Management Accounting Analysis

This management accounting assignment analyzes various cost concepts and techniques. It delves into job order costing systems, examines the allocation of manufacturing overhead, and explores the implementation of an activity-based costing system for a furniture manufacturer. The assignment addresses specific requirements related to cost computation, overhead application adjustments, and the benefits of activity-based costing in managing product costs and process efficiency.

Running head: MANAGEMENT ACCOUNTING
Management accounting
Name of the university
Name of the student
Authors note

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MANAGEMENT ACCOUNTING
Table of Contents
Requirement a:.................................................................................................................................2
Requirement b:.................................................................................................................................2
Requirement c:.................................................................................................................................2
Requirement d:.................................................................................................................................3
Requirement e:.................................................................................................................................4
Requirement f:.................................................................................................................................4
Requirement g:.................................................................................................................................4
Reference & Bibliography:..............................................................................................................5

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MANAGEMENT ACCOUNTING
Requirement a:
Costing system based on job order is mainly used by manufacturing business for
evaluating total number of products produces in a single batch and it is used extensively.
Allocation of costs becomes difficult for companies, job for different products and orders needs
to be determined. Computation of expenses per unit is done by cost that is allocated to any
particular job divided by number of unit produced in the job (Christ and Burritt 2015).
Requirement b:
Particulars SE523 PS612 CH421 DS174 Total
Opening WIP 20000 25000 15000 0
Quantity Completed 20000 0 15000 5000
Closing WIP Units 0 25000 0 0
Opening Value of Work-in-Process $ 3,00,000 $ 3,00,000
Raw Material $ 2,21,000 $ 2,21,000
Labor Cost $ 2,00,500 $ 2,00,500
Manufacturing Overhead $ 97,500 $ 97,500
Closing Value of Work-in-Process $ 0 $ 8,19,000 $ 0 $ 0 $ 8,19,000
Requirement c:
Particulars Amount
Direct Raw Material $ 13,800
Labor Cost $ 43,200
Manufacturing Overhead $ 22,000
$ 79,000
Opening WIP $ 4,31,000
Less: Closing WIP $ 0
Cost of Goods Manufactured $ 5,10,000
Quanity Completed 15000
Cost per Units completed $ 34

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MANAGEMENT ACCOUNTING
Particulars Opening Inventory Units Completed Total
Total Units 19400 15000 34400
Units Sold 19400 1600 21000
Closing Units 0 13400 13400
Cost per unit $ 35 $ 34
Value of Closing Inventory $ 0 $ 4,55,600 $ 4,55,600
Requirement d:
Particulars Amount
Annual Predetermined Ovehead $ 45,00,000
Budgeted Machine Hours $ 9,00,000
Predetermined Overhead Rate $ 5
Machine Hours upto May'17 835000
Machine Hours in June'17 49900
Total Machine Hours 884900
Applied Manufacturing Overhead $ 44,24,500
Actual Oveehead upto May'17 $ 41,05,000
Actual Overhead in June'17 $ 2,17,000
Total Actual Overhead $ 43,22,000
Over Applied Overhead Expenses $ 1,02,500

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MANAGEMENT ACCOUNTING
Requirement e:
Dr. Cr.
Date Amount Amount
First Treatment:
30-06-2017 Manufacturing Overhead A/c. Dr. $ 1,02,500
To, Cost of Goods Sold A/c. $ 1,02,500
Second Treatment:
30-06-2017 Manufacturing Overhead A/c. Dr. $ 1,02,500
To, Work-in Process A/c. $ 1,02,500
Work-in-Process A/c. Dr. $ 1,02,500
To, Cost of Goods Sold A/c. $ 1,02,500
Particulars
Requirement f:
Turramurra Furniture is facing some issues relating to under utilization and over
utilization of overhead products. The accounting adjustments made by firm would help in
resolving such existing problems relating to over and under application of manufacturing
overhead (Otley 2016).
Requirement g:
Organization is engaged in development of wide range of products and it has the
intention of incorporating the activity based costing system for evaluation of costs incurred.
Management of expenses and costs can be controlled in an efficient way using this technique of
costing. Accumulation of products and assessment of finished goods are done by acquiring
knowledge that is related to operation process of organization. In the given case, main objective
of organization is to gain an in depth detail about product process costs and their allocation to

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MANAGEMENT ACCOUNTING
each stages of productions. Therefore, this particular costing system will help in addressing
range of products and applications related to overhead (Lanen 2016).
Reference & Bibliography:
Christ, K.L. and Burritt, R.L., 2015. Material flow cost accounting: a review and agenda for
future research. Journal of Cleaner Production, 108, pp.1378-1389
Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea: The
case of the balanced scorecard. Contemporary Accounting Research.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting practices. Journal of
Operations Management, 32(7), pp.414-428.
Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.
Lanen, W., 2016. Fundamentals of cost accounting. McGraw-Hill Higher Education.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–
2014. Management accounting research, 31, pp.45-62.
Schaltegger, S. and Zvezdov, D., 2015. Expanding material flow cost accounting. Framework,
review and potentials. Journal of Cleaner Production, 108, pp.1333-1341.