Management Accounting Statement Question Answer 2022

Running head: MANAGEMENT ACCOUNTING 1
MANAGEMENT ACCOUNTING

Running head: MANAGEMENT ACCOUNTING
Contents
Question 1.....................................................................................................................................3
Question 2.....................................................................................................................................4
Question 3.....................................................................................................................................4
Question 4.....................................................................................................................................5
Question 5.....................................................................................................................................5
Question 6.....................................................................................................................................6
References.....................................................................................................................................7

Running head: MANAGEMENT ACCOUNTING
Management accounting is the field which deals with the under which the provisions of the
accounting information are utilized in order to be aware about the information of the
accounting nature. The management accounting helps the managers in keeping a track on the
performance of the control functions. The simplest definition of the management accounting is
the provision of financial and the non-financial decisions in order to deal with the information
possessed by the managers (Nielsen and Roslender, 2015).
Question 1
Income Statement
for the year ending
Particulars Units Price Total
Selling price of barbecue 2000 2 4000
Selling price of balloon 1000 1 1000
Total sales 5000
Cost of stock 2000 0.25 500
1000 0.03 30
Gross Profit 4470
Less: Expenses
Remuneration 1600
Leasing BBQ 200
Balloon Pump 50
Sales and administrative 50
Permit expenses 250
Total Expenses 2150
Net profit 2320

Running head: MANAGEMENT ACCOUNTING
Question 2
Activity cost pools
Particulars Activity
measures
John Paul Ringo George Total
Operating
BBQ
Number of
barbeques
sold
$
300,000.00
$
100,000.00
$
40,000.0
0
$
-
400000
Inflating
balloons
Number of
balloons
$
5,000.00
$
37,500.00
$
15,000.0
0
$
10,000.0
0
50000
Cashier Number of
balloons and
barbeques
$
250.00
$
-
$
2,500.00
$
250.00
Greeting
customers
Number of
balloons and
barbeques
$
500.00
$
-
$
500.00
$
3,750.00
Total labor
costs
$
305,750.00
$
137,500.00
$
58,000.0
0
$
14,000.0
0
5000
Total labor
costs per unit
$
1,223.00
$
550.00
$
232.00
$
56.00
Activity rate $
152.88
$
68.75
$
29.00
$
7.00
Question 3
Sales margin Barbeques Balloons
Selling units 2000 1000
Selling price 2 1
Sales volume $ 4,000.00 $ 1,000.00
Costs:
Cost of stock $ 500.00 $ 30.00
Leasing $ 200.00
Remuneration $ 800.00 $ 800.00
Balloon Pump $ 50.00
Sales and administrative $ 25.00 $ 25.00
Permit expenses $ 125.00 $ 125.00
Net customer margin $ 2,350.00 $ (30.00)

Running head: MANAGEMENT ACCOUNTING
Question 4
A) As per the opinion of Paul, the statement is not justifiable as the work was assigned to the
friends on the basis of mutual understanding. The job of selling and handling of the
administrative task is not an easy one and it requires the technical knowledge of the marketing
and as well the skill of managing the counter. Paul’s statement is totally not justifiable as the
without advertising or selling or managing the counter of BBQ was not possible. The
contribution has been equal as after the preparation of barbeque and balloons the next step is of
selling. If the product is not going to be sold, how the company will generate the income which
is to be distributed among all of the four friends. Hence, the contribution cannot be seen on the
basis of the category of the work, rather the quantity is measured. Hence the statement
delivered by Paul is not justifiable (Weygandt, Kimmel and Kieso, 2018).
B) The statement given by Ringo, about selling the balloon to be thee bad idea can be correct
can be not. This is due to the fact as selling barbeque is the main product of the counter and the
balloons seems to be the strategy to attract the customers. At times the business people tend to
find out the side attractive product to sell the number of units faster. This idea is incorporated
after analyzing the market and the needs of the customers and further the processing is done
accordingly. Hence, it can be concluded that selling of balloon cannot be a waste of idea. They
can use this idea to build more customer base and to attract a particular niche that is young
category (Palmatier, 2018).
C) A subjective performance evaluation is carried out on the basis of intangible employee
qualities. Generally the subjective feedback from the manager as opposed to objective,
measurable feedback is taken on the priority basis. The subjective performance evaluation

Running head: MANAGEMENT ACCOUNTING
gives a clear picture of the overall performance of the employees but excessive use can also
create the numerous risks (Allen, Burton, Smith and Wood, 2017). As per the case study the
rules for assessing their individual performance are set before the enterprise begins, however in
order to avoid the subjective evaluation of the performance following is the list of the steps that
needs to be followed.
 The subjective performance evaluation can be avoided when there is low flexibility in
evaluating the overall performance, when the subjective performance measures are not
utilized.
 The new and the better method for appraising the performance of the employees can be
taken into consideration and the subjective measures normally define the subjective
contribution which is also susceptible to manipulation easily.
 The most pronounced problem with subjectivity is that it provides supervisors with the
possibility to assess performance untruthfully and hence this needs to be eliminated on
an emergency basis (Bol, 2005).
Question 5
Particulars
Unit
s
Pric
e
Actual
results
Unit
s
Pric
e
Valu
e
Varian
ce
Sales
300
0 1.65 4950
400
0 1.65 6600 1650
Cost of goods sold
Direct materials 0.16 475 0.16 633 158
Direct labor 0.53 1600 0.53 2133 533
Manufacturing overhead 0.08 240 0.08 320 80
Gross Margin 2635 3513 878
Selling and administrative
expenses:
Lease of Gazebo
0.01
7 50 0.02 67 17
Stand permit 0.08 250 0.08 333 83

Running head: MANAGEMENT ACCOUNTING
3
Net operating income 2335 3913 1578
In this section the planning budget has been compared by the actual budget to identify any kind
of the references. In this scenario, the units have increased to 4000 whereas earlier the total
units were 3000. The Budget planning is he practice or the method by which the company as
well as the individuals evaluate their earnings and expenses and also on the basis of that
projects the value of the inflows as well as outflows of the cash. The ultimate aim is to lay out
all necessary elements and drive the future goals of the organization. Budget planning may be
completed in one meeting or it may take weeks of evaluating available data to finalize. In this
scenario the planning budget discloses the overall net operating income with a rise of 1578
dollars. Further, the sales have also increased due to increase in number of the units overall.
The prices have been described proportionately on the basis of the number of units.
The blame for the differences is provided to the management as the ultimate responsibility for
the purpose of the preparation of the planning budget. The accountants or the experts who
prepare the budget are mostly responsible as they are aware of the accounting treatment and
hence, the responsibility lies in the hands of the management as well as accountants.
Question 6
Particulars BBQ Balloons sold
Material Price variance
Standard quantity 2000 1000
Standard price 450 25
Actual Price 500.00 30

Running head: MANAGEMENT ACCOUNTING
Actual Quantity 2075 1050
Quantity Variance
(AC-SC)*AQ 103750 5250
Total variance
(AQ-SQ)*SP 33750 1250
Total variance
Price variance + Quantity Variance 137500 6500

Running head: MANAGEMENT ACCOUNTING
References
Allen, D., Burton, F.G., Smith, S.D. and Wood, D.A., (2017) Shadow IT Use, Outcome
Effects, and Subjective Performance Evaluation. Outcome Effects, and Subjective Performance
Evaluation (June 27, 2017).
Bol, J. (2005) Subjective Performance Evaluation [Online] Available from
https://pdfs.semanticscholar.org/8c4e/7c48e841f55508e05fdd36d983bec7bcf18c.pdf
Nielsen, C. and Roslender, R., (2015) Enhancing financial reporting: the contribution of
business models. The British Accounting Review, 47(3), pp.262-274.
Palmatier, R.W., (2018) Advancing marketing strategy research. John Wiley & Sons United
States.
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., (2018) Financial and Managerial Accounting,
Loose-leaf Print Companion. John Wiley & Sons.