Management Accounting Assignment: Cost Analysis and Budgeting

This management accounting assignment solution provides a comprehensive analysis of various cost accounting techniques and financial concepts. The assignment includes detailed explanations and calculations related to cost accounts, process costing, job costing, variance analysis, and budgeting. The solution presents normal and formula views of cost accounts, illustrating direct material, work-in-progress, finished goods, accounts payable, and cost of goods sold. It also explores contract costing using the Colosseum as a case study. Furthermore, the assignment delves into process costing, demonstrating the calculation of equivalent units, closing work-in-progress, and total production costs. Job costing is analyzed, including joint cost allocation and decision-making regarding further processing. Variance analysis is performed, covering material price and usage variances, along with labor rate variances. Finally, the assignment presents a detailed budget, including cost of goods sold, ending inventory, and purchase budgets, emphasizing the importance of budgeting for financial planning and control. The solution references relevant academic sources to support its analysis.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author’s Note:
Number of Question Attempted: 5

MANAGEMENT ACCOUNTING
Table of Contents
Answer to Question 1......................................................................................................................2
Requirement A.............................................................................................................................2
Requirement B.............................................................................................................................6
Answer to Question 2......................................................................................................................7
Answer to Question 3....................................................................................................................11
Answer to Question 4....................................................................................................................15
Requirement A...........................................................................................................................15
Requirement B...........................................................................................................................18
Answer to Question 5....................................................................................................................19
Requirement A...........................................................................................................................19
Requirement B...........................................................................................................................22
Reference.......................................................................................................................................23
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Answer to Question 1
Requirement A
Normal View of Cost Accounts
Figure 1: (Table showing Direct Material Account)
Source: (Created by Author)
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Figure 2: (Table showing Work-in-Progress Account)
Source: (Created by Author)
Figure 3: (Table showing Finished Goods Account)
Source: (Created by Author)
Figure 4: (Table showing Account Payable Account)
Source: (Created by Author)
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Figure 5: (Table showing Cost of Goods Sold Account)
Source: (Created by Author)
Formula View of Cost Accounts
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Requirement B
One of the most iconic structures of building in Rome is Colosseum and it is regarded as
the attractive tourist destination. In 72 AD, the construction of this major building was initiated
and the construction was finished in 80AD. Some of the purpose for which Colosseum was used
involved battling of gladiators, for hunting purpose and using it for any other national events. It
was predictable that Colosseum acquired the space of 50000 to 60000 spectators at a time. There
was no process of effective estimation of cost and proper costing system when the construction
of structure was being done. Moreover, the prediction at that time was about the cost of
Colosseum that might have taken the fortune. In today’s world, construction of such building
would cost billions of dollars and that amount will also not be enough to cover up the cost.
bBetween 1993 and 2000, a program of restoration was conducted on the building of Colosseum
and it was ascertained that there was exhaustion of approximately 40 billion Italian fire. This
particular fact helps in the development of judgment of how much it would cost to construct the
similar monument. In order for recreation of some buildings that is similar to the monuments, it
is recommended to apply the contract costing technique. Such recommendation is made because
construction of such buildings is similar to the construction of such monuments. The reason for
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recommending such costing technique is applicable to the fact that under the contract costing
technique, the construction is done on degree of completion. Moreover, the technique of contract
costing contains certain provisions regarding the maintenance of effective records and cost of
some materials overtime that will help in managing such change (Ax & Greve, 2017).
Figure 5a: (Image depicting Colosseum building)
Source: (Maas et al., 2016)
Answer to Question 2
Normal View of Process Costing Accounts
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Figure 6: (Table showing Total Equivalent Units and Total Production)
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Figure 7: (Table showing Value of Closing WIP)
Source: (Created by Author)
Figure 8: (Table showing Total Production Cost)
Source: (Created by Author)
Figure 8: (Table showing Work-in-Progress Account)
Source: (Created by Author)
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Formula View of Process Costing Accounts
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Answer to Question 3
Normal View of Job Costing Accounts
Figure 9: (Table showing Joint cost allocated to B and selling price per kg)
Source: (Created by Author)
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