University Name - Management Accounting for Cost & Control Assignment

This document presents a detailed solution to a management accounting assignment, addressing key concepts such as process costing, variance analysis, and budgeting. The assignment explores the application of these concepts through various questions, including the analysis of cost variations, computation of equivalent units, and the evaluation of joint production costs. It also covers the importance of budgeting in relation to government policies and the impact of political factors. The document provides calculations, explanations, and answers to each question, along with references. The solution demonstrates the practical application of management accounting principles in different business scenarios. The document is a valuable resource for students seeking to understand and solve management accounting problems.

Running head: MANAGEMENT ACCOUNTING FOR COST & CONTROL
Management Accounting for Cost & Control
Name of the Student:
Name of the University:
Author’s Note:

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Table of Contents
Answer to Question No 1................................................................................................................2
Requirement A:............................................................................................................................2
Requirement B:............................................................................................................................3
Answer to Question No 2................................................................................................................4
Answer to Question No 3................................................................................................................6
Requirement a:.............................................................................................................................6
Requirement b:.............................................................................................................................6
Answer to Question 4:.....................................................................................................................7
Requirement a:.............................................................................................................................7
Requirement b:.............................................................................................................................9
Answer to Question No 5..............................................................................................................11
Requirement A:..........................................................................................................................11
Requirement B:..........................................................................................................................12
Reference List................................................................................................................................14

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Answer to Question No 1
Requirement A:
DR. CR.
Date Particulars Amount Date Particulars Amount
To, Balance b/d. 24855 31/8/14 By, Work-in-Process A/c. 6010
To, Accounts Payable A/c. 6155 By, Balance c/d 25000
31010 31010
DR. CR.
Date Particulars Amount Date Particulars Amount
1/8/X4 To, Balance b/d 8790 31/8/X4 By, Cost of Goods Sold A/c. 30000
31/8/X4 To, Work-in-Process A/c. 30110 By,Balance c/d 8900
38900 38900
DR. CR.
Date Particulars Amount Date Particulars Amount
31/8/X4 To, Finished Goods A/c. 30000 31/8/X4 By, Profit & Loss A/c. 32800
To, Manufacturing
Overhead A/c. 2800
32800 32800
Direct Material Account
Finished Goods
Cost of Goods Sold

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
DR. CR.
Date Particulars Amount Date Particulars Amount
1/8/X4 To, Balance b/d 6700 31/8/X4 By, Finished Goods A/c. 30110
To, Direct Labor A/c. 14800 By, Balance c/d 9400
To, Manufacturing Overhead A/c. 12000
To, Direct Material A/c. 6010
39510 39510
DR. CR.
Date Particulars Amount Date Particulars Amount
31/8/X4 To, Bank A/c. 6700 1/8/X4 By, Balance b/d 2345
31/8/X4 To, Balance c/d 1800 By, Direct Material A/c. 6155
8500 8500
Work-in-Process
Accounts Payable
Requirement B:
There has been an existence of vast variation in the development of the great Pyramid of
Giza when it was constructed 4500 years ago. The development of the Giza pyramid required the
use of traditional methods that were inclusive of several stages like the execution, planning,
designing, initiation and closing. There were certain restraints with respect to the development of
the great pyramid that were inclusive of the resources, techniques and the costs (Alawattage et
al., 2017). The introduction of the innovative cost management accounting mechanism would
lead to a transformation in the difference among the mechanism utilised for the intention of
development along with the eradication of the restraints that have been explained earlier.
In this aspect, which is in association to the development of the great pyramid, the
incorporation of the process costing would be suitable. It would be supportive for the dissecting
of the cost that would aid in managing the construction cost. The cost per unit of the products has
been predicted to be the cost that is related to the cost discovered in the process costing (Otley,

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
2015). The processed costing depends on the standard cost, which becomes helpful when a vast
variety of products is produced. The development of the pyramid would become very tough
without describing the actual cost that is related. However, the incorporation of the process
costing would help in the assignment of the actual product cost.
Answer to Question No 2
Computation of Equivalent Units:
Process 1 Physical Flow
Material Conversion
O/WIP 2000 0 1400
Started in May 6000
Total Production 8000
Completed in Process 7000 7000 7000
C/WIP 1000 1000 500
Total Equivalent Units 8000 7500
Process 2 Physical Flow
Material Conversion
O/WIP 1000 0 500
Started in May 7000
Total Production 8000
C/WIP 750 0 225
Completed I Process 7250 7250 7250
Total Equivalent Units 7250 7975
Equivalent Units
Equivalent Units
Cost per Equivalent Units:

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Particulars Material Coversion Transferred-in Total
Process 1:
O/WIP Cost $3,000 $2,000 $5,000
Current Cost $30,000 $60,000 $90,000
Total Production Cost of Process 1 $33,000 $62,000 $95,000
Total Equivalent Units 8000 7500
Cost per Equivalent Units of Process 1 $4.13 $8.27 $12.39
Process 2:
O/WIP Cost $3,000 $4,000 $8,000 $15,000
Current Cost $35,000 $45,000 $86,742 $166,742
Total Production Cost of Process 2 $38,000 $49,000 $94,742 $181,742
Total Equivalent Units 7250 7975 7000
Cost per Equivalent Units of Process 2 $5.24 $6.14 $13.53 $25
Cost of Finished Goods and Closing Stock:
Particulars Amount
Finished Goods Completed during May 7250
Cost per Equivalent Units $25
Cost of Finished Goods Completed $180,671
Closing Stock in Process 1 1000
Cost per Equivalent Units for Process 1 $12.39
Cost of Closing Stock in Process 1 $12,391.67
Closing Stock in Process 2 750
Cost per Equivalent Units for Process 1 $24.92
Cost of Closing Stock in Process 2 $18,690.08

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Answer to Question No 3
Requirement a:
Particulars Amount
Total Joint Production Cost A $250,000
Less: Joint Cost allocated to
A B $187,500
Joint Cost allocated to B C=A-B $62,500
Sales Volume of C (in kg.) D 60000
Selling Price per kg. of C E $4.50
Net Realisable Value of C F=DxE $270,000
Net Realisable Value of D
G=Fx(C/
B) $90,000
Sales Volume of D (in kg.) H 40000
Selling Price per kg. of D I=G/H $2.25
Requirement b:
The net profit, earned in general circumstances, are computed below:
Particulars A B Total
Selling Price per unit $4.50 $2.25
Sales Volume 60000 40000 100000
Total Sale Revenue $270,000 $90,000 $360,000
Joint Cost Allocation ($187,500) ($62,500) ($250,000)
Further Processing Cost ($45,000) ($25,000) ($70,000)
Net Profit $37,500 $2,500 $40,000
However, if the company sells product A for $2 per kg at the spilt-off point, the the
outcomes of the business operation would be as follows:

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Particulars A B Total
Selling Price per unit $2.00 $2.25
Sales Volume 60000 40000 100000
Total Sale Revenue $120,000 $90,000 $210,000
Joint Cost Allocation ($142,857) ($107,143) ($250,000)
Further Processing Cost ($25,000) ($25,000)
Net Profit ($22,857) ($42,143) ($65,000)
As the company would incur huge loss in this new scenario, it should process product A
further instead of selling it outside.
Answer to Question 4:
Requirement a:
Particulars Amount
Material Purchased (in units) 220000
Standard Price per kg $6
Standard Cost for Actual Material
Purchased $1,320,000
Actual Cost of Actual Material
Purchased $1,364,000
Material Price Variance ($44,000)
Remarks Unfavorable
Material Price Variance:

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Particulars Amount
Units Produced 19500
Standard Usage per unit of
production 11
Standard Usage for Actual
Production 214500
Actual Material Usage 197000
Standard price per kg. $6
Material Usage Variance $105,000
Remarks Favorable
Material Usage Variance:
Particulars Amount
Actual Production 19500
Standard Labor hour per unit 2
Standard Labor Hour for Actual
Production 39000
Actual Labor Hours 40000
Standard Labor Rate per hour $20
Direct Labor Efficiency Variance ($20,000)
Total Direct Labor Variance ($1,650)
Direct Labor Rate Variace $18,350
Standard Labor Cost for Actual
Labor Hours $800,000
Actual Labor Cost $781,650
Actual Direct Labor Rate per hour $19.54
Actual Direct Labor Rate per hour:

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Dr. Cr.
Date Amount Amount
Direct Material A/c. Dr. $1,364,000
To, Accounts Payable A/c. $1,364,000
Work-in-Progress A/c. Dr. 1287000
To, Direct Material A/c. 1287000
Material Price Variance A/c. Dr. $44,000
To, Direct Material A/c. $44,000
Direct Material A/c. Dr. $105,000
To, Material Usage Variance A/c. $105,000
Direct Labor Cost A/c. Dr. $781,650
To, Accrued Payroll A/c. $781,650
Work-in-Progress A/c. Dr. 780000
To, Direct Labor Cost A/c. 780000
Direct Labor Cost A/c. Dr. $18,350
To, Direct Labor Rate Variance A/c. $18,350
Direct Labor Efficiency Variance A/c. Dr. $20,000
To, Direct Labor Cost A/c. $20,000
Material Usage Variance A/c. Dr. $105,000
Direct Labor Rate Variance A/c. Dr. $18,350
To, Cost of Goods Sold A/c. $59,350
To, Direct Labor Efficiency Variance A/c. $20,000
To, Material Price Variance A/c. $44,000
Particulars
Requirement b:
The variance analysis method refers to the recognition and identification of the
variance case within the income and expenditure of the values that have been budgeted from the
current year amount. The aspects that led to the advent of the variations in the budgeted value are
identified by taking assistance of the variance evaluation (Ashraf, & Uddin 2015). Additionally,
it assists in resourceful operations of budget ultimately. The effectiveness of the control
technique is evaluated by making use of such evaluations that supports the management in the

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
development of certain proposals that would be helpful in restraining these discrepancies. It even
assists during the allotment of the accountabilities, which occupies the department with the help
of the controlling mechanisms.
The analysis of the variance is considered as a key tool in the management of business
and is significant in the process of management accounting. This helps in the scrutinising of the
factors for the digression between the actual and the predicted values that helps in developing the
efficiency and in that way helps in maintaining the authority over the expenses of the venture by
effectual monitoring of the actual and the premeditated expenses (Mohd-Jamal, & Tayles 2014).
The several problems, trends and opportunities in regards to the long-term and the short-term
achievements for any kind of projects of the firm that are disclosed by taking assistance of the
assessment of the variance. It assists in explaining the variances of the revenue and the cost.
The quantitative inspection has been a key factor in numerous other areas, which includes
the examination of the organizational behaviour, performance of the company and the human
resource department. This assists in providing a free communication with respect to the
anticipations of the feedback and the performance of the several other departments. The financial
result of the firm is directly connected with the human resource performance and the evaluation
of the variance assists in establishing a relationship among the transformations in various
departments. The incorporation of the variance assessment helps in examining the answers of the
employees with respect to numerous components that would that will be helpful in gaining the
feedback (Abdelmoneim Mohamed, & Jones 2014). The managers are certain levels performing
in numerous departments exploit the variance assessment that assists then in implementing the
effective equipments and tools for taking care of the costs. They try to achieve the utmost degree
of advantages from the variance of using of the materials.

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MANAGEMENT ACCOUNTING FOR COST & CONTROL
Answer to Question No 5
Requirement A:
Particulars 20X2 20X3 20X4 20X5 20X6
Sales Volume 32400 34992 37791 40000 40000
Selling Price per unit $6.63 $6.97 $7.38 $8.13 $8.78
Total Sales Revenue $214,812 $243,824 $279,051 $325,080 $351,000
Cost of Goods Sold ($164,520) ($186,192) ($212,841) ($238,760) ($257,120)
Gross Profit $50,292 $57,632 $66,210 $86,320 $93,880
General & Administrative
Expenses ($30,074) ($34,135) ($39,067) ($45,511) ($49,140)
Net Profit before Tax $20,218 $23,496 $27,143 $40,809 $44,740
Less: Income Tax @40% ($8,087) ($9,399) ($10,857) ($16,324) ($17,896)
Net Profit after Tax $12,131 $14,098 $16,286 $24,485 $26,844
Particulars 20X2 20X3 20X4 20X5 20X6
Opening Balance of Retained
Earnings $3,500 $3,780 $4,082 $4,409 $4,762
Net Profit for the period $12,131 $14,098 $16,286 $24,485 $26,844
$15,631 $17,878 $20,368 $28,894 $31,606
Less: Dividends Payable ($7,885) ($9,164) ($10,586) ($15,915) ($17,449)
Closing Balance of Retained
Earnings $3,780 $8,714 $9,782 $12,979 $14,157
Budgeted Income Statement:
Budgeted Statement of Retained Earnings:
Workings: