Management Accounting: Manufacturing Cost Flows, International Issues, Comprehensive Manufacturing Budget

MANAGEMENT ACCOUNTING
Management accounting
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1MANAGEMENT ACCOUNTING
Table of Contents
Question 1..................................................................................................................................2
Manufacturing cost flows.......................................................................................................2
Question 2..................................................................................................................................3
International issues in management account..........................................................................3
(i) Advantage of Australian dairy product in China............................................................3
(ii) Difference in western and Chinese approaches of management accounting..............4
(iii) Concepts of Guanxi and power distance.....................................................................4
Question 3..................................................................................................................................5
Comprehensive manufacturing budget..................................................................................5
(a) Five year budget..........................................................................................................5
(b) Increased production constraint...................................................................................7
(c) Report to CEO.............................................................................................................7
Question 4..................................................................................................................................8
(i) Distinguish between variable cost and fixed cost and product cost and period cost......8
(ii) Relevant range...........................................................................................................10
Question 5................................................................................................................................10
Strategic Management Accounting case study....................................................................10
(i) Before and after budget comparison.............................................................................10
(ii) Drop in sales for the competitor Death Star manufacturing......................................11
(iii) Report........................................................................................................................12

2MANAGEMENT ACCOUNTING
Question 5................................................................................................................................12
Ethics case study..................................................................................................................12
(i) Advice to Burdon..........................................................................................................12
(ii) Recommended actions for Burdon............................................................................13
Reference..................................................................................................................................14

3MANAGEMENT ACCOUNTING
Question 1
Manufacturing cost flows
Cost of goods manufactured schedule
Opening work in progress $ 6,20,000.00
Direct material
Opening raw material inventory $ 4,86,000.00
Add: Raw material purchases $ 86,51,500.00
Add: Freight inward $ 1,00,500.00
Raw material available for use $ 92,38,000.00
Less: Closing raw material inventory $ 7,86,500.00
Direct material used $ 84,51,500.00
Direct labour cost $ 43,28,500.00
Manufacturing overhead
Indirect labour $ 12,50,000.00
Direct manufacturing overhead $ 22,55,500.00
Other manufacturing overhead $ 8,47,000.00
Factory rent $ 2,50,000.00
Factory heat, light and power $ 15,67,500.00
Total manufacturing overhead $ 61,70,000.00
Less: Closing work in progress $ 11,87,500.00
Cost of goods manufactured $ 183,82,500.00
Cost of goods sold schedule
Cost of goods manufactured $ 183,82,500.00
Add: Opening finished goods inventory $ 2,75,500.00
Cost of goods available for sale $ 186,58,000.00
Less: Closing finished goods inventory $ 7,52,000.00
Cost of goods sold $ 179,06,000.00
Income statement for Snoozy Trading Co Ltd
Particulars Amount Amount
Sales revenue $ 357,26,840.00
Less: Cost of goods sold $ 179,06,000.00
Gross profit $ 178,20,840.00
Less: Selling and administration expenses
Sales Rep Salary and Commission Costs $ 33,24,500.00
Administration Salaries and Costs $ 8,75,500.00