Management Accounting Project: Cost Control and Analysis

This management accounting project report addresses key concepts such as panopticism in cost control, functions of management accounting, and the use of checklists for control. It includes practical exercises involving the preparation of a manufacturing statement and income statement for Tendulkar Manufacturing Co., analysis of labor costs, material control accounts, and accrued payroll accounts. Furthermore, the report delves into payroll entries, activity-based costing, and service department cost allocation using direct, step, and reciprocal methods. The report provides detailed calculations and journal entries, offering a comprehensive overview of management accounting principles and their application in real-world scenarios. This resource can be found on Desklib, a platform offering a wide range of study tools and solved assignments for students.

Running Head: Management Accounting
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Project Report: Management Accounting for cost and control

Management Accounting
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Contents
Question 1: Panopticism...................................................................................................3
Question 2: Control...........................................................................................................3
Question 3: Checklist........................................................................................................4
Question 4: Manufacturing statement and income statement...........................................4
Question 5: Labour cost concept......................................................................................9
Question 6: Material control account.............................................................................10
Question 7: Accrued payroll account.............................................................................11
Question 8: Payroll entries..............................................................................................13
Question 9:Activity based costing..................................................................................21
Question 10: Service department cost allocation............................................................21
References.......................................................................................................................26

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Question 1: Panopticism
Panopticism is a hypothetical jail which has been projected by Jeremy Bentham. It
have round tires of cell adjacent a central surveillance tower. Panopticism is a process of
panopticon in which cost are controlled and reduced by the companies to maintain the
performance and the position of the company in the industry. Panopticism requires less staff
and the main motto of this process is to set the goals and achieve the goals in no cost. It
explains that the virtual and hypothetical control should be there in the organization to
maintain the performance of the staff and it would make a control over all the cost of the
company due to hypothetical perseverance (Garrison et al, 2010). Panopticism process
controls and monitors the activity of a business to manage the entire activities of the
company. It enhances the overall business and the management of the company to reduce and
manage the cost of the company.
Question 2: Control
Controlling is a significant part of business which extends the performance and the
management of an organization. The way toward controlling includes supervising, proposing,
monitoring and analyzing corrections in the business activity and the process of the company.
The administration bookkeeping framework controls the business procedures and exercises in
order to guarantee that the business goals are accomplished. For instance, the exception
reporting and variance analysis is gotten through the management accounting framework,
which help administration in assessing the slip by at the workplace. Further, the controls are
likewise set down to decrease the wastage and in this way, the general cost of manufacturing
(Ittner, Lanen & Larcker, 2002). The variance analysis assists in finding the reasons for
rebelliousness and shatter of controls, alongside giving answer for the same. Along these,
management accounting assists the administration in giving the controlling capacity in the
association, which is significant for the accomplishment of the gaols.

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Question 3: Checklist
Checklist is a list of total items and things which are required to done the things or the
points which are required to be considered and used as a reminder. It is a type of job aid
which is used by the companies and the individuals to reduce the failure through
compensating the potential limits of attention and human memory. Van Halen’s checklist
theory explains that the band has been successful due to their checklist. The bank always used
to maintain a checklist before any concert so that the things could be managed and
performance could be at its best. It is quite tough for a band to manage such as big
equipments in smaller place but it used to easier for Van Halen’s due to their policy and the
checklist management (Weygandt, Kimmel & Kieso, 2015). However, it has also been found
that a checklist is only successful when it is properly followed.
Question 4: Manufacturing statement and income statement
Normal Solution:
a)
Tendulkar Manufacturing Co
Manufacturing statement for the year ending at 30
September, 20X7
Particulars Amount Amount
Direct material
Beginning raw materials 11,000
Purchase of raw materials 8,42,000
Less: Ending raw material -26,000
8,27,000
Direct Expenses
Inward Charges on raw
materials 25,340
Direct labor 4,56,780
4,82,120
Factory Overhead
Manufacturing expense 3,70,000
Salaries (Factory) 3,80,400
Depreciation on Machinery 12,900
Insurance 9,225
Rates 9,425
7,81,950

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Total Manufacturing Cost 20,91,070
Add: Beginning WIP 66,000
Less: Closing WIP 34,000
Cost of goods manufactured 21,23,070
b)
Tendulkar Manufacturing Co. Ltd
Income statement for the year ending at 30 September,
20X7
Particulars Amount Amount
Sales of finished goods 38,56,000.00
Other Income (Discounts from
creditors) 5,320.00 38,61,320.00
Less: Cost of goods sold
Closing Finished Goods 32,000.00
Cost of goods
manufactured 21,23,070.25
Less: Beginning Finished
Goods 50,000.00
21,05,070.25
Gross Profit 17,56,249.75
Less: Expenses
Advertising 24,000.00
Audit Fee 12,000.00
Discounts to debtors 3,450.00
Cartage Outwards 6,543.00
Insurance 3,075.00
Light and power (Office) 23,000.00
General Expenses 54,320.00
Rates 3,141.75
Salaries (Office) 37,340.00
Sales Commission 47,600.00
2,14,469.75
Profit Before Tax Profit 15,41,780.00
Less: Tax 56,740.00
Profit After Tax 14,85,040.00
Formula view:

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Particulars Amount Amount
Direct material
Beginning raw materials 11000
Purchase of raw materials 842000
Less: Ending raw material -26000
=SUM(C8:C10)
Direct Expenses
Inward Charges on raw materials 25340
Direct labor 456780
=SUM(C13:C14)
Factory Overhead
Manufacturing expense 370000
Salaries (Factory) =12600+367800
Depreciation on Machinery 12900
Insurance =12300*0.75
Rates =12567*0.75
=SUM(C17:C21)
Total Manufacturing Cost =D11+D15+D22
Add: Beginning WIP =23000+17000+26000
Less: Closing WIP =15000+11000+8000
Cost of goods manufactured =D24+C25-C26
Particulars Amount Amount
Sales of finished goods 3856000
Other Income (Discounts from creditors) 5320 =SUM(C34:C35)
Less: Cost of goods sold
Closing Finished Goods 32000
Cost of goods manufactured =D27
Less: Beginning Finished Goods 50000
=C38+C37-C39
Gross Profit =D35-D40
Less: Expenses
Advertising 24000
Audit Fee 12000
Discounts to debtors 3450
Cartage Outwards 6543
Insurance =(16000-3700)*0.25
Light and power (Office) 23000
General Expenses 54320
Rates =(12567*0.25)
Salaries (Office) =35000+2340
Sales Commission 47600
=SUM(C43:C52)
Profit Before Tax =IF(D41>=D53,"Profit","Loss")=D41-D53
Less: Tax 56740
Profit After Tax =D54-D55
Tendulkar Manufacturing Co
Manufacturing statement for the year ending at 30 September, 20X7
Tendulkar Manufacturing Co. Ltd
Income statement for the year ending at 30 September, 20X7
a)
b)

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Manual:

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Question 5: Labour cost concept
The perpetual inventory stock deals with constant recording and tracking of the stock
in an organization. In this way, the arrangement of perpetual inventory records consequently

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inventory and update the inventory system of the company. Since, the stock evidences are
reorganized on continuous premise, accordingly, it is required for the companies to update
and tally the inventory system to manage the performance of the company. It epxlians about
the cost of goods sold of the company (Coper and Kaplan, 2012).
Further, it explains that the overtime payment should be treated as overhead as this
cost could be controlled by the company.
Question 6: Material control account
Normal View:
Material Control Account
Date Particulars Debit Date Particulars Credit
01.08.2016 Balance
60,000.0
0
WIP control
account
60,000.0
0
Account
payable
80,000.0
0
Indirect
Material
30,000.0
0
31.08.2016 Balance
50,000.0
0
Total
1,40,000.0
0 Total
1,40,000.0
0
Journal Entry of indirect Material
Debit Credit
Profit and
loss a/c
30,000.0
0
Indirect
Material 30,000.00
Formula view:

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Date Particulars Debit Date Particulars Credit
01.08.2016 Balance 60000 WIP control account 60000
Account payable 80000 Indirect Material =F8-F5-F7
31.08.2016 Balance 50000
Total =SUM(C5:C6) Total =C8
Debit Credit
Profit and loss a/c =F6
Indirect Material =C14
Material Control Account
Journal Entry of indirect Material
Manual view:
Question 7: Accrued payroll account
Normal View:
Accrued Payroll Account
Date Particulars Debit Date Particulars Credit
01.03.2016 Balance
18,000.0
0
Salary and
wages
50,000.0
0
Cash
70,000.0
0
Direct
labor
22,000.0
0

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31.03.2016 Balance
20,000.0
0
Total
90,000.0
0 Total
90,000.0
0
Formula view:
Date Particulars Debit Date Particulars Credit
01.03.2016 Balance 18000
Salary and wages 50000
Cash 70000 Direct labor 22000
31.03.2016 Balance 20000
Total =F9 Total =SUM(F5:F8)
Accrued Payroll Account
Manual view: