Analyzing Financial Data: Management Accounting Assignment Solution

This document presents a comprehensive solution to a management accounting assignment, addressing key concepts such as the differences between financial and management accounting, product and period cost calculations, job costing, journal entries, and activity-based costing (ABC). The solution begins by differentiating financial accounting, which focuses on historical data and external reporting based on GAAP, from management accounting, which emphasizes future-oriented decision-making for internal use. It then calculates product and period costs for Lettman Corporation, determines the total job cost for Job 407 at Abdullah Manufacturing Company, and prepares journal entries for raw material purchases and usage at Jon Corporation. Finally, the solution applies activity-based costing to products produced by Nikkel Corporation, demonstrating the allocation of costs based on activities such as setting up batches, processing orders, and assembling products. Desklib offers more solved assignments and study resources for students.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author Note

1MANAGEMENT ACCOUNTING
Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................2
Answer to Question 3......................................................................................................................3
Answer to Question 4......................................................................................................................3
Answer to Question 5......................................................................................................................4

2MANAGEMENT ACCOUNTING
Answer to Question 1
Financial accounting refers to the discipline that is utilized in order to determine the
financial health of the company. The determination of the financial health and the liquidity
position of a company are important. This is because the financial information presented in the
accounting statements reflects the true financial condition of the company, which helps the
stakeholders of business to interpret the financial condition of the company in order to take the
accurate financial decision. The major stakeholders who are the users of the financial statements
are the board of directors of the company, financial institutions and other related investors.
Management accounting on the other hand, is the discipline that is utilized by the
managers for the purpose of decision making in regards to the due course of business.
Management accounting does not make the use of the historical performance of the firm.
Management accounting primarily depends on the current and the future trends of the firm and
draws the required analysis.
The primary difference between the management accounting and financial accounting is
that the management accounting is an internal operation in regards to the organization and
financial accounting is an external operation meant for the external stakeholders of business.
Financial accounting on the other hand is based upon the Generally Accepted Accounting
Principles (GAAP) but management accounting is based upon a number of estimates or
experiences.
Answer to Question 2
The total amount of product costs and the period costs can be listed down as follows:
Computation of the Product Cost
Particulars
Amount
($)
Indirect labor 38,000
Direct materials 165,000
Direct labor 87,000
Total Product Cost 290,000

3MANAGEMENT ACCOUNTING
Computation of the Periodic Cost
Particulars
Amount
($)
Marketing Salaries 45,000
Property taxes, factory 9,000
Administrative travel 98,000
Sales commissions 48,000
Advertising 138,000
Depreciation of production equipment 39,000
Total Periodic Cost 377,000
Answer to Question 3
The cost pertaining to the Job 407 of Abdullah Manufacturing Company can be
computed as follows:
Job Cost for Job 407
Direct labor cost
$2,040.0
0
Directs material cost $90.00
Manufacturing Overhead ($34 * 75 Direct labor
hours)
$2,550.0
0
Total Job Cost
$4,680.0
0
Answer to Question 4
The journal entries that should be passed are as follows:
Particulars
Debit
(Dr)
Credit
(Cr)
Inventory Account 80,000
Accounts Receivable Account 80,000
Requisition of raw material from storeroom
Total amount of raw materials $85,000
Less: Indirect materials $7,000

4MANAGEMENT ACCOUNTING
Total raw materials have to be debited to
Work-in-process $78,000
Answer to Question 5
Activity based costing for the products produced by Nikkel Corporation
Product COOR
Activities Activity rate (a)
Total Activity
(b)
ABC Cost (a x
b)
Setting up batches $60.42 per batch 60 3625.2
Processing the orders $20.58 per order 46 946.68
Assembly of the
products
$10.71 per
assembly 320 3427.2
Product A61E
Activities Activity rate (a)
Total Activity
(b)
ABC Cost (a x
b)
Setting up batches $60.42 per batch 53 3202.26
Processing the orders $20.58 per order 20 411.6
Assembly of the
products
$10.71 per
assembly 150 1606.5