University Management Accounting Case Study Assignment

This assignment presents solutions to three management accounting case studies. The first case study focuses on Cattesloe Ltd., a manufacturing company, and involves preparing revenue, production, and direct materials budgets, along with a direct manufacturing labor budget and a budgeted finished goods inventory. The second case study analyzes Asaya Clothing Pty. Ltd., also a manufacturing company, which uses the weighted average method for process costing, calculating equivalent units and cost per unit for transferred in costs, direct materials, and conversion costs, and determining the total costs assigned and the cost of ending work in progress. The third case study delves into the hospitality industry, discussing the importance of setting goals, vision, and mission for a budget hotel, particularly in the context of increasing foreign direct investment and technological advancements, and suggesting strategies for revenue generation, customer focus, and cost reduction through effective marketing, online platforms, and operational efficiency.

1
By student name
Professor
University
Date: 03 October 2017.
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Contents
Case Study 1…………..……………………..........……………………………..……………………...3
Case Study 2…………..……………………..........……………………………..……………………...5
Case Study 3…………..……………………..........……………………………..……………………...7
Refrences.....………………………………………………………………....................................8
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Case Study 1
In the case study, a manufacturing company named Cattesloe Ltd. is given and it is selling 2 products,
namely Thingone and Thingtwo. (Alexander, 2016) The cost data, the revenue data, the budgets and the
actual data pertaining to the year 2015 has been given based on which the budgets had to be prepared.
1. Revenue Budget:
Particulars Units Selling Price ($) Final Revenue ($)
Thing One 60,000 165 9,900,000
Thing Two 40,000 250 10,000,000
Total 19,900,000
Preparation of Revenue Budget (in dollars)
2. Production Budget:
Particulars ThingOne ThingTwo
Units to be sold during the year 60,000 40,000
Add: Inventory at end 25,000 9,000
Total requirement for the year 85,000 49,000
Less: Inventory at beginning 20,000 8,000
Total Units to be produced 65,000 41,000
Preparation of Production Budget (in units)
3. And 4 Direct Materials Purchase Budget in units and in dollars:
Particulars A B C Total
Thingone 260,000 130,000 390,000
(65000*4)
(65000*2)
Thingtwo 205,000 123,000 41,000 369,000
(41000*5)
(41000*3)
(41000*1)
Total 465,000 253,000 41,000 759,000
Target inventory at end 36,000 32,000 7,000 75,000
Total requirements 501,000 285,000 48,000 834,000
Target inventory at beginning (32,000) (29,000) (6,000) (67,000)
Direct material purchased (in quantity) 469,000 256,000 42,000 767,000
Purchase cost (per unit) 12 5 3
Total purchase costs (in dollars) 5,628,000 1,280,000 126,000 7,034,000
Direct Material
Direct Materials Purchases Budget (in Quantities and in dollars)
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4. Direct Manufacturing labour budget (in dollars):
Particulars
Budgeted
Production
(Units)
Direct
manufacturing
labour hrs per unit Total Hrs.
Hourly
wage rate
($) Total ($)
Thingone 65,000 2 130,000 12 1,560,000
Thingtwo 41,000 3 123,000 16 1,968,000
Total 3,528,000
Direct Manufacturing Labour Budget (in dollars)
5. Budgeted Finished Goods Inventory as on 31st December, 2015 (in dollars):
Amount ($) Total ($) Amount ($) Total ($)
A 4*12 48 5*12 60
B 2*5 10 3*5 15
C 0*3 - 1*3 3
Direct manufacturing labour cost 2*12 24 3*16 48
Manufacturing overhead cost per unit 2*20 40 3*20 60
Budgeted Manufacturing cost per unit 122 186
Budgeted Finished Goods inventory 25000*122 3,050,000 9000*186 1,674,000
Cattesloe Ltd.
Budgeted Finished Goods Inventory as on 31st December, 2015
Thingone Thingtwo
Particulars
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Case Study 2:
In this case study, a manufacturing concern by the name Asaya Clothing Pty. Ltd. has been given and it
manufactures winter clothing. (Abbott & Kantor, 2017) It has 2 divisions, Knitting and Finishing
department and mainly 3 types of costs are being incurred namely, direct material cost, transferred in
costs and conversion costs. Asaya clothing is in the practice of using weighted average method of
process costing. The accouting data with opening and closing data has been provided. Given below are
the respective calculations:
Particulars Unit Amount ($) Particulars Unit Amount ($)
To Opening Work in progress 75 105,000 By Finishing Department 150 275,934
To Direct Material 135 37,500 (150*(1035.71+250+553.85))
To Transferred in cost 142,500 By Closing Work in progress 60 87,066
To conversion cost 78,000 (60*1035.71)+(60*75%*553.85)
363,000 363,000
Process 1 (Knitting Department)
% of completion Equivalent units % of completion Equivalent units % of completion Equivalent units
75 Opening Work in Progress
135 Units Introduced
Units Introduced & Completed 150 100 150 100 150 100 150
Closing Stock 60 100 60 - - 75 45
210 210 200 210 100 150 175 195
Costs
Opening Work in Progress 75,000 - 30,000
During June 142,500 37,500 78,000
Total Cost 217,500 37,500 108,000
Cost per unit 1,035.71 250.00 553.85
Inputs Particulars Output Direct Material Conversion CostsTransferred in costs
Statement of equivalent units & cost per unit
1. The equivalent units are 210 for transferred in costs, 150 units for direct material and 195 units
for conversion costs as can be seen above in Statement of equivalent units and cost per unit.
(Belton, 2017)
2. The total costs to be assigned for the period is computed to be $ 217500 for transferred in costs,
$ 37500 for direct materials and $ 108000 for conversion costs, and the cost per equivalent unit
is computed to be $1035.71, $250 and $553.85 respectively.
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3. The total costs as pet the above workings for the units completed comes to $ 275934 and cost of
units to be assigned to the ending work in progress comes to $ 87066. This workings is given in
Table 1 above. (Bromwich & Scapens, 2016)
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Case Study 3
In the given case it is very important to set out the goals, vision and mission in the competing and
growing hospitality industry, when one is appointed as the assistant manager of the budget hotel. There
are few key points that must be kept in mind while setting out the specific goals of the hotel. It is
important that the model of the business must be met in such a way that the overall cost related to the
hotel can be met along with generating sufficient amount of revenue for the company and their peers.
(Bromwich & Scapens, 2016) The present situation is such that the FDIs are making ample amount of
investment in the hotel industry and the companies should try to make use of the same by applying
effective leveraging techniques. The short term visions of the company would be to develop a strong
customer base in the industry by developing some reputation with the help of effective marketing and
generating word of mouth recommendations. (Das, 2017) This can be done by generating revenue
models for the company and customer focused model that works on lower interest rate arena. The
mission of the company would be to operate for a longer time in the business by developing good brand
name for the company. The hotel industry runs on innovation and the company should try to indulge in
the same by launching different menus and other programs that helps in long term growth of the
company. On the basis done it can be seen that a large amount of unallocated cost is there in
advertisements and in the overhead budget that increases the overall operations. The companies should
try to develop better promotion strategies by giving discounts to the customer or other special offers
that will help in improving the functions of the hotel and help in development of better brand name for
the same. The food and beverages industry is flourishing and it is important that the focus should be
placed on the same. (Heminway, 2017)
With the recent technological developments it can be seen that there is a huge growth in the online
business where there are a number of platforms with which the company can tie up and sell their food
and services to the customer through these sites at different corners of the world. So the budget hotel
can make use of the same by developing proper model in that regard. The company can go for such sites
that offer discounts for tie ups and price should be accommodating enough of the total cost that the
hotel incurs in delivering those products that are ordered through these online sites. It is also important
to see that once the strategies are defined they are implemented soon, so that the overall overhead
cost that the company is incurring is reduced. (Murray & Markey Towler, 2017)‐ It is also important that
these models should be effectively tested before they are applied. The main aim of the hotel industry is
that the customer is the king and all the efforts must be channelized in the same direction.
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References
Abbott, M. & Kantor, A., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case of
the Victorian Rail Track Corporation. Australian accounting Review.
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp.
411-431.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management
Accounting Research, Volume 31, pp. 1-9.
Das, P., 2017. Financing Pattern and Utilization of Fixed Assets - A Study. Asian Journal of Social Science
Studies, 2(2), pp. 10-17.
Heminway, J., 2017. Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and
Organic Documents. SSRN, pp. 1-35.
Murray, C. & Markey Towler, B., 2017. A Theory of Return-Seeking Firms.‐ SSRN, pp. 1-14.
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