ACCT5000: Intermediate Management Accounting Report - Semester 1

This report, prepared for ACCT5000 Intermediate Management Accounting, delves into key aspects of cost accounting and its significance in managerial decision-making. It examines the identification of costs, the impact of cost behavior, and the utilization of financial information by both internal and external stakeholders. The report explores the challenges in data collection, and offers recommendations for improved cost calculation and strategic decision-making. It highlights the importance of accurate cost analysis for determining selling prices, identifying areas for cost reduction, and formulating effective business strategies. The report also discusses the different requirements of internal and external users, and the need for reliable and verifiable financial data. Furthermore, it considers the impact of cost behavior on investment decisions, the use of cost formulas, and the challenges associated with data collection, including data sensitivity, time constraints, and variations in data format. The report concludes with recommendations for the management to take corrective actions and develop effective cost formulas.

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ACCT5000 management Accounting

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Table of Contents
Introduction................................................................................................................................3
Issue 1.........................................................................................................................................3
a).............................................................................................................................................3
b)............................................................................................................................................4
Issue 2.........................................................................................................................................5
a).............................................................................................................................................5
b)............................................................................................................................................5
Conclusion..................................................................................................................................6
Recommendations......................................................................................................................6
Reference....................................................................................................................................7

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Introduction
The business is established to carry out various activities and in that there will be
consideration of various important elements. There is the requirement for various approaches
to be used in this process and in the undertaking of them various challenges are also faced. In
the report, all the issues will be identified and the manner in which they are to be dealt with
will also be considered. The cost account and cost behaviour will be undertaken and with
that, the manners in which financial information proves to be beneficial will also be
considered.
Issue 1
a)
Cost is the main aspect of the manufacturing process which shall be identified in order to
make various other decisions. By the identification of the cost, it will be possible to identify
the total expenses which have been incurred and the amount which is to be earned on the
same. The price which will be charged from the customers is to be decided in an appropriate
manner and that will be possible with the cost only (Kidane, 2012). The addition of the profit
margin will be made to the cost which will be providing the company with the appropriate
selling price.
The information in relation to the cost will be collected and then that will be used to
formulate the policies and strategies for the benefit of the business. There are many such
expenses which are incurred in the business but can be eliminated and they all will be
identified so that corrective measures can be taken for them. There is the breakeven that is
involved and it is the point at which the business will not be making any profits or losses.
This means the complete cost will be recovered at this stage and after that, the profits will be

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earned by the company (Huang et al., 2014). With the help of this, the sales required to earn
adequate profits will be determined and then the plan will be made accordingly to achieve the
same.
There will be an undertaking of the correct decisions by the management with the help of
available data. The manner in which operations shall be performed will be ascertained and
planned in the required manner.
b)
In the business, there are two parties who require the information and they consist of internal
and external users. They both have different requirements and for that the information that is
presented to them is different. The internal users require detailed information about each
aspect and for that management accounting information is considered which fulfills the
requirement in a timely manner (Narbaev and Alberto, 2014). There is the consideration of
the current situation and with that, the forecasts for the coming period are also made. The
information which is involved in the process is reliable and verifiable and in case of the need,
there will be appropriate verification which will be made possible.
The management is required to make the decisions on various matters and for that, they are
required to make the appropriate comparison among all the data so that the correct evaluation
is made. On the basis of the findings which will be obtained, there will be the undertaking of
the correct and reliable decisions. The accounting will be made with the data and that will be
covering all the financial as well as non-financial aspects.

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Issue 2
a)
The costing of any product is made after considering all the activities which are involved in
the process. In that, there are various types of costs that are involved and the impact which
will be made on the cost with the change in the activities will be required to be ascertained.
This will be made possible with the help of cost behaviour and so it will be required that
management considers the cost and the impact of the same on investment in making any
decisions (Novák and Boris, 2014). There will be a reduction in the cost which will be made
possible as all these charges which are not required will be avoided. This will be beneficial
for the business as the increment in the profit will be ensured with the help of it.
The cost in the business will be ascertained with the help of several methods that are used to
make the cost formula. The regression analysis is one method in which the equation to
develop cost will be prepared and used in all the situations. There are several expenses that
are involved and accounts are prepared in relation to all of them. There will be involvement
of the variable and fixed cost among them and the account analysis method will be used to
segregate them with the proper evaluation.
b)
The challenges in the business are faced in all the processes and so is the case with data
collection activity. The issues which are involved will be required to be evaluated and
identified so that the management can take corrective action in that respect. All the
information which is involved cannot be disclosed and there is the challenge faced in this
respect (Taipaleenmäki and Seppo, 2013). All the parties will be refusing to share the data
which is sensitive and that complete information will not be available. The time which is

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involved in the data collection is high as there will be a collection of information from
various places and that will take time. By this, the production time will be reduced in which
the information can be used for some additional returns (Noordin et al., 2015). There will also
be the issue in understanding as the information collected from different sources will be in a
variant format and language which not be understandable by all.
Due to all of the identified issues, it will be required by the management to take the corrective
measures which will help in reducing the challenges and increase the efficiency of the
business.
Conclusion
In the report, there has been consideration of all the issues and the causes which are
responsible for them. The manner in which management will be using the accounting
information has been identified and with that, the importance of calculating cost is also
ascertained. The cost behaviour and importance of the same are evaluated and the manner in
which business will be benefitted from all has also been taken into account. There are several
issues and challenges faced in business and they all have been determined.
Recommendations
The valuation has made clear various aspects and on that basis, the corrective actions will
have to be taken by the management. They will be required to formulate the strategy by
which the correct cost calculation will be made and that will also be helping in making other
decisions. There will be the development of effective cost formula by which the correct cost
will be determined. All the information in this respect will be collected in such a manner that
issues involved can be avoided at best.

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Reference
Huang, Shaio-Yan, Hsueh-Ju Chen, An-An Chiu, and Chih-Pin Chen. "The application of the
theory of constraints and activity-based costing to business excellence: the case of automotive
electronics manufacture firms." Total quality management & business excellence 25, no. 5-6
(2014): 532-545.
Kidane, Fitsum. "The role of cost analysis in managerial decision making: a review of the
literature." Asian Journal of Research in Banking and Finance 2, no. 3 (2012): 60-69.
Narbaev, Timur, and Alberto De Marco. "An earned schedule-based regression model to
improve cost estimate at completion." International Journal of Project Management 32, no. 6
(2014): 1007-1018.
Noordin, Raman, Yuserrie Zainuddin, Rasid Mail, and Noor Kaziemah Sariman.
"Performance outcomes of strategic management accounting information usage in Malaysia:
insights from electrical and electronics companies." Procedia Economics and Finance 31, no.
2 (2015): 13-25.
Novák, Petr, and Boris Popesko. "Cost variability and cost behaviour in manufacturing
enterprises." Economics and Sociology 7, no. 4 (2014): 89-103.
Taipaleenmäki, Jani, and Seppo Ikäheimo. "On the convergence of management accounting
and financial accounting–the role of information technology in accounting
change." International Journal of Accounting Information Systems 14, no. 4 (2013): 321-348.