PIA ACC203 Management Accounting: Exhibition Furniture Case Study

This assignment presents a comprehensive case study of Exhibition Furniture, a desk manufacturer, focusing on management accounting principles. It includes a detailed analysis of the company's budgeting process, direct material consumption, and cost control measures. The solution provides recommendations for improving the budgeting process through flexible usage, variance analysis, and the implementation of a quarterly budget. It also includes a budgeted balance sheet and a memorandum to the CEO outlining strategies for cost reduction and enhanced profitability. The analysis covers aspects like direct materials (oak tops and oak legs), direct manufacturing labor, and sales projections. This document is available on Desklib, a platform offering various study tools and solved assignments for students.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Answer to Part 1:........................................................................................................................2
Answer to A:..............................................................................................................................2
Answer to B:..............................................................................................................................2
Answer to C:..............................................................................................................................2
Answer to D:..............................................................................................................................3
Answer to E:...............................................................................................................................3
Answer to F:...............................................................................................................................4
Answer to G:..............................................................................................................................4
Answer to H:..............................................................................................................................4
Answer to I:................................................................................................................................5
Answer to J:................................................................................................................................6
Answer to K:..............................................................................................................................6
Answer to L:...............................................................................................................................7
Answer to Part 2:........................................................................................................................8
Reference List:.........................................................................................................................10

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Answer to Part 1:
Answer to A:
Answer to B:
Answer to C:

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Answer to D:
Answer to E:

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Answer to F:
Answer to G:
Answer to H:

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Answer to I:

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Answer to J:
Answer to K:

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Answer to L:
Budgeted Balance Sheet:
Particulars Amount
Current Assets:
Cash $ 20,000
Direct Material Inventory $ 3,440
Finished Goods Inventory $ 1,91,043
TOTAL CURRENT ASSETS $ 2,14,483
Non-Current Assets:
Property, Plant & Equipment (net) $ 5,50,000
TOTAL NON-CURRENT ASSETS $ 5,50,000
TOTAL ASSETS $ 7,64,483
Current Liabilities $ 30,000
Non-Current Liabilities $ 59,340
TOTAL LIABILITIES $ 89,340
NET ASSETS $ 6,75,143
Equity:
Shareholders' Equity $ 6,50,000
Budgeted Profit $ 4,38,743
Retained Earnings ($ 4,13,600)
TOTAL EQUITY CAPITAL $ 6,75,143

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Answer to Part 2:
Memorandum:
To: CEO of Exhibition Furniture
From: ABC Agency
Date: 6th February 2018
Subject: Improvement in Budgeting Process
The continuous improvement can be initiated in the process of budgeting. The
consumption of direct material can be enhanced either in the price and usage.
Recommendations can be provided in enhancing the present use of direct materials after
lowering the minimum usage by 1 square meter for both the oak tops and oak legs. The
application of flexible usage can be used for business where cost can be closely associated
with the business activity (Rogulenko et al. 2016). In the event of retail environment, the cost
of overhead can be separated and the same can be considered as the fixed cost. Similarly,
these cost can be allocated with the oak tops and oak legs and simultaneously can be related
with the revenue generation unit.
Importantly, variance analysis can be helpful in managing the differences between the
budgeted cost and actual costs (Christ and Burritt 2015). The variance analysis can be applied
for oak tops and oak legs as this would assist in implementing control over the project
expenses by understanding the planned costs against the original costs.
One of the vital aspect of budget variance is a qualitative investigation can be
conducted amid the actual cost and scheduled behaviour. Application of budget variance
would help in controlling the business costs. Furthermore, recommendations can be provided
in the areas of establishing the use of quarterly budget as this would help in financial

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planning for the business (Kohlmeyer et al. 2014). The application of quarterly budget would
help the CEO of Exhibition Furniture in looking at the trouble that is prevalent and creating a
appropriate framework for determining the performance of the business.
The application and preparation of quarterly budget would enable the management of
Exhibition Furniture in thinking and planning the future for a particular production period
during the accounting year. With the quarterly budget the management would be able to
analyse the actual performance from the budgeted performance (Eldenburg et al. 2016). The
preparation of the quarterly budget would help the CEO of Exhibition Furniture in lowering
the cost in accordance with the needs of product to better improve the profitability for every
desk chair. Quarterly budget would provide the management with details of the budget
components ranging from fixed costs, semi-fixed and variable costs.
On a concluding note the memorandum provides the appropriate recommendations
which would assist the Exhibition Furniture CEO in recognizing and eliminating the
unwanted cost. The preparation of the alternative quarterly and flexible would assist in
improving the profitability of the organization.
Thank You
From ABC Agency.

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Reference List:
Christ, K.L. and Burritt, R.L., 2015. Material flow cost accounting: a review and agenda for
future research. Journal of Cleaner Production, 108, pp.1378-1389.
Eldenburg, L.G., Wolcott, S.K., Chen, L.H. and Cook, G., 2016. Cost management:
Measuring, monitoring, and motivating performance. Wiley Global Education.
Kohlmeyer III, J.M., Mahenthiran, S., Parker, R.J. and Sincich, T., 2014. Leadership, Budget
Participation, Budgetary Fairness, and Organizational Commitment. In Advances in
Accounting Behavioral Research (pp. 95-118). Emerald Group Publishing Limited.
Rogulenko, T., Ponomareva, S., Bodiaco, A., Mironenko, V. and Zelenov, V., 2016.
Budgeting-Based Organization of Internal Control. International Journal of Environmental
and Science Education, 11(11), pp.4104-4117.