Assignment on Managerial Accounting PDF

1
Table of Contents
Table of Contents...........................................................................................................1
Introduction...........................................................................................................2
Part 1. Profit Statements for Swipe 50 Limited for the months of February and March
1)Profit Statements using Absorption Costing for February and March....................3
2)Profit Statements using Variable Costing for February and March........................4
Part 2. Profit Reconciliation Statement calculated using Absorption Costing to that
using Variable costing..........................................................................................4
Part 3. How each method differs from the other method and also explain in the
importance of each of the methods..................................................................5-7
Part 4. Three ways that Swipes 50 Limited can improve its accounting systems......7-10
Part 5. Why the managing accountant job are important within a manufacturing
company........................................................................................................10-11
Conclusion....................................................................................................................12
References....................................................................................................................12

2
Introduction
There is large importance of managerial accounting processes for a company as it helps
in collecting, recording, analyzing and interpreting the internal accounting information
that assists the business managers to take important decisions regarding its future growth
and development. In this context, the present report is being undertaken for the purpose
of providing an adequate understanding of the managerial accounting processes for
evaluation of a company internal business processes and developing future strategic
action plan. The use of different accounting methods adopted by a company for
preparation of internal accounting information is explained adequately within the report.
Managerial accounting is the branch of accounting that deals with providing accounting
information that is useful to managers in decision-making. Unlike financial accounting, it
does not focus on following reporting standards. Rather, it makes use of principles from
different fields of business to cater to management needs.
Managerial accounting involves budgeting and forecasting, performance evaluation,
financial analysis, product costing and pricing, evaluation of business decisions,
governance, corporate finance, and other areas.

3
1.Please create a report for 50 swipes limited and please include the following in
your report
Prepare profitstatementforSwipe50Limitedforthemonthof February and March using
a. Absorption costing
b. Variable costing
a. Absorption costing:
Profit statement (Absorption costing)-February
Sales (11500 units/22 Euro) € 253,000
Beginning inventory 0
Manufacturing cost (29000+19000+7300+28600) € 83,900
Ending inventory ((83900/12500) *1000 units) € 6,712
Cost of goods sold (83900-6712) € 77,188
Gross margin (253000-77188) € 175,812
Total selling & administrative expenses € 44,500
Operating income (175812-44500) € 131,312
Profit statement (Absorption costing)-March
Sales (15500 units/22 Euro) € 341,000
Beginning inventory (same ending inventory for February) € 6,712
Manufacturing cost (33250+22000+8500+28600) € 92,350
Ending inventory 0
Cost of goods sold (92350+6712) € 99,062
Gross margin (341000-99062) € 241,938
Total selling & administrative expenses € 57,100
Operating income (241938-57100) € 184,838

4
b. Variable costing:
Profit statement (Variable costing)-February
Sales (11500 units/22 Euro) € 253,000
Beginning inventory 0
Manufacturing cost (29000+19000+7300) € 55,300
Ending inventory ((55300/12500) *1000 units) € 4,424
Cost of goods sold (55300-4424) € 50,876
Variable selling & administrative expenses € 36225
Contribution margin (253000-77188) € 165,899
Fixed production overheads € 28,600
Fixed selling & administrative expenses € 8,275
Operating income (165899-28600-8275) € 129,024
Profit statement (Variable costing)-March
Sales (15500 units/22 Euro) € 341,000
Beginning inventory (same ending inventory for February) € 4,424
Manufacturing cost (33250+22000+8500) € 63,750
Ending inventory 0
Cost of goods sold (63750+4424) € 68,174
Variable selling & administrative expenses € 48825
Contribution margin (341000-68174-48825) € 224,001
Fixed production overheads € 28,600
Fixed selling & administrative expenses € 8,275
Operating income (224001-28600-8275) € 187,126
2.Profit Reconciliation Statement calculated using Absorption Costing to that using
Variable Costing
Reconciliation Statement FebruaryMarch
Net operating income under absorption costing € 131,312€ 184,838
Less Fixed Manufacturing Overheads carried forward
(Closing Inventory) (1000*(28600/12500)) € 2,288
Add Fixed Manufacturing Overheads brought forward
(Beginning Inventory) (1000*(28600/12500)) € 2,288
Net Income using Variable Costing € 129,024€ 187,126