Prepare and Analyse Management Accounting Information Question Answer 2022

Running head: PREPARE AND ANALYSE MANAGEMENT ACCOUNTING
INFORMATION
Prepare and Analyse Management Accounting Information
Name of the Student
Name of the University
Authors Note
Course ID

1PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
Table of Contents
Prepare and Analyse Management Accounting Information:....................................................3
Assessment 1 – Written Test......................................................................................................3
Answer to question 1:.............................................................................................................3
Answer to question 2:.............................................................................................................4
Answer to question 3:.............................................................................................................5
Answer to question 4:.............................................................................................................6
Answer to question 5: (Calculations).....................................................................................6
Answer to question 6:.............................................................................................................7
Requirement a:.......................................................................................................................7
Requirement b:.......................................................................................................................7
Requirement c:.......................................................................................................................7
Requirement d:.......................................................................................................................8
Requirement e:.......................................................................................................................8
Answer to question 7:.............................................................................................................8
Assessment 2 – Case Study:.......................................................................................................9
Case Study Question 1:..........................................................................................................9
Requirement 1:.......................................................................................................................9
Requirement 2:.......................................................................................................................9
Requirement 3:.....................................................................................................................10
Case Study Question 2:........................................................................................................10

2PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
Assessment 3 – Presentation:...................................................................................................11
Topic 1:................................................................................................................................11
Topic 2:................................................................................................................................12
Topic 3: Difference Between Authoritarian and participative style of budgeting:..............12
Answer to Scenario 1:..........................................................................................................12
References:...............................................................................................................................13

3PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
Prepare and Analyse Management Accounting Information:
Assessment 1 – Written Test
Answer to question 1:
Double entry system is regarded as the systematic, self-reliant and dependable system
of accounting. By adhering with the widely accepted characteristics or principles account is
kept under this system (Kaplan and Atkinson 2015). On the basis of the one side arithmetical
accuracy of the transaction is assured on the other side determination of the financial position
of the business is effortlessly conceivable. The fundamental principles of double entry system
are as follows;
a. Two Parties: Under the double entry book-keeping system each transaction
comprises of two parties namely debit and credit (Kamal 2015). As per the main
principles of this system each debit amount results in a corresponding credit or each
credit results in corresponding debit for the similar amount.
b. Given and receiver: Each transaction should have a minimum of one receiver and
giver.
c. Exchange of equivalent amount: The value of money for a transaction given by the
party is equivalent to the amount that is received by the party.
d. Separate entity: Under this system business is regarded as the separate entity from
the owner (Banker et al. 2017). Therefore, the business is regarded as the distinct
entity.
e. Dual aspects: Each transaction is divided in two parts. The left side of the transaction
represents the debt side while the right side represents the credit.
f. Results: Under the double entry system the total of debit side is equivalent to the total
of the credit side. Therefore, the determination of result becomes easy.

4PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
g. Complete accounting system: Double entry system is regarded as scientific and
complete accounting system.
Answer to question 2:
Basis of Comparison Fixed Cost Variable Cost
Meaning The costs that remains same
irrespective of the amount of
production is regarded as
fixed cost.
The cost that changes with
the changes in output is
regarded as the variable cost
(Bogt and Scapens 2019).
Nature It is related to time. It is related to volume.
Incurred when Fixed costs is occurred
irrespective of whether the
units are produced or not
(Malina 2017).
Variable costs only occur
when there is a production
of units.
Unit cost With changes in unit fixed
costs also changes. This
means that as the units
produced increases the fixed
cost per unit falls and vice
versa, therefore the fixed
cost per unit is inversely
proportional to number of
output generated.
The variable costs remain
similar per unit.
Behaviour Fixed cost remains the same
for the given time period.
Variable costs changes with
the changes in the output

5PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
level.
Answer to question 3:
A mixed cost is the cost which comprises of both the component of fixed cost and
variable costs. It is considered important to understand the mix of these elements of a cost, in
order to facilitate the understanding of how the costs would change with the different level of
activity (Bromwich and Scapens 2016). Characteristically, a portion of mixed costs might be
present in the nonappearance of all the activity, where cost might also rise with the rise in
level of activity. As the level of usage of mixed cost item rises, the components of fixed costs
would not change whereas the component of variable costs would increase.
For example, if the company owns the property, the total cost of the property during
the year is mixed cost. The depreciation that is related with the asset is the fixed cost since it
does not change from year to year while the utilities expense would vary depending upon the
usage of the property (Clarke et al. 2019). The fixed cost of the building is $100,000 per year
whereas the variable costs of utilities stands $250 per occupant. If the property comprises of
100 occupants the calculation of mixed is as follows;
$125,000 Total Cost = $100,000 Fixed + ($250/occupant x 100 occupants)
Answer to question 4:

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Answer to question 5: (Calculations)
Answer A:
Answer B:
Answer C:

7PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
Answer to question 6:
Requirement a:
Requirement b:
Requirement c:

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Requirement d:
Requirement e:
Based on the above tables, the change is not recommended to the organisation owing
to the fact that it would increase the total number of units to be sold.
Answer to question 7:
Setting up a record storage system needs a detailed review of present company
practices and workable plan. This comprises of applying the logical organization principles,
correct division and categories as the key to efficient recording and storing of data. Below
stated are the key process of recording and storing data;
a. Reviewing the records that the company wants to store and the present collection of
records as well as storage practices (Weetman 2019). Creating a strong committee for
work purpose would help in outlining the materials they plan to organize. It is also
necessary to create a categories of records that one can require to encompass all the
records.
b. Organizing the documents in an identifiable category which makes sense to personnel.
The main criteria for this category is that it does not overlap other category. If the
major category involves customers, then each customers or compatible group of
customers must serve as the sub-category (Dierynck and Labro 2018). Under each

9PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
category and sub-category individual records can be arranged alphabetically by the
title, date or completed which makes easy retrieval.
c. A filing system without back-up system cannot be considered complete or secure.
Companies suffer mainly due to financial losses when they lose data. Records that are
critical can be duplicated and file them securely in the fire-proof off-site locations.
d. Another method of storing data is to scan the critical data electronically and then
transmit the files to online for storage.
Assessment 2 – Case Study:
Case Study Question 1:
Requirement 1:
Requirement 2:

10PREPARE AND ANALYSE MANAGEMENT ACCOUNTING INFORMATION
Requirement 3:
Department A takes direct labor hours as the allocation base whereas Department B
takes machine hours as the allocation base. This approach gives more accurate picture
because it allocation base is according to the nature of work of each department which is
closer to the actual scenario. This gives a department wise overhead rate which is more
realistic
Case Study Question 2:

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Assessment 3 – Presentation:
Topic 1:
An avoidable cost is the cost which can be eliminated by not indulging in or not
anymore performing the activity. For instance, if an individual chooses production line, then
the cost of building in which it is housed is now considered as avoidable costs since an
individual can sell the building. The concept of avoidable cost is considered important when
indulging in the cost reduction activities. Usually, variable costs are regarded as the avoidable
costs whereas the fixed costs are not treated as avoidable cost. While in the short-term several
costs are treated as fixed and hence unavoidable.
Avoidable Cost in Decision Making:
Avoidable costs are useful in decision making as expenses which can be eliminated if
the decision is made to change the course of project or business. For a manufacturer with
several product lines, hence taking away the related expenditure particularly the labour and
materials. Companies in the decision making procedure looks for process to lower or
eliminate the expenditure that assess the avoidable costs related with underperforming or
non-profitable line of product.

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Topic 2:
At the time of making decision related to product, managers do not consider fixed
cost rather they emphasis on variable costs in the production related decisions. When
managers decide between keeping the level of production constant or increasing the
production they emphasis on variable or incremental costs of production for extra units of
output. They do not consider fixed cost associated to the operations which cannot be changed
and would not change with the production level. Hence, in most straightforward instances
fixed cost is not relevant in production related decision.
Topic 3: Difference Between Authoritarian and participative style of budgeting:
In the authoritarian style of budgeting the high-ranked manager just sets the target and
the budget for the unit managers. Under this budget unit managers have very little say for the
targets which are set. While in participative style of budgeting both the targets and the
budgets arrived in the procedure of conversation and negotiation amid the higher ranked
managers and unit managers. under this budget, the managers are viewed to have a minimum
say at the time of setting the target and budget.
Answer to Scenario 1:

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References:
Banker, R.D., Byzalov, D., Fang, S. and Liang, Y., 2017. Cost management
research. Journal of Management Accounting Research, 30(3), pp.187-209.
Bogt, H.J. and Scapens, R.W., 2019. Institutions, situated rationality and agency in
management accounting. Accounting, Auditing & Accountability Journal.
Bromwich, M. and Scapens, R.W., 2016. Management accounting research: 25 years
on. Management Accounting Research, 31, pp.1-9.
Clarke, B., Collier, P., Munir, R., Oliver, G., Robinson, P., Steenkamp, N. and Zwikael, O.,
2019. Strategic management accounting: CPA program.
Dierynck, B. and Labro, E., 2018. Management accounting information properties and
operations management. Foundations and Trends® in Technology, Information and
Operations Management, 12(1), pp.1-114.
Kamal, S., 2015. Historical evolution of management accounting. The cost and
management, 43(4), pp.12-19.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Malina, M.A. ed., 2017. Advances in management accounting. Emerald Group Publishing.
Weetman, P., 2019. Financial and management accounting. Pearson UK.