Management Accounting for Costs and Control Assignment Analysis

This document presents a comprehensive solution to a management accounting assignment, covering key areas such as job costing, production cost reports, and variance analysis. The solution begins with a detailed job costing problem, including the creation of raw material, work-in-process, accounts payable, finished goods, and cost of goods sold accounts, along with relevant calculations. The assignment then proceeds to a production cost report, calculating equivalent units and costs per equivalent unit, and assigning costs to units transferred and work-in-process. A profit analysis for different product grades is also included, determining the optimal course of action for further processing. Variance analysis is performed, calculating material price and usage variances, as well as labor rate variances. Finally, a budget is created, analyzing costs across different periods. The assignment incorporates formula views and manual solutions to aid understanding and provides a detailed discussion of variance analysis and budgeting processes. The document is a valuable resource for students studying management accounting.

Running head: MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Management accounting for costs and control
Subject code
Student name and ID number
Assignment task number
Author note

MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................9
Question 3................................................................................................................................12
Question 4................................................................................................................................16
Question 5................................................................................................................................21
Reference..................................................................................................................................24
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Question 1
A. Job costing
Raw Material Account
Particular Amount Particular Amount
Opening balance $ 28,698.00 Work-in-progress $ 3,620.00
Purchase of Raw
material $ 4,922.00
Closing Stock of Raw
material $ 30,000.00
Total $ 33,620.00 Total $ 33,620.00
Work-in-Process Account
Particular Amount Particular Amount
Op balance $ 9,700.00 Cost of goods manufactured $ 61,120.00
Raw material $ 3,620.00
Direct Labour $ 29,600.00
Manufacturing OH $ 29,600.00 Closing balance $ 11,400.00
Total $ 72,520.00 Total $ 72,520.00
Accounts payable
Particular Amount Particular Amount
Bank account $ 8,700.00 Op balance $ 5,678.00
Closing balance $ 1,900.00 Raw Material purchased $ 4,922.00
Total $ 10,600.00 Total $ 10,600.00
Finished Goods
Particular Amount Particular Amount
Op balance $ 12,780.00 Cost of goods sold $ 55,000.00
Cost of goods manufactured $ 61,120.00 closing balance $ 18,900.00
Total $ 73,900.00 Total $ 73,900.00
Cost of goods sold
Particular Amount Particular Amount
Finished Goods $ 55,000.00 Cost of sales $ 55,000.00
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Total $ 55,000.00 Total $ 55,000.00
Calculation of Closing WIP
Particulars Amount
Material $ 9,000.00
labour $ 2,400.00
Closing WIP $ 11,400.00
calculation of Labour hour rate
Particulars Amount
Labour amount $ 2,400.00
Labour hours 300
Labour hour Rate 8.00
Calculation of Overhead absorption rate
Particulars Amount
Overhead (Budgeted) $ 24,000.00
Budgeted Labour hours 3000
Overhead Absorption rate $ 8.00
Formula view
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Manual solution –
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
B. Management accounting and history
Roman Coliseum is the load bearing structure that was built around in 1900. The main
reason that no one builds any structure this way now as the structure involved lot of labour
hour that was approximately 2/3rd of total cost and only 1/3rd of total expenses were towards
material cost (Braun, Tietz & Harrison, 2013). Therefore, if modern management accounting
approach is used to recreate the structure it can be built using the job costing approach. Job
costing involves accumulation of costs of overhead, labour and materials. This method can be
used to track the particular cost with regard to individual jobs and recognising them to check
whether there is any scope to reduce the cost in any particular area (Corum, Vayvay &
Bayraktar, 2014). Further, it can be used to track if any excess costs is incurred and the
measure to minimize the extra cost. Further, the job costing system is appropriate for
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MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
constructing building or any structure like Roman Coliseum. Under the job costing approach
the accounting activities will be carried out as follows –
 Materials – the cost components are accumulated and thereby allocated to the project
or product when the components are used (Kerzner, 2013).
 Labour – workers charge time to particular jobs that are allocated thereafter to the
jobs on the basis of employee’s labour cost
 Overhead – the overhead costs are accumulated in the cost pools and then are
assigned based on the job cost (Matsumura, Mattison & Miller-Nobles, 2014).
Therefore, if the Roman Coliseum is restructured using the modern cost management
accounting like jib cost it will minimize the cost required to complete the project and the cost
will be allocated on systematic basis.
Question 2
a. Production cost report for May
Calculation of Equivalent Units
Particulars Direct Material Direct Labour Overhead Physical units
Units Completed 32800 32800 32800 32800
Closing WIP 18400 5520 5520 18400
Total 51200 38320 38320 51200
Calculation of Costs per equivalent unit
Particulars
Direct
Material Direct Labour Overhead Total
Cost in the Beginning $ 27,000.00 $ 44,307.69 $ 13,292.31 $ 84,600.00
Costs incurred during the
year $ 118,700.00 $ 187,000.00
$
56,100.00 $ 361,800.00
Total $ 145,700.00 $ 231,307.69
$
69,392.31 $ 446,400.00
Cost per equivalent unit 2.85 6.04 1.81 10.69
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Statement showing assigning the cost to units transferred
Particulars
Direct
Material Direct Labour Overhead Total
Cost of units transferred
$
93,339.06
$
197,987.80 $ 59,396.34
$
350,723.20
Closing WIP
$
52,360.94
$
33,319.90 $ 9,995.97
$
95,676.80
Total $ 145,700.00 $ 231,307.69 $ 69,392.31 $ 446,400.00
Units to be Accounted for
Particulars Amount
Units at the beginning WIP 5600
Units started during the month 45600
Total Units 51200
Formula view –
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b. Work-in-process T-accounts
Work in Process Account
Particulars Units Amount Particulars Units Amount
Opening balance 5600
$
84,600.00 Transfer to next process
3280
0
$
350,723.20
Material Introduced
4560
0
$
118,700.00
Labour
$
187,000.00
overhead
$
56,100.00 Closing balance
1840
0
$
95,676.80
Total
5120
0 $ 446,400.00 Total
5120
0 $ 446,400.00
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