University Management Accounting Case Study: ACCT6004 Analysis

This case study analyzes the management accounting practices of J&B Sports, focusing on job order costing and ethical considerations. The assignment includes calculations of direct labor costs, manufacturing overhead, and cost of goods manufactured. It explores the manipulation of financial records to meet performance targets, specifically addressing the unethical practice of altering inventory valuation and inspection costs. The analysis covers the impact of these actions on financial statements and decision-making, referencing ethical guidelines from APES 110. The case study examines sales revenue, cost of goods sold, and gross profit for different product lines, and investigates the beginning and ending inventory levels. The solution also provides an overview of the management's strategic goals and the implications of unethical financial reporting on the company's long-term viability and stakeholder relationships.

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

1MANAGEMENT ACCOUNTING
Table of Contents
Activity 3: Job Order Costing and Ethics in J&B Sports:...............................................................2
Part (a):........................................................................................................................................2
Part (b):........................................................................................................................................2
Sub part (i):..............................................................................................................................2
Sub part (ii):.............................................................................................................................2
Sub part (iii):............................................................................................................................2
Sub part (iv):............................................................................................................................2
Part (c):........................................................................................................................................3
Part (d):........................................................................................................................................3
Sub part (i):..............................................................................................................................3
Sub part (ii):.............................................................................................................................4
References and bibliography:..........................................................................................................5

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Activity 3: Job Order Costing and Ethics in J&B Sports:
Part (a):
Direct labor cost per unit 2.40
Allocated manufacturing overhead per unit 3.00
Predetermined overhead rate (/DL$)
(3/2.4) 1.25
Part (b):
Sub part (i):
Cost of direct material used in June 191,591
Cost of direct labor used in June 74,208
Manufacturing overhead 92,760
Total manufacturing cost for
June 358,559
Sub part (ii):
Total manufacturing cost for
June 358,559
Add: Beginning WIP 5,565
Less: Ending WIP (2,335)
Cost of goods manufactured 361,789
Sub part (iii):
Total manufacturing cost for
June 358,559
Add: Beginning WIP 5,565
Total Cost of units finished 361,789
Ending WIP Inventory 2,335
Sub part (iv):
Particulars Units Sold Sales price
per unit
Total Sales
Revenue Amount
Shorts
14,00
0
12.
00
168,0
00
Jerseys 3,10 14. 45,8

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0 80 80
Jackets
2,50
0
125.
00
312,5
00
Total Sales Revenue 526,380
Units Sold Total cost
per unit
Cost of
Goods Sold
Shorts
14,00
0
9.
87
138,1
80
Jerseys
3,10
0
11.
17
34,6
27
Jackets
2,50
0
77.
12
192,8
00
Total Cost of Goode Sold
(365,607
)
Gross profit for the month of
June 160,773
Part (c):
It can be observed that, there were 100 work in process inventory of shorts at the
beginning of the June and 13,500 units were finished during the year, but the sales for the year
was 14,000 units, hence there was 500 units in the beginning finished goods inventory. In case of
Jerseys, total units finished in the month of June were 3,200 units while the sales were for 3100
units. If no finished goods inventory was there for Jerseys, then the ending inventory of the
Jerseys were 100 units more than the beginning inventory. 2,500 units of Jackets were finished in
the month of June and 2,500 units of Jackets were sold in the month of June, hence, if it is
assumed that there was no beginning finished goods inventory for the Jackets, then the beginning
and the ending finished goods inventory for the Jackets are same and it is zero.

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Part (d):
Sub part (i):
In the given case study, it can be observed that, the management of the J&B Sports had
planned for three alternative actions, to increase sales by 10% annually, to increase income
before tax by 15% annually and to increase dividend by 12% annually. Lastly, the management
added an additional strategy to maintain the total the cost of goods sold within 70% of the sales
price. Maintaining cost of goods sold within 70% of the sales price implies to manage the
variable costs efficiently and to maintain it within the 70% of the sales price. It seeks the
management to manage the variable costs efficiently, to reduce the wastage, and to make sure the
efficient utilization of the resources. It can be observed from the given case study, that the
manager of the J&B Sports, have manipulated the financial records and shown a higher amount
of ending work in process inventory and a lower amount of inspection cost to show the total cost
of goods sold within the 70% limit of the total sales price. Hence, this is an unethical practice by
the manager. AEPS 100 Codes of Ethics, section 130 Professional and Due Care, says that,
accountants, should be working with professional competence and with due care while delivering
their duties, and performing their services (APES 110 2019). As per section 110 Integrity, they
need to work with integrity and to serve the organization with their professional services (APES
110 2019). In the given case study, the managers of the J&B Sports have manipulated the
financial records to show that they have achieved the management decision artificially.
Sub part (ii):
Because of such action by the manager of the J&B Sports, the actual manufacturing costs
have been manipulated and a higher cost is being presented as a lower, which will make an
actual loss for them. For such an action by the manager, there will be an actual monetary loss as

5MANAGEMENT ACCOUNTING
well as there would be nonmonetary by way of losing customers and losing customer loyalty.
Further, it would lead them to management inefficiency in a long-term perspective (APES 110
2019).

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References and bibliography:
Adler, R. (2013). Management Accounting. Routledge.
APES 110. (2019). Cpaaustralia.com.au. Retrieved 12 August 2019, from
https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-
ethical-standards/apes-110-code-of-ethics-for-professional-accountants
DRURY, C. M. (2013). Management and cost accounting. Springer.
Harrison, F., & Lock, D. (2017). Advanced project management: a structured approach.
Routledge.