Managerial Accounting

This report discusses various concepts of managerial accounting such as ratio analysis, budgetary control, variance analysis, variable costing, and absorption costing.

Running Head: Managerial Accounting
1
Project Report: Managerial Accounting

Managerial Accounting
2
Contents
Part 1.................................................................................................................................3
Introduction...................................................................................................................3
Ratio analysis................................................................................................................3
Budgetary control.........................................................................................................5
Variance analysis..........................................................................................................6
Variable costing............................................................................................................8
Absorption costing......................................................................................................10
Conclusion..................................................................................................................11
Part 2...............................................................................................................................12
2.1...............................................................................................................................12
2.2...............................................................................................................................18
2.3...............................................................................................................................19
2.4...............................................................................................................................19
References.......................................................................................................................21

Managerial Accounting
3
Part 1:
Introduction:
Managerial accounting is a broad concept which covers various applications and
method to apply over an organization in order to maintain the performance of the business
and reach over a decision. It is important for a business entity to look over these methods and
identify, evaluate and record all the financial contract into the company’s books to keep a
track over the performance of the company. The main accounting methods are ratio analysis,
budget analysis, variance analysis, variable costing and absorption costing. In the report,
these methods have been studied and applied over the professional life to measure their
impact.
Ratio analysis:
Ratio analysis is an accounting method which is applied over the financial statement
of the business to measure the financial performance of the business. The main aim of ratio
analysis is to summarize the financial statement of the organization and brief about the key
financial aspect of the company. It offers a quick indication about the financial performance
of the company through gathering the data from the financial statement of the company. In
accounting, ratios are categorized into various forms such as liquidity ratios, profitability
ratios, solvency ratios, debt management ratios, market value ratios etc. (Kaplan & Atkinson,
2015).
All of these ratios define about the different financial aspect of the company. Such as
profitability ratios are used in the organization to calculate the overall profitability
performance of the company against the total sales, equity, assets etc of the company.
Further, liquidity ratios are calculated to identify whether the company is able to pay the short

Managerial Accounting
4
term debt obligation on the basis of current assets available to the company. More to it,
solvency ratios defines about the capital management process and financial risk of the
business.
Further, market ratios and efficiency ratios are used to identify the market worth and
daily operation management capability of the business. Below is the formula to calculate the
ratios of the company and reach over a conclusion about various financial performance
aspects of the company.
Description Formula
Profitability
Net margin Net profit/revenues
Return on equity Net profit/Equity
Liquidity
Current ratio
Current assets/current
liabilities
Quick Ratio
Current
assets-Inventory/current
liabilities
Efficiency
Receivables collection period Receivables/ Total sales*365
Payables collection period Payables/ Cost of sales*365
Asset turnover ratio Total sales/ Total assets

Managerial Accounting
5
Solvency
Debt to Equity Ratio Debt/ Equity
Debt to assets Debt/ Total assets
(Kaplan & Atkinson, 2015)
Budgetary control:
Budgetary control is a procedure used by the managers and the owners of the business
to identify about the future performance if the company. This performance explains how
efficiently and effectively a manager could utilize the budgets to control and monitor over the
operations and cost of the company in a given accounting period. It is a process in which
managers set the performance and financial goal and compare it with the actual result of the
business to identify the scope of improvement in the company.
Budgetary control process evaluates the previous data of the company and studies the
current trend in the market to set up a plan in which future performance of the company is
decided. It explains that how well the business would perform in near future. It evaluates the
total revenue earn by the company and total expenses which would be made by the company
in near future. Such as, in my organization, budgets are planned and prepared to set a
financial goal which is required to be achieved by the organization (Garrison, Noreen,
Brewer & McGowan, 2010). Budgetary reports help the business to evaluate the market and
make better decision about the performance of the company.
In an organization, initially the budget is prepared just to set an aim and objective for
the employee of the company. Secondly, budget reports are prepared and it is required for the
management of the company to compare it with actual data and analyze whether there is any

Managerial Accounting
6
scope of improvement in the business. It interprets the actual performance outcome to the
budgeted outcome in order to reach over a conclusion about the performance of the company.
Budgets are of various types and it is basically prepared by the manufacturing
companies to identify the total sales units, total amount generated trough sale, total required
production unit, closing inventory, debtor’s amount, creditor amount, cash budget etc of the
company. Budgets make it simple for the companies to identify the future market and set the
strategy and planning accordingly so that the main aim of the company could be obtained.
Variance analysis:
Variance analysis is an accounting method which is based on the quantitative
methods. It is basically a set of process which is used by the organizations to evaluate the
difference among the actual outcome and budgeted outcome of the company. It is a
quantitative investigation in which the performance of the company is measured and
evaluates by the managers of the company and it is identified why the difference has taken
place among the numbers and whether there is any scope of improvement in the business.
Such as, if the budget of an organization is $ 5000 and the actual sales of the company are $
4000 then there is $ 2000 variance yield which is unfavourable for the business (Moles,
Parrino & Kidwekk, 2011).
The detailed variance analysis allows the business and its management to understand
about calculation which has occurred in the business and recommends the management about
changes which would help the company to improve the overall performance. The most
common used variance analysis is as follows:
 Purchase price variance
 Labour rate variance

Managerial Accounting
7
 Variable overhead spending variance
 Fixed overhead spending variance
 Selling price variance
 Material yield variance
 Labour efficiency variance
 Variable overhead efficiency variance (Horngren, 2009)
Below is an example of variance analysis to understand it briefly.
Kg/ hour Per unit Total
Material 12 $ 7 $ 84
Direct Labour 3 $ 30 $ 90
Monthly Production Data
Units Produced 22,000
Material Used 203,000 Kg
Labour Worked 60,000 Hours
Material Purchased 320,000 Kg
Total Material Purchased $ 2,036,000 6.3625
Total Direct labour
variance
-2378

Managerial Accounting
8
Calculation of material purchase price variance
Standard Price (A) $ 7
Actual Price (B) $ 6.36
Actual quantity (C) 320,000
DM purchase price
variance (A-B)*C
$ 204,000.00
Favourable
Calculation of material usage variance
Standard Quantity (A) 264,000
Actual Quantity (B) 203,000
Standard Price (C) $ 7.00
DM material usage
variance (B-A)*C
$ -427,000.00
Unfavourable
Calculation of actual direct labour rate per hour
Direct Labour Variance 2378

Managerial Accounting
9
Standard rate $ 30
Actual Hours 60,000
Actual direct labour rate
per hour
45.06
Variable costing:
Variable costing method is a managerial cots accounting concept. This method
explains that only that cost must be recorded in the income statement of the company which
has actually affected the production process of the company. Under this method, management
is required to record all the manufacturing overhead expenses which have occurred into the
business in specific time period while producing a product. In variable costing method only
variable manufacturing cost of the business are used such as direct material, direct labour,
variable manufacturing overhead etc. (Brigham & Daves, 2012). Companies which records
the transaction on the basis of variable costing keep fix cost operating expenses record book
separately from the production cost to keep a track over entire cost of the company.
Variable costing make it more complex for the management and the business to
identify about the ideal price of product or services if the company. Since it does not take
concern over the fixed cost and other relevant cost of production of the company and it
affects the profitability level of the business. However, it makes it easier for the business to
identify the variable cist and potential profitability level of a manufacturing business through
producing a single product unit. Below is an example of variable costing:
Income statement
As on 31st Dec 2020

Managerial Accounting
10
Sales $ 6,600,000
Less:
Direct material $ 1,585,200
Direct labour $ 1,710,000
Variable manufacturing OH $ 840,000
Selling and distribution
expenses $ 366,000
Contribution margin $ 2,098,800
Fixed expenses $ 624,600
Net profit $ 1,474,200
(Appelbaum, Kogan, Vasarhelyi & Yan, 2017)
Absorption costing;
Absorption costing method is a managerial cots accounting concept. This method
explains that each variable and fixed cost must be recorded in the income statement of the
company which has actually affected the production process of the company. Under this
method, management is required to record all the expenses related to production which have
occurred into the business in specific time period while producing a product (Moles, Parrino
& Kidwekk, 2011). In absorption costing method all the manufacturing cost of the business
are used such as direct material, direct labour, manufacturing overhead, selling expenses, bad
debts, depreciation etc. Companies which records the transaction on the basis of absorption

Managerial Accounting
11
costing, doesn’t have to keep fix cost operating expenses record book separately from the
production cost to keep a track over entire cost of the company.
Absorption costing make it simple for the management and the business to identify
about the ideal price of product or services if the company. It also evaluates the total
profitability level of the business (Garrison, Noreen, Brewer & McGowan, 2010). However,
it makes it difficult for the business to identify the variable cost and potential profitability
level of a manufacturing business through producing a single product unit. Below is an
example of absorption costing:
Income statement
As on 31st Dec 2020
Sales $ 6,600,000
Less:
Direct material $ 1,585,200
Direct labour $ 1,710,000
Gross Profit $ 3,304,800
Less:
Manufacturing OH $ 1,464,600
Selling and distribution
expenses $ 366,000
Rent $ 80,000
Bad debts $ 253,732
Net profit $ 1,140,468

Managerial Accounting
12
Conclusion:
To conclude, managerial accounting concept makes to easier for the management to
make various financial decision easily, It assist the management at every step to make better
decision and prepared better strategies for the company to meet the common goal and
objectives of the business.

Managerial Accounting
13
Part 2:
2.1:
Monthly sales revenue budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Sales Units
6,0
00
30,
00
0
6,0
00
60,
00
0
6,0
00
6,0
00
12,
00
0
12,
00
0
12,
00
0
90,
00
0
120
,00
0
240
,00
0
60
0,0
00
Sales revenue
$
66,
00
0.0
0
$
33
0,0
00.
00
$
66,
00
0.0
0
$
66
0,0
00.
00
$
66,
00
0.0
0
$
66,
00
0.0
0
$
13
2,0
00.
00
$
13
2,0
00.
00
$
13
2,0
00.
00
$
99
0,0
00.
00
$
1,3
20,
000
.00
$
2,6
40,
000
.00
$
6,6
00,
00
0.0
0
Schedule of cash receipts
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Total Sales
Revenue
$
66,
00
0.0
0
$
33
0,0
00.
00
$
66,
00
0.0
0
$
66
0,0
00.
00
$
66,
00
0.0
0
$
66,
00
0.0
0
$
13
2,0
00.
00
$
13
2,0
00.
00
$
13
2,0
00.
00
$
99
0,0
00.
00
$
1,3
20,
000
.00
$
2,6
40,
000
.00
$
6,6
00,
00
0.0
0
Total cash sales
$
39,
60
0
$
19
8,0
00
$
39,
60
0
$
39
6,0
00
$
39,
60
0
$
39,
60
0
$
79,
20
0
$
79,
20
0
$
79,
20
0
$
59
4,0
00
$
792
,00
0
$
1,5
84,
000
$
3,9
60,
00
0
Credit sales (1st
month amount)
$
48
0,0
00
$
19,
80
0.0
0
$
99,
00
0.0
0
$
19,
80
0.0
0
$
19
8,0
00.
00
$
19,
80
0.0
0
$
19,
80
0.0
0
$
39,
60
0.0
0
$
39,
60
0.0
0
$
39,
60
0.0
0
$
297
,00
0.0
0
$
396
,00
0.0
0
$
79
2,0
00.
00
Credit sales (2nd
month amount)
$
14,
25
0
$
15
2,0
00
$
6,2
70.
00
$
31,
35
0.0
0
$
6,2
70.
00
$
62,
70
0.0
0
$
6,2
70.
00
$
6,2
70.
00
$
12,
54
0.0
0
$
12,
54
0.0
0
$
12,
540
.00
$
94,
050
.00
$
12
5,4
00.
00

Managerial Accounting
14
Total Cash
collection
$
53
3,8
50
$
36
9,8
00
$
14
4,8
70
$
44
7,1
50
$
24
3,8
70
$
12
2,1
00
$
10
5,2
70
$
12
5,0
70
$
13
1,3
40
$
64
6,1
40
$
1,1
01,
540
$
2,0
74,
050
$
4,8
77,
40
0
Monthly production budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Sales Units
6,0
00
30,
00
0
6,0
00
60,
00
0
6,0
00
6,0
00
12,
00
0
12,
00
0
12,
00
0
90,
00
0
120
,00
0
240
,00
0
60
0,0
00
Opening
inventory
15
00
75
00
15
00
15
00
0
15
00
15
00
30
00
30
00
30
00
22
50
0
300
00
600
00
15
0,0
00
Closing
inventory
75
00
15
00
15
00
0
15
00
15
00
30
00
30
00
30
00
22
50
0
30
00
0
600
00
150
0
15
0,0
00
Total
production
12,
00
0
24,
00
0
19,
50
0
46,
50
0
6,0
00
7,5
00
12,
00
0
12,
00
0
31,
50
0
97,
50
0
150
,00
0
181
,50
0
60
0,0
00
Direct Material budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Total production
units
12,
00
0
24,
00
0
19,
50
0
46,
50
0
6,0
00
7,5
00
12,
00
0
12,
00
0
31,
50
0
97,
50
0
150
,00
0
181
,50
0
60
0,0
00
Raw materail
required for 1
unit (kg) 5 5 5 5 5 5 5 5 5 5 5 5 60
Cost of raw
material per kg
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5
0.4
5 5
Raw material
cost
$
27,
00
$
54,
00
$
43,
87
$
10
4,6
$
13,
50
$
16,
87
$
27,
00
$
27,
00
$
70,
87
$
21
9,3
$
337
,50
$
408
,37
$
1,3
50,

Managerial Accounting
15
0 0 5 25 0 5 0 0 5 75 0 5
00
0
Opening raw
material
$
4,8
00
$
9,6
00
$
7,8
00
$
18,
60
0
$
2,4
00
$
3,0
00
$
4,8
00
$
4,8
00
$
12,
60
0
$
39,
00
0
$
60,
000
$
72,
600
$
24
0,0
00
Closing raw
material
$
9,6
00
$
7,8
00
$
18,
60
0
$
2,4
00
$
3,0
00
$
4,8
00
$
4,8
00
$
12,
60
0
$
39,
00
0
$
60,
00
0
$
72,
600
$
240
,00
0
$
47
5,2
00
Total direct
material
$
31,
80
0
$
52,
20
0
$
54,
67
5
$
88,
42
5
$
14,
10
0
$
18,
67
5
$
27,
00
0
$
34,
80
0
$
97,
27
5
$
24
0,3
75
$
350
,10
0
$
575
,77
5
$
1,5
85,
20
0
Schedule of cash disbursement
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Total direct
material
$
31,
80
0.0
0
$
52,
20
0.0
0
$
54,
67
5.0
0
$
88,
42
5.0
0
$
14,
10
0.0
0
$
18,
67
5.0
0
$
27,
00
0.0
0
$
34,
80
0.0
0
$
97,
27
5.0
0
$
24
0,3
75.
00
$
350
,10
0.0
0
$
575
,77
5.0
0
$
1,5
85,
20
0.0
0
Total cash
payment
$
6,3
60
$
10,
44
0
$
10,
93
5
$
17,
68
5
$
2,8
20
$
3,7
35
$
5,4
00
$
6,9
60
$
19,
45
5
$
48,
07
5
$
70,
020
$
115
,15
5
$
31
7,0
40
Credit purchase
(1st month
amount)
$
73,
15
3
$
14,
31
0.0
0
$
23,
49
0.0
0
$
24,
60
3.7
5
$
39,
79
1.2
5
$
6,3
45.
00
$
8,4
03.
75
$
12,
15
0.0
0
$
15,
66
0.0
0
$
43,
77
3.7
5
$
108
,16
8.7
5
$
157
,54
5.0
0
$
52
7,3
95
Credit purchase
(2nd month
amount)
$
78,
35
6
$
56,
89
7
$
11,
13
0.0
0
$
18,
27
0.0
0
$
19,
13
6.2
5
$
30,
94
8.7
5
$
4,9
35.
00
$
6,5
36.
25
$
9,4
50.
00
$
12,
18
0.0
0
$
34,
046
.25
$
84,
131
.25
$
36
6,0
17
Total Cash
collection
$
15
7,8
70
$
81,
64
7
$
45,
55
5
$
60,
55
9
$
61,
74
8
$
41,
02
9
$
18,
73
9
$
25,
64
6
$
44,
56
5
$
10
4,0
29
$
212
,23
5
$
356
,83
1
$
1,2
10,
45

Managerial Accounting
16
2
Direct Labour budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Production unit
12,
00
0
24,
00
0
19,
50
0
46,
50
0
6,0
00
7,5
00
12,
00
0
12,
00
0
31,
50
0
97,
50
0
150
,00
0
181
,50
0
60
0,0
00
Time per unit
(hour) 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Total labour hour
3,6
00
7,2
00
5,8
50
13,
95
0
1,8
00
2,2
50
3,6
00
3,6
00
9,4
50
29,
25
0
45,
000
54,
450
18
0,0
00
Rate per hour
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
Total labour
cost
$
34,
20
0.0
$
68,
40
0.0
$
55,
57
5.0
$
13
2,5
25.
0
$
17,
10
0.0
$
21,
37
5.0
$
34,
20
0.0
$
34,
20
0.0
$
89,
77
5.0
$
27
7,8
75.
0
$
427
,50
0.0
$
517
,27
5.0
$
1,7
10,
00
0.0
Manufacturing overhead budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Unit produced
12,
00
0
24,
00
0
19,
50
0
46,
50
0
6,0
00
7,5
00
12,
00
0
12,
00
0
31,
50
0
97,
50
0
150
,00
0
181
,50
0
60
0,0
00
Variable cost:
Utilities cost
$
7,8
00
$
15,
60
0
$
12,
67
5
$
30,
22
5
$
3,9
00
$
4,8
75
$
7,8
00
$
7,8
00
$
20,
47
5
$
63,
37
5
$
97,
500
$
117
,97
5
$
39
0,0
00
Indirect material
$
3,0
00
$
6,0
00
$
4,8
75
$
11,
62
5
$
1,5
00
$
1,8
75
$
3,0
00
$
3,0
00
$
7,8
75
$
24,
37
5
$
37,
500
$
45,
375
$
15
0,0
00
Plant
maintainence
$
3,6
00
$
7,2
00
$
5,8
50
$
13,
95
$
1,8
00
$
2,2
50
$
3,6
00
$
3,6
00
$
9,4
50
$
29,
25
$
45,
000
$
54,
450
$
18
0,0

Managerial Accounting
17
0 0 00
Environmental
fee
$
1,6
80
$
3,3
60
$
2,7
30
$
6,5
10
$
84
0
$
1,0
50
$
1,6
80
$
1,6
80
$
4,4
10
$
13,
65
0
$
21,
000
$
25,
410
$
84,
00
0
Others
$
72
0
$
1,4
40
$
1,1
70
$
2,7
90
$
36
0
$
45
0
$
72
0
$
72
0
$
1,8
90
$
5,8
50
$
9,0
00
$
10,
890
$
36,
00
0
Fixed cost:
Training and
devlopment
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
3,6
00
$
43,
20
0
Property and
business taxes
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
3,3
00
$
39,
60
0
Supervisor's
salary
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
45
0
$
12,
450
$
12,
450
$
14
9,4
00
Amortization on
equipment
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
90
0
$
14,
900
$
14,
900
$
17
8,8
00
Insuarnce
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
96,
00
0
Others
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
9,8
00
$
11
7,6
00
Total
manufacturing
cost
$
68,
85
0
$
85,
65
0
$
79,
35
0
$
11
7,1
50
$
60,
45
0
$
62,
55
0
$
68,
85
0
$
68,
85
0
$
96,
15
0
$
18
8,5
50
$
262
,05
0
$
306
,15
0
$
1,4
64,
60
0
Ending finished goods inventory budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Sales Units 6,0 30, 6,0 60, 6,0 6,0 12, 12, 12, 90, 120 240 60

Managerial Accounting
18
00
00
0 00
00
0 00 00
00
0
00
0
00
0
00
0
,00
0
,00
0
0,0
00
Ending finidhed
inventory
75
00
15
00
15
00
0
15
00
15
00
30
00
30
00
30
00
22
50
0
30
00
0
600
00
150
0
15
0,0
00
Selling and administrative expenses budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Sales units
6,0
00
30,
00
0
6,0
00
60,
00
0
6,0
00
6,0
00
12,
00
0
12,
00
0
12,
00
0
90,
00
0
120
,00
0
240
,00
0
60
0,0
00
Selling and
administrative
expenses
((1122460-
878710)/(750000
-350000))
3,6
60
18,
30
0
3,6
60
36,
60
0
3,6
60
3,6
60
7,3
20
7,3
20
7,3
20
54,
90
0
73,
200
146
,40
0
36
6,0
00
Total selling and
administrative
expenses
3,6
60
18,
30
0
3,6
60
36,
60
0
3,6
60
3,6
60
7,3
20
7,3
20
7,3
20
54,
90
0
73,
200
146
,40
0
36
6,0
00
Cash budget
Ja
n-
20
Fe
b-
20
M
ar-
20
Ap
r-
20
M
ay-
20
Ju
n-
20
Jul
-20
Au
g-
20
Se
p-
20
Oc
t-
20
No
v-
20
De
c-
20
To
tal
Opening cash
balance
10
33
65
$
39
3,8
35
$
53
0,8
38
$
45
2,7
68
$
57
4,2
85
$
69
6,3
97
$
61
1,4
83
$
60
8,8
45
$
61
9,0
98
$
35
7,8
28
$
379
,81
5
$
507
,57
0
Revenue
$
53
3,8
50
$
36
9,8
00
$
14
4,8
70
$
44
7,1
50
$
24
3,8
70
$
12
2,1
00
$
10
5,2
70
$
12
5,0
70
$
13
1,3
40
$
64
6,1
40
$
1,1
01,
540
$
2,0
74,
050
$
4,8
77,
40
0
Loan
Cash payment:
Cash
disbursement
$
15
7,8
$
81,
64
$
45,
55
$
60,
55
$
61,
74
$
41,
02
$
18,
73
$
25,
64
$
44,
56
$
10
4,0
$
212
,23
$
356
,83
1,2
10,
45

Managerial Accounting
19
70 7 5 9 8 9 9 6 5 29 5 1 2
Direct labour
$
34,
20
0
$
68,
40
0
$
55,
57
5
$
13
2,5
25
$
17,
10
0
$
21,
37
5
$
34,
20
0
$
34,
20
0
$
89,
77
5
$
27
7,8
75
$
427
,50
0
$
517
,27
5
1,7
10,
00
0
variable
manufacturing
cost
$
16,
80
0
$
33,
60
0
$
27,
30
0
$
65,
10
0
$
8,4
00
$
10,
50
0
$
16,
80
0
$
16,
80
0
$
44,
10
0
$
13
6,5
00
$
210
,00
0
$
254
,10
0
84
0,0
00
rent
$
20,
00
0
$
20,
00
0
$
20,
000
$
20,
000
80,
00
0
Property and
business taxes
$
39,
60
0
39,
60
0
Insuarnce
premium
$
96,
00
0
96,
00
0
Other expenses
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
85
0
$
25,
850
$
25,
850
31
0,2
00
Selling and
administrative
expenses
$
3,6
60
$
18,
30
0
$
3,6
60
$
36,
60
0
$
3,6
60
$
3,6
60
$
7,3
20
$
7,3
20
$
7,3
20
$
54,
90
0
$
73,
200
$
146
,40
0
36
6,0
00
Income tax
installment
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
$
5,0
00
Dividend
payment
$
60,
00
0
$
60,
00
0
$
60,
00
0
18
0,0
00
Closing cash
balance
$
39
3,8
35
$
53
0,8
38
$
45
2,7
68
$
57
4,2
85
$
69
6,3
97
$
61
1,4
83
$
60
8,8
45
$
61
9,0
98
$
35
7,8
28
$
37
9,8
15
$
507
,57
0
$
1,2
56,
163
6,9
88,
92
6
2.2:
Income statement
As on 31st dec 2021

Managerial Accounting
20
Sales $ 6,600,000
Less:
Direct material $ 1,585,200
Direct labour $ 1,710,000
Gross Profit $ 3,304,800
Less:
Manufacturing OH $ 1,464,600
Selling and distribution expenses $ 366,000
Rent $ 80,000
Bad debts $ 253,732
Net profit $ 1,140,468
Statement of retained eaning
As on 31st dec 2021
Opening reatined earning $ 1,670,908
Expected net profit $ 1,140,468
Closing retained earnings $ 2,811,376
2.3:
Statement of balance sheet
As on Dec 31, 2020
Current Assets:
Cash $ 1,256,163
Inventory- finished goods $ 16,500
Inventory- raw material $ 240,000
Accounts receivable $ 917,400
Prepaid expenses $ 83,800
Total current assets $ 2,513,863
Non current assets:
Property, plant and equipment $ 645,200
Total assets $ 3,159,063

Managerial Accounting
21
Current liabilities:
Accounts payable $ 583,155
Income tax payable $ 5,000
Capital stock $ 900,000
Retained earnings $ 1,670,908
$ 3,159,063
Statement of reatined earnings
Opening retained earnings 530440
Add: Net profit 1140468
1670908
2.4:
Income statement
As on 31st dec 2020
Sales $ 6,600,000
Less:
Direct material $ 1,585,200
Direct labour $ 1,710,000
Variable manufacturing OH $ 840,000
Selling and distribution
expenses $ 366,000
Contribution margin $ 2,098,800
Fixed expenses $ 624,600
Net profit $ 1,474,200

Managerial Accounting
22
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Appelbaum, D., Kogan, A., Vasarhelyi, M., & Yan, Z. (2017). Impact of business analytics
and enterprise systems on managerial accounting. International Journal of Accounting
Information Systems, 25, 29-44.
Brigham, E. & Daves, P., (2012). Intermediate financial management. Nelson Education.
Horngren, C.T., (2009). Cost accounting: A managerial emphasis, 13/e. Pearson Education
India.
Kaplan, R.S. & Atkinson, A.A., (2015). Advanced management accounting. PHI Learning.
Moles, P. Parrino, R & Kidwekk, D. (2011). Corporate finance, European edition, John
Wiley andsons, United Kingdom.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.