Management Accounting for Cost and Control: Comprehensive Analysis

This report provides a comprehensive overview of management accounting practices for cost and control. It defines Panopticism in the context of accounting, outlines the functions of management accounting including planning, organizing, and decision-making, and discusses the importance of checklists for maintaining routine and implementing control. The report also covers perpetual inventory systems, overtime costs, and costing methods, comparing traditional costing with activity-based costing (ABC). Furthermore, it includes a numerical example demonstrating cost allocation between departments. This document aims to provide a thorough understanding of the tools and techniques used in management accounting for effective cost management and strategic decision-making.

Running head: MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Management Accounting for Cost and Control
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Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................2
Answer to question 3:.................................................................................................................3
Answer to question 4:.................................................................................................................4
Answer to question 5:.................................................................................................................7
Answer to question A:................................................................................................................7
Answer to question B:................................................................................................................7
Answer to question 6:.................................................................................................................7
Answer to question 7:.................................................................................................................8
Answer to question 8:.................................................................................................................8
Answer to Part A:.......................................................................................................................8
Answer to Part B:.......................................................................................................................9
Answer to Part C:.......................................................................................................................9
Answer to question 9:...............................................................................................................11
Answer to question 10:.............................................................................................................13
Reference List:.........................................................................................................................15

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Answer to question 1:
Panopticism is referred as the social or theoretical framework which is named after
Panopticon. The theory was established by French philosopher named Michel Foucault
(Schaltegger & Burritt, 2017). Panoticon provides explanation to the tentative laboratory
associated with the authority that can be transformed or amended as the symbol of
surveillance. It is generally considered as the tool of disciplinary tool for surveillance.
For instance, the example of Pannotion has increased surveillance effect on the
surveillance in the age of technology and it is noticed that surveillance possess the appeal of
culture. The development in the observable data is provided in the organization and the
individuals from the data mining tools (Lanen, 2016). This has resulted in the development of
surveillance of data that can address the mode of surveillance that helps in pointing out the
distant transaction source by considering the algorithmic manufacturing.
In the current aspect of management accounting, Panopticism helps in the process of
management accounting as it helps in keeping a record for each single transaction along with
the necessary figures (Eldenburg et al., 2016). Therefore, Panopticism helsp in figuring out
the mistakes and errors and appropriate steps for rectification in order to make sure that the
accounting procedure remains authentic.
Answer to question 2:
The functions of management accounting are as follows;
a. Planning: Planning as the functions of management accounting refers to the short
term and long term application of plans to achieve the desired outcome. The functions
of management accounting is closely associated with the planning process (Ingersoll,
2015). This is because it provides managers with the required information for decision

3MANAGEMENT ACCOUNTING FOR COST AND CONTROL
making and providing reports that estimate the impacts of alternative course of
actions.
b. Organizing: Once the process of organising is established an organizational
framework and passing on the responsibilities to people that are working in the
organization to attain the business goals and objects (Jones et al., 2017). The form of
organizational structures differs one business to another business. Therefore,
organising necessitates clearness regarding each manager’s accountability and
authority lines.
c. Decision making: Decision making is considered as the procedure of selecting from
the opposing substitutes. Decision making is inherited in the functions of management
accounting such as planning, organising and controlling. The manager cannot plan
without making decision and has the select from the competing objectives and
methods of carrying out the selected objectives.
Answer to question 3:
As stated by (Dixon et al., 2018) maintaining routine and have become very complex
element in the current world since humans are inevitable to mistakes in the contemporary
words. As per the Van Helen Rock Band checklist is vital tool of implementing control.
Checklist are helpful in the implementation and composition of control. According to the
rock band, it is considered that Checklist is an important tool of implementing control since
this assures that every person that are engaged in the job is better able to understand the goals
and complying with the necessary procedure.
As stated by the rock band they gain by using checklist since check list according to
rock band is highly considered to be highly portable. With the help of checklist, the rock band
is better able to manage the consistency of supply, inventories and they are generally
considered as the time saving element by adding up the needed records amid the other things

4MANAGEMENT ACCOUNTING FOR COST AND CONTROL
(Weygandt et al., 2015). Under this conditions checklists not only helps in maintaining
necessary records but also required for necessary success.
Answer to question 4:
Normal View
Normal View:

5MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Formula View:

6MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Formula View:
Answer to question 5:
Answer to question A:
The system of perpetual inventory continuously updates the records for the small
organizations when it makes the use of the raw materials or sells the products to the
consumers (Warren et al., 2015). Organizations that uses the perpetual system of inventory
must apply the system of physical count of stock in to the day-to-day organizations inventory
and compare the quantity against the records of inventory. The physical stock take in this

7MANAGEMENT ACCOUNTING FOR COST AND CONTROL
system would act as the tool for investigating in the discrepancies of the inventory record in
order to determine the reasons for improper quantities.
Answer to question B:
Overtime refers to the augmented pay for each hour which an hourly worker is
entitled to get when they put in more than the prescribed hour work per day or week (Handy
& Polimeni, 2017). The overtime payment that is paid to the worker is considered as into the
indirect labour cost and the same is accounted into the overhead costs.
Answer to question 6:

8MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Answer to question 7:
Answer to question 8:
Answer to Part A:

9MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Answer to Part B:
Answer to Part C:

10MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Answer to question 9:
Costing refers to the system of accounting in which all the costs that are sustained in
executing the activity or achieving the objective are collected, categorised and verified. The
emergence of 1980 era bought an intensive competition across the world with increased
importance of overloads with the decline in the direct labour (Greenberg & Wilner, 2015).
Also there was problems which was being faced with the traditional system of costing. The
activity based is considered as the precise and favoured over the traditional cost accounting
system. The ABC methods of cost system is created when the expenses of the business are
higher and there are several mixed goods. Incorrectness and mistakes are considered
unwelcome due to the rates that is set by the market participants. For the reason that heavy
and stiff rivalry, a greatly dependable and correct system of cost management is required.
The traditional method of cost accounting makes the use of the single overhead pool
and it is unable to compute the actual costs. The costs objects are assigned arbitrarily the
basis of machine hours and labour (Edmonds et al., 2016). On the other hand, the ABC
system of costing includes the identification of products parts or the labour while the
traditional cost accounting arbitrarily assembles the expenses, salaries and depreciation.

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The targeted costs which is created upon the activities are computed through ABC
costing. The ABC system is considered to be beneficial because it aids in streamlining the
course of decision making and makes the concept of administration turns out to be target
oriented. The activity based costing method helps in assessing the performance and setting
out the standards that help the managers to make use of the information for the purpose of
comparative study.
Under the traditional costing systems, the business decides the cost of productions
following the production of budgets while under the ABC costing the value of the product is
ascertained based on the feedback of consumer. The structure of activity based costing helps
in determining the company whether to reduce or increase the activity costs to grab the
attention of customers (Scott, 2015). The system of cost helps in keeping up with the market
participants without forgoing the quantity and superiority of the products.
The activity based costing helps the company in developing strategy, long range plans
and competitive advantage by placing focus on the activities. ABC system of costing uses the
cost identification objects which is selected along with the direct costs that are associated
with the products.
In spite of the benefits there are certain arguments against the ABC costing system in
the cost allocation areas (Edmonds et al., 2016). With the availability of data there are some
costs that requires allocation to department and product allocation. This leads to occurrence
of costs that may not be at times be regarded possible. It can be stated that traditional costing
system is not accurate as the ABC system. Traditional costing system may also lead to
substantial under valuation and over valuation.

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Answer to question 10:
Total Cost of S1 Department (x) = Direct Centre Cost of S1 + [20% * Total Cost of S2 (y) ]

13MANAGEMENT ACCOUNTING FOR COST AND CONTROL
=>, x = $20000 + (20% X y)
b) Total Cost of S2 Department (y) = Direct Centre Cost of S2 + [ 15% * Total Cost of S1
(x)]
=>, y = $25000 + (15% X x)
=>, y= $25000 + [15% x ($20000 + 20%y)]
=>, y= $25000 + $3000 + 3%y
=>, y-0.03y = $28000
=>, 0.97y = $28000
=>, y = $28000/0.97 = $28868
x = $20000 + 20%y
=>, x = $20000 + (20% x $28868)
=>. x = $20000 + $5773 = $25773

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Reference List:
Dixon, G. D., Taylor, A. D., Utting Jr, R. W., Eaton, J. L., & Im, S. L. (2018). U.S. Patent
Application No. 15/541,283.
Edmonds, T. P., Edmonds, C. D., Tsay, B. Y., & Olds, P. R. (2016). Fundamental managerial
accounting concepts. McGraw-Hill Education.
Eldenburg, L. G., Wolcott, S. K., Chen, L. H., & Cook, G. (2016). Cost management:
Measuring, monitoring, and motivating performance. Wiley Global Education.
Greenberg, R. K., & Wilner, N. A. (2015). Using concept maps to provide an integrative
framework for teaching the cost or managerial accounting course. Journal of
Accounting Education, 33(1), 16-35.
Handy, S. A., & Polimeni, R. S. (2017). Concept Mapping-A Graphical Tool to Enhance
Learning in an Introductory Cost or Managerial Accounting Course. Journal of the
Academy of Business Education, 18.
Ingersoll, K. (2015). Inventory management for the pharmacy technician. Educational
Review Systems. Accreditation Council of Pharmacy Education (ACPE).
Jones, M. A., Taylor, R. J., Snelgrove, R., & Tripathi, R. (2017). U.S. Patent Application No.
15/313,870.
Lanen, W. (2016). Fundamentals of cost accounting. McGraw-Hill Higher Education.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Warren, C. S., Reeve, J. M., & Duchac, J. (2015). Managerial accounting. Nelson Education.

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Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting.
John Wiley & Sons.