management accounting. Throughput accounting concept was developed by Eli goldrath an Israeli business management guru and originator of theory of constraint.

Accrual accounting- If a company uses   accrual accounting,   it records revenue when the actual transaction is completed (such as the completion of work specified in a contract agreement between the company and its customer), not when it receives the cash. That is, the company records revenue when it earns it, even if the customer hasn’t paid yet. For example, a carpentry contractor who uses accrual accounting records the revenue earned when he completes the job, even if the customer hasn’t paid the final bill yet.

Expenses are handled in the same way. The company records any expenses when they’re incurred, even if it hasn’t paid for the supplies yet. For example, when a carpenter buys lumber for a job, he may very likely do so on account and not actually lay out the cash for the lumber until a month or so later when he gets the bill.

Marginal and absorption costing system both are important for the company. By using both of these approaches, profit calculation can be done by the business firm. Income statement refers to the statement where cash inflow amount which is revenue and outflow elements like varied sort of expenses are included. From revenue expenses values are subtracted to identify whether company earn profit or loss in its business. Usually, from sales revenue direct expenses are subtracted and in this way, gross profit value is computed. Thereafter, from gross profit amount, indirect expenses are subtracted and by doing so, net profit amount is calculated (Zimmerman and Yahya-Zadeh, 2011). Thus, it is assumed that income statement have significance for the firms. In management accounting, income statement can be prepared in two ways which are marginal and absorption costing method. There is large difference between both approaches because calculation method vary in case of these methods. It MC method,out of FC and VC exclusively expenses that are not stable in nature are taken in to account. Apart from this, in absorption costing,all sort of expenses are considered for costing purpose and profit calculation. Due to this reason, profit amount revealed by both these approaches are also different from each other. Marginal costing method reflects higher amount of net profit then absorption costing method. However, this does not mean that specific calculation approach is more effective than other approach.This is because fixed expenses are not incurred directly in production of goods (Macintosh and Quattrone, 2010). Hence, manager is always interested in knowing whether variable expenses have high, low or moderate impact on the firm profitability. On other hand, manager would like to use absorption costing method. One of the main reason behind such kind of belief is thatall sort of expenditures are included in the calculation process. Fixed expenses are directly not related to production of goods and services but fixed assets are used by the business firms for production of goods. Hence, it can be said that it is very important to take in to account fixed expenses in profit calculation. So, there is significance of both marginal and absorption costing methods for the business firms (Baldvinsdottir, Mitchell and Nørreklit, 2010). It depends on the manager requirements and discretion that which approach of profit calculation it think is more appropriate for the company. It means that there are advantages of using both approaches to managers in respect to making business decisions. However, most of times managers prefer to use marginal costing method in the business. This is because they give much importance to the expenses that are directly related to the production of goods and services at workplace.

Table 1: Profit by absorption costing method

It can be observed that in case of absorption costing method, net profit amount to 900. Under this, first of all sales revenue amount is recorded which is 100000 and thereafter, from cost of production closing stock amount is deducted. From sales cost of goods sold value is subtracted and in this way gross profit amount is calculated. Variable expenses are listed in the calculation table and it can be observed that variable sales indirect expense amount to 6000 followed by fixed cost production overhead value which is 8000 and administration expenses whose value is 7000 followed by selling cost whose value is 100. On this basis, it can be said that systematic approach is followed for calculation purpose. From gross profit amount, all expenses are subtracted and by doing so, net profit is computed whose value is 900.

Table 2: Profit by marginal costing method

In case of marginal cost method, sales value again is 100000 and like absorption costing method from cost of production closing stock amount is subtracted in marginal costing method. Fixed overhead expenses are subtracted from newly computed value. In this way, overall production cost of sales is calculated. From sales revenue amount 85900 value is subtracted and in this way gross profit amount is calculated. Finally, from gross profit variable expenses are subtracted and in respect to fixed cost only, fixed cost administration cost is subtracted. Here major, difference comes between fixed and marginal costing method at a point where fixed production expenses were subtracted along with variable expenses in absorption cost but in marginal costing, fixed production overhead are directly deducted from sales (Lukka and Modell, 2010). Hence, profit amount vary for MC and AC method as it may be observed that in MC method, profit amount is 1000 and same in case of AC method is 900. Thus, it is clear that there is difference in the profit amount that is computed by using marginal and absorption costing methods. Managers must use both these methods for profit calculation and must use both of them to make business decisions. Like financial models, calculation models in respect to marginal and absorption costing can be developed and by changing values of fixed and variable expenses, it can be identified that with change in these expenses, what sort of variation comes in profit amount. Such kind of models can assist firm in making business decisions in respect to setting of target for fixed and variable expenses which assist firm in earning determined amount of profit in the business. It may be assumed that MC and AC method have significance for the firms and managers because by using these approaches in different manner profit calculation can be done and performance can be accessed. Hence, managers must use both these approaches to make business decisions.

What are common concepts and techniques of managerial accounting?

 http://www.investopedia.com/ask/answers/062915/what-are-common-concepts-and-techniques-managerial-accounting.asp

In-text:   (Tarver, 2017)

Your References:   Tarver, E. (2017).   What are common concepts and techniques of managerial accounting? . [online] Investopedia. Available at: http://www.investopedia.com/ask/answers/062915/what-are-common-concepts-and-techniques-managerial-accounting.asp [Accessed 30 Oct. 2017].

HE IMPORTANCE OF MANAGEMENT ACCOUNTING FOR PROFESSIONAL ACCOUNTANTS IN BUSINESS – GAA ACCOUNTING

 Drilling data Much of management accounting focuses on the analysis of data, experts say, and how that data is acquired and analysed differentiates the management accountant from the auditor. As K.M. Wong, Group Manager, Finance and Accounting, at Power Assets Holdings and an Institute Council member, points out, “one of an accountant’s essential functions is providing useful information to company management.”

In-text:   (Gaaaccounting.com, 2017)

Your Bibliography:   Gaaaccounting.com. (2017).   The Importance of Management Accounting for Professional Accountants in Business – GAA Accounting . [online] Available at: http://www.gaaaccounting.com/the-

Baldvinsdottir, G., Mitchell, F. and Nørreklit, H., 2010. Issues in the relationship between theory and practice in management accounting.   Management Accounting Research .  21(2). pp.79-82.

Lukka, K. and Modell, S., 2010. Validation in interpretive management accounting research.   Accounting, organizations and society .  35(4). pp.462-477.

Macintosh, N.B. and Quattrone, P., 2010.   Management accounting and control systems: An organizational and sociological approach . John Wiley & Sons.

Zimmerman, J.L. and Yahya-Zadeh, M., 2011. Accounting for decision making and control.   Issues in Accounting Education .  26(1). pp.258-259.

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Wednesday, march 12, 2008, management accounting - 1.

Select The Blank Question Furniture account will always have a ________ balance. Correct Answer Debit Your Answer Nil Multiple Choice Multiple Answer Question Accounting is the art where transactions are … Correct Answer Summarized , Classified , Recorded Your Answer Summarized , Classified , Recorded True/False Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Correct Answer False Your Answer False Select The Blank Question The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Correct Answer Total variable overhead Your Answer Total variable overhead True/False Question Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Correct Answer True Your Answer True Select The Blank Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc. Correct Answer Accounting period Your Answer Accounting period True/False Question Standard costs are used for external reporting. Correct Answer False Your Answer False True/False Question It is said that the income statement represents wealth increase /decrease for the organisation. Correct Answer True Your Answer False Multiple Choice Single Answer Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads ? Correct Answer Rs.300,000/- Your Answer Rs.200,000/- Multiple Choice Multiple Answer Question The factors to be considered while preparing the direct materials budget are : Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for specific purposes Your Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for specific purposes Multiple Choice Multiple Answer Question In which of the following situations, the flexible budget should be preferred? Correct Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity Your Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity Multiple Choice Multiple Answer Question Techniques of management accounting include: Correct Answer Marginal costing , Budgetary control , Standard costing Your Answer Marginal costing , Cost control , Budgetary control , Standard costing Match The Following Question Correct Answer Your Answer Profit and loss account Commission received Dividend paid Manufacturing account Work in Progress Land & Building Balance Sheet Land & Building Closing stock of finished goods Trading account Closing stock of finished goods Work in Progress True/False Question While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts Your Answer Increase the selling price , Increase the sales volume , Increase the selling efforts Multiple Choice Multiple Answer Question From the following, select intangible assets: Correct Answer Goodwill , Patents , Trade Marks Your Answer Patents , Trade Marks , Investments True/False Question Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. Correct Answer True Your Answer False Multiple Choice Single Answer Question Find the budget which is inadequate as a cost control technique : Correct Answer Fixed budget Your Answer Fixed budget True/False Question Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices. Correct Answer True Your Answer True Multiple Choice Single Answer Question Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and closing stock Rs.1,47,750/-. Calculate the Gross Profit. Correct Answer Rs.3,00,000/- Your Answer Rs.3,00,000/- Select The Blank Question ________ is an example of intangible asset. Correct Answer Goodwill Your Answer Land True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Your Answer True True/False Question Goods sent to the customers on approval basis should be treated as sales. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Features of Sunk cost are . . . Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past Your Answer Indicates historical cost , Incurred in past , Relevant in decision making process True/False Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Your Answer True True/False Question A business is an activity carried out with the intention of earning the profit. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Identify the steps involved in selecting the optimum product mix, when the limiting factor is number of labour hours and sales demand. Correct Answer For each product find the contribution per unit and per labour hour , Award ranks to each of the products based on contribution per limiting factor , Priority is given to fulfill the market demand of the product which gives maximum contribution per labour hour. Your Answer For each product find the contribution per unit and per labour hour , Award ranks to each of the products based on contribution per limiting factor , Priority is given to fulfill the market demand of the product which gives maximum contribution per labour hour. Multiple Choice Multiple Answer Question Techniques of management accounting include: Correct Answer Marginal costing , Budgetary control , Standard costing Your Answer Marginal costing , Cost control , Budgetary control True/False Question The ideal budget period for a company engaged in generation and distribution of electricity is one year. Correct Answer False Your Answer False Select The Blank Question The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year. Correct Answer Depreciation Your Answer Depreciation True/False Question According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged. Correct Answer True Your Answer True Select The Blank Question Crane expenses should be apportioned on the basis of ________. Correct Answer Number of hours crane worked in the department Your Answer Number of hours crane worked in the department Multiple Choice Multiple Answer Question Essentials for effective implementation of budgetary control system are Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education Your Answer Commitment of top management , Clearly defined objectives , Continous budget education Multiple Choice Single Answer Question Commission payable to General Manager is 10 % of the net profits. If the net profit before charging commission is Rs.29,200/-, then what will be the amount of his net profit after commission? Correct Answer Rs.26,545.45 Your Answer Rs.29,200/- Select The Blank Question A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed. Correct Answer Budget Your Answer Budget True/False Question A very wide scope of Management Accounting is the limitation by itself. Correct Answer True Your Answer True Select The Blank Question The combination in which different products are sold by a company is known as ________. Correct Answer Sales mix Your Answer Sales mix Multiple Choice Single Answer Question The reporting method used in the costing system should be based on the principle of Correct Answer Management by exception Your Answer Management by objectives True/False Question Balance sheet indicates the financial status of the business at given period. Correct Answer True Your Answer True Multiple Choice Single Answer Question The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribuiton department shoud be charged as: Correct Answer Service costs Your Answer Service costs Multiple Choice Single Answer Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as Correct Answer Drawings Your Answer Capital Select The Blank Question Measurement of ________ gives an idea of the degree of mobility of labour. Correct Answer Labour turnover Your Answer Labour turnover Multiple Choice Single Answer Question Net profit for the year before charging commission to the manager, is Rs.111,775/-. The manager of the company is entitled to commission @ 8% on net profits after charging commission. Find the amount of commission due to the manager. Correct Answer Rs.8,279.63 Your Answer Rs.8,942/- Match The Following Question Correct Answer Your Answer Total cost Cost of finished goods Cost of finished goods Non operating income Profit on sale of investment Profit on sale of investment Selling and distribution overheads Advertisement expenses Advertisement expenses Factory overheads Repair for factory building Repair for factory building True/False Question Control on purchase of material is exercised by the storekeeper. Correct Answer False Your Answer True Multiple Choice Single Answer Question A company wishes to earn a 15% profit margin on selling price when quoting for a job. Which of the following is the profit margin of cost which will achieve the required profit margin ? Correct Answer 0.1765 Your Answer 0.15 Select The Blank Question Economical use of labour, materials and facilities can achieved with the help of ________. Correct Answer Budgetary control Your Answer Cost control

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