Management Accounting Case | Question and Answer

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author’s Note:

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MANAGEMENT ACCOUNTING
Table of Contents
Question 1......................................................................................................................2
Question 2......................................................................................................................3
Part a...........................................................................................................................3
Part b..........................................................................................................................3
Part c...........................................................................................................................4
Question 3......................................................................................................................4
Part a...........................................................................................................................4
Part b..........................................................................................................................5
Question 4......................................................................................................................6
Part a...........................................................................................................................6
Part b..........................................................................................................................7
Question 5......................................................................................................................7
Question 6......................................................................................................................8
Part a...........................................................................................................................8
Part b..........................................................................................................................9
Bibliography...................................................................................................................9

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Question 1
As per the case, Anni-Frid and Benny wants to appoint a management accountant for
properly conducting the operations of the business. Anni-Frid and Benny appoints Bjorn as a
management accounting for the business. It is to be noted that Qualification of Bjorn is not
apt for the post. As per the ethical regulations which are set by Institute of Management
Accountants has been violated. The provisions of Competency standards, management
accounts need to maintain appropriate level of professional expertise by continually
developing knowledge and skills. The management accountant needs to have proper
qualification and maintain competence while conducting the duties of a management
accountant.
Question 2
Part a
Particular
Fixed
Costs
Variable
Costs
Direct
Costs
Indirect
Costs
Product
Costs
Period
Costs
Rent   
Warehouse rent   
Administrative Costs for
Staff   
Commission   
Invoicing system fees   
Miscellaneous Costs   
Full Time employee fee   
Miscellaneous costs of
Warehouse   
Delivery Costs   
Fabric   
Timber   
Foam   
Button stud   
Varnish   
Bolt   
Woodworking costs   

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MANAGEMENT ACCOUNTING
Assembling costs   
Varnishing Costs   
Part b
Quarter Delivery costs Units Delivered
First $ 360.00 125
Second $ 400.00 150
Third $ 340.00 125
Quarter $ 300.00 100
Total $ 1,400.00 500
Highest Activity Costs $ 400.00
Lowest Activity Costs $ 300.00
Highest units delivered 150
Lowests Units Delivered 100
Variable Costs Per Unit $ 2.00
Fixed Costs $ 100.00
Part c
Computation of Total Product Costs
Particulars Amt $
Rent 20000
Warehouse rent 30000
Administrative Costs for Staff 100000
Commission 35000
Invoicing system fees 500
Miscellaneous Costs 4000
Full Time employee fee 80000
Miscellaneous costs of Warehouse 5000
Delivery Costs 1400
Fabric 3000
Timber 36000
Foam 150
Button stud 450
Varnish 10000
Bolt 500
Woodworking costs 87500

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Assembling costs 12500
Varnishing Costs 35000
Total Product Costs 461000
Unit Product Costs 922
Question 3
Part a
Particulars Unit Price per unit Amt $
Sales 500 $ 1,000.00 500000
Less: Variable Costs 500
Commission 500 $ 70.00 35000
Invoicing System Fees 500 $ 1.00 500
Miscellanous Costs 500 4000
Miscellanous costs of Warehouse 500 5000
Delivery Costs 500 1400
Fabric 500 3000
Timber 500 36000
Foam 500 150
Button stud 500 450
Varnish 500 10000
Bolt 500 500
Woodworking costs 500 $ 35.00 87500
Assembling costs 500 $ 25.00 12500
Varnishing Costs 500 $ 35.00 35000
Total Variabke Costs 500 231000
Contribution Margin 500 269000
Less: Fixed Cpsts 500
Rent 500 20000
Warehouse rent 500 30000
Amnistrative Costs for Staff 500 100000
Full time employee wages 500 80000
Total Fixed Costs 500 230000
Profits 500 39000
Part b
Profit and loss A/c Absorbtion Costing System)
Particulars Unit Price per unit Amt $

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Sales 500 1000 500000
Direct Material Costs
Fabric 500 3000
Timber 500 36000
Foam 500 150
Button stud 500 450
Varnish 500 10000
Bolt 500 500
Total Direct Material 50100
Direct Labour costs
Woodworking costs 500 $ 35.00 87500
Assembling costs 500 $ 25.00 12500
Varnishing Costs 500 $ 35.00 35000
Total Direct Labour 135000
Variable Maunufacturing Overhead
Commission 500 70 35000
Invoicing System Fees 500 1 500
Miscellanous Costs 500 4000
Miscellanous costs of Warehouse 5000
Delivery Costs 1400
Total Variable Overheads 45900
Fixed Overheads
Rent 500 20000
Warehouse rent 500 30000
Amnistrative Costs for Staff 500 100000
Full time employee wages 500 80000
Total Fixed Overhead 230000
Profits 39000
Question 4
Part a
Particulars Amt$
Manufacturing Costs
Fabric 3600
Timber 43200
Foam 180
Button stud 540
Varnish 12000
Bolt 600
Woodworking costs 105000

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Assembling costs 15000
Varnishing Costs 42000
Direct Manufacturing costs 222120
Rent 20000
Warehouse rent 30000
Amnistrative Costs for Staff 100000
Commission 42000
Invoicing ystem fees 600
Miscellanous Costs 4000
Full Time employee fee 80000
Miscellanous costs of Warehouse 5000
Delivery Costs 1600
Indirect Manufacturing costs 283200
Total Manufacturing costs 505320
Direct Labour hours 4800
Overhead per direct labour hours 59
Part b
The analysis of the indirect activities of the business reveals that woodwork would
have the higher allocation of the overhead costs for the business as the same forms part of the
indirect costs activities of the business considering the level of operations in the current year.
The company is looking to expand the level of their production and thereby the same would
also result in increase in the costs of operations and also increase in different overhead costs
for the business.
Question 5
Profit and loss A/c
Particulars Unit Price per unit Amt $
Variable Costs 500
Commission 500 $ 70.00 35000
Invoicing System Fees 500 $ 1.00 500
Miscellanous Costs 500 4000
Miscellanous costs of Warehouse 500 5000
Delivery Costs 500 1400
Fabric 500 3000
Timber 500 36000

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Foam 500 150
Button stud 500 450
Varnish 500 10000
Bolt 500 500
Woodworking costs 500 $ 35.00 87500
Assembling costs 500 $ 25.00 12500
Varnishing Costs 500 $ 35.00 35000
Total Variabke Costs 500 231000
Fixed Cpsts 500
Rent 500 20000
Warehouse rent 500 30000
Amnistrative Costs for Staff 500 100000
Full time employee wages 500 80000
Total Fixed Costs 500 230000
Further processing costs 500 52.5 52500
Total Costs 513500
Revised Sales Expected 625000
Profits 111500
The above analysis shows that the management of the company needs to proceed with
the new varnishing process which produces 21st style chairs and as per the table presented
above, it clearly demonstrates that the business would be able to generate more revenue and
thereby more profits from operations due to new process which is initiated by the business.
The only hike in the costs would be the additional varnishing costs which are mainly due to
the new costing which is to be applied to the chairs. Therefore, it can be said that Anni-Frid
and Benny should proceed with the suggestion and implement the same in the operational
process of the business.
Question 6
Part a
As per the analysis, it can be anticipated that the product unit costs for the business
would definitely reduce as the number of units which is produced by the business increases.
This can be attributed to the economies of scale concept which allows the business to make

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appropriate uses of resources and enhance the production but also at the same time, the costs
of production for the business are also reduced. Therefore, it can be said that increase in scale
of production for the business would enhance the productivity of the business and at the same
time the costs of operations for the business would fall.
Part b
In case there is an fall in the production and the same is not as per the anticipated
production level which is set by the management of the company than the indirect costs
would be over allocated to some extent and therefore adjustments are required to the made to
the costs estimates of the business so that accurate presentation of the cost structure can be
achieved by the business.
Bibliography
Ackerman, P., Belbo, H., Eliasson, L., de Jong, A., Lazdins, A. and Lyons, J., 2014. The
COST model for calculation of forest operations costs. International Journal of Forest
Engineering, 25(1), pp.75-81.

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Gibson, I., Rosen, D. and Stucker, B., 2015. Business opportunities and future directions.
In Additive Manufacturing Technologies (pp. 475-486). Springer, New York, NY.
Lewis, W.A., 2013. Overhead costs (Vol. 6). Routledge.
Osadchy, E.A. and Akhmetshin, E.M., 2015. Accounting and control of indirect costs of
organization as a condition of optimizing its financial and economic activities. International
Business Management, 9(7), pp.1705-1709.