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Understanding Management Accounting

   

Added on  2020-03-16

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Running head: MANAGEMENT ACCOUNTING1Management AccountingName:Institution:Date:

MANAGEMENT ACCOUNTING2Question 1Email to the management of CEO Jumper jackfruit companyFrom :Albert Lee<albertlee@jackfruit.com>Sent: wed 20/12/2017 2.38 AMTo: Paul mark<paulmark@jackfruit.com>CC: jasmine Lim accounting executive <theboss@jackfruit.com>Subject : Budget 2018Profit BudgetJanuaryFebruaryMarchAprilSales300500200200Price300300300300Revenue900001500006000060000Direct material($20/hr)60001000040004000Direct labor(25hr/hr)30000500002000020000Variable overheads1500250010001000Selling expenses6001000400400Variable expenses38100635002540025400Contribution51900865003460034600Fixed cost20000200002000020000Net profit31900665001460014600

MANAGEMENT ACCOUNTING3The profit budget had an error initially on the revenue part, The error occurred when the selling price used was indicated as $220 per case instead of $300. Second, February sales were under stated by 300 units. The accountant had recorded the projected sales in January at200 units instead of 500 units. This are the two items that caused all those errors in the profit budget(Lansdowne, 2003)..Direct Material PurchaserefJanFebMarchaprilSales300500200Beginning Inventorya150250100Desired Ending Inventoryb250100100Production (units)A+b=c400350200DM( Needed for production)c400350200Beginning Inventory (DM)50%200175100Desired ending inventory175100100DM(Purchase) Units375275200Cost of DM202020Total750055004000Direct labor budgetJanFebMarchProduction Units400350200Hours required to complete one unit444Direct labor needed16001400800DL hours252525

MANAGEMENT ACCOUNTING4Total400003500020000Cash BudgetJanFEBMarchReceipts from sales9000015000060000Payment to suppliers750055004000Overhead cost220002175021000Lumberjack salaries450004200024000Total Cost695006225045000Operating cash flows205008775015000Overhead budgetJanFebmarProduction units400350200VC per unit555Total VC200017501000F.C20,00020,00020000Total OH220002175021000In cash budget management, the discrepancies come in the month of January where the previously done cash flow was a negative case. The difference is in the receipts from sales where Jumping Jackfruit was understating the sales received by a huge margin leading to negative cash flows. The previously stated sales receipt for the month of January $66,000 andthe current sales receipt after adjustment is $ 90000(Lansdowne, 2003).. In the month of

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