Management Accounting ACC203 Assignment Solution and Analysis

This document provides a comprehensive solution to a Management Accounting assignment, likely for an ACC203 course. It addresses key concepts such as the information needs of various managerial roles (retail outlet manager, design team, marketing manager), the importance of planning in achieving organizational objectives, and the application of cost accounting principles. The assignment includes calculations and analysis related to the schedule of cost of goods manufactured, cost of goods sold, and income statement, as well as the classification of various costs for a T-shirt manufacturing company. The solution also demonstrates the application of overhead rates and job costing, including journal entries for manufacturing overhead and cost of goods sold. The assignment references several accounting textbooks to support the analysis and calculations. This resource can be useful for students studying management accounting and related topics.

MANAGEMENT ACCOUNTING
ACC203
STUDENT ID
[Pick the date]

Question 1
Part 1
a) The manager of the retail outlet would need information on the various costs of the outlet
based on which pricing decisions need to be made. Further, the sales data and the breakup
of the same is also required so that orders can be placed appropriately. Additionally, in
order to push the sale of a particular product which might be languishing, promotional
offers may need to be introduced (Drury, 2006).
b) The design team would require information regarding the expectations and needs of the
customers which they expect to meet through the purchase of the product. Additionally,
the cost considerations are imperative and hence an estimation of the budget needs to be
drawn based on consumer spending patterns. Also, the overall available budget for the
designing of the product needs to be considered. Information on the product offerings of
competitor is also imperative (Emmauel and Otley, 2010).
c) The marketing manager would need information about the targeting and segmentation of
the product coupled with competitor’s strategy related to marketing. Besides, information
about the product and underlying design is also critical for the marketing campaign and
also information regarding the available budget needs to be communicated coupled with
time frame (Kinney and Rainborn, 2012).
d) The product costing if the same is manufactured in-house needs to be available so that the
cost paid to the outside manufacturers is less than the same. Information on the
quotations given by various manufacturers and ongoing prices charged to other
customers. Additionally, the product pricing and profit margins are also critical since
maximum price to be paid to manufacturers also depends on that (Heisinger, 2009).
Part 2
A company has a vision and a mission statement which offers an insight into what the company
intends to become over the long time. In line with the mission statement and eventual vision,
various short term and long term objectives are defined taking into consideration the available
resources. In order to achieve these objectives, it is imperative to plan using dedicated planning
systems. This ensures that the company has a road map so as to achieve the intended vision.
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Further, it provides a clear idea to the employees and also the shareholders as the expectations in
the near term and long term which enhances commitment and consistency in action and strategy
(Weyganth, Kimmel and Kieso, 2009). Also, it provides various milestones which can act as
benchmark to measure the performance of the company and the top executives in the broad
manner. Further, through planning the priorities of the organisation, the target of the firm
becomes apparent and facilitates the decision making. For instance, during the initial phase the
objective of the company may be to maximise market penetration and profit may take a backseat.
This allows higher conviction to the stakeholders that the long term objectives would be met in a
time bound manner (Drury, 2006).
Question 2
Given data can be summarized below:
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(1) The schedule of cost of goods manufactured for Flintoff Fashions
(2) The schedule of cost of goods sold for Flintoff Fashions.
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(3) The income statement for Flintoff Fashions.
(4) Both cost schedules and the income statement for the given cases:
(a) Raw material purchases amounted to $110 400
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(b) Indirect labor was $9600
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Question 3
The major costs associated with the manufacturing of T- shirts of Happy Daze T- shirt
manufactures are as given below (Emmauel and Otley, 2010).
a) Cost of daily radio advertising on the local community radio station.
 Fixed cost
 Discretionary
 This cost is considered under advertisement expenditure which is decided by the top
management personal and may vary in the short term period.
b) Cost of the fabric used to make the T-shirts.
 Variable cost
 Engineered
 Cost of fabric is directly related to the number of T- shirt produced and hence, it is
considered to be engineered cost.
c) Cost of the ink used in the designs.
 Variable cost
 Engineered
 Cost of ink is directly related to the number of T- shirt produced and hence, it is
considered to be engineered cost.
d) Salary of the managing director.
 Fixed cost
 Committed
 The salary of the managing directors is part of the structure of the firm and hence, it
would not change in the short term period.
e) Wages of the production employees who sew and print the T-shirts.
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 Variable cost
 Engineered
 The wages given to the production employees is termed as variable engineered cost
which is directly proportional to the level of production.
f) Cost of movie tickets provided for the Employee of the Month award each month.
 Fixed cost
 Discretionary
 Cost of movie tickets given by the company is fixed cost because it is decided by the
management and may vary in the short time period.
g) Depreciation of the sewing machines, calculated on a units of production basis.
 Variable cost
 Engineered
 This cost is directly associated with level of production and hence, it is variable
engineered cost.
h) Cost of electricity used in the factory building.
 Variable cost
 Engineered
 This is variable engineered cost which is directly varies with respect to the number of
unit manufactured in the firm.
i) Rent of the building.
 Fixed cost
 Committed
 Rent of the building is type of fixed cost which is considered under organization main
expense and this cost cannot alter in the short term period.
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j) Wages of the staff who package the T-shirts.
 Variable cost
 Engineered
 Wages provided to the staff who packages the T-shirts are variable and engineered cost
because it is directly proportional to the number of unit produced.
k) Cost of sewing machine maintenance.
 Fixed cost
 Discretionary
 This cost results from the decision of the management under the category of maintenance
and it can be changed in short term period.
l) Cost of the new advertising sign at the front of the factory.
 Fixed cost
 Discretionary
 This cost results from the decision of the management under the category of
advertisement expense and it can be changed or altered in short term period.
m) Cost of the company car used by the managing director.
 Fixed cost
 Discretionary
 This cost results from the decision of the management and it can be changed or altered in
short term period.
Question 4
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Overhead rate of 150% of direct labor cost
JOB SR22 (in process 31 January)
Direct material = $4,000
Direct labor = $2,000
Applied manufacturing overhead = $3,000
Total = $9,000
Jobs BS67, TR29 and GT108 (started during February)
Direct materials requisition February (totaled) = $26,000
Direct labor cost = $20,000
Manufacturing overhead (in Feb) = $32,000
Job GT108 (in process 28 February)
Direct labor cost = $2,800
Direct labor = $1,800
 Costs of goods manufactured for February
Total cost of the work (started in February) = 26000 +20000+32000 = $78,000
Add: Operating of the work (in process) = 9000
Total ¿ 78000+9000=$ 87,000
Subtract: closing of the work (in process) = 2800 +1800 +2700 = -$7,300
Cost of goods manufactured for February ¿ 87000+ (−7300 )=$ 79,700
 Amount of over applied or under applied overhead (which is to be closed to cost of goods
sold - 28 February)
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Applied overhead ¿ 20000∗150 %=$ 30,000
Incurred overhead (given) = $32000
Overhead under applied = $2,000
 Journal entries
(1)
Finished goods (Debit) = $79,700
Work in progress (A/c) = $79700
(2)
Cost of goods sold (Debit) = $2,000
Manufacturing overhead ¿ $ 2,000
References
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Drury, C. (2006) Cost and Management Accounting: An Introduction. 6th ed. New York:
Cengage Learning.
Emmauel, R.C. and Otley, T.D. (2010) Accounting for Management Control. 8th ed. London:
Cengage Learning.
Heisinger, K. (2009) Essentials of Managerial Accounting. 4th ed. London: Cengage Learning.
Kinney, R. M. and Rainborn , A. C. (2012) Cost Accounting: Foundations and Evolutions. 9th
ed. New York: Cengage Learning.
Weyganth, J.J., Kimmel, D. P. and Kieso, E. D. (2009) Managerial Accounting: Tools for
Business Decision Making. 5th ed. Sydney: John Wiley & Sons.
Wygandth, J. J., Kimmel, D. P. and Kieso, E. D. (2010) Accounting Principles.10th ed. Sydney:
John Wiley & Sons.
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