ACCT20076 - Management Accounting Case Study: Maharjan Analysis

This case study provides a comprehensive analysis of Maharjan Manufacturing Pty Ltd, focusing on key management accounting principles. The analysis includes calculations of contribution margins under normal and overtime production for plants in Coffs Harbour and Port Macquarie, break-even point analysis, and operating income calculations. The study identifies the strengths of each plant, particularly Port Macquarie's higher contribution per unit and Coffs Harbour's lower break-even point and higher operating income under specific conditions. Furthermore, the case addresses the allocation of 192,000 generators between the two plants based on contribution margins. The study concludes with a discussion of limitations, such as the lack of detailed overtime production analysis and the omission of other overhead costs, suggesting areas for further investigation. This assignment is available on Desklib, where students can find similar solved assignments and past papers.

FOUNDATION OF MANAGEMENT
ACCOUNTING
MAHARJAN MANUFACTURING
PTY LTD –
A CASE STUDY
STUDENT NAME –
STUDENT ID -

TABLE OF CONTENTS
EXECUTIVE SUMMARY
ANALYSIS OF THE RESULTS
FINDINGS FROM THE ANALYSIS
LIMITATIONS AND NECESSARY ACTION
APPENDICES
REFERENCES

EXECUTIVE SUMMARY
Management Accounting plays a very important role
in the finance industry. Through this report, the major
part of the management accounting will be discussed
in detail. For the purpose of the study, the company –
Maharjan Manufacturing Pty Ltd, financials have been
considered. There are two main aim of this report.
First aim is to understand the different terms of the
management accounting along with the calculations
like contribution, break even, etc.
Second major aim is analyze the impact of calculated
figures on the decision making function of the
management of the company.

EXECUTIVE SUMMARY (CONTD.)
In the given case the company has two
manufacturing plants. One is at Coffs Harbour
and second one is Port Macquarie. The analysis
have been done under the normal production as
well as under the overtime production. The best
plant has been the Coffs Harbour and the report
has been prepared with all the analysis.
With these considerations, the report has been
prepared and divided into appropriate headings.

ANALYSIS OF THE RESULTS
At first the contribution has been calculated under the
normal production as well as the overtime production.
Contribution is defined as the difference between the
Selling price per unit and the variable cost per unit. It
informs the margin that the company earns (Horngren,
2012).
Under the normal production, the plant located at Prot
Macquarie has generated the contribution of $192 per
unit against the $144 per unit of Coffs Harbour.
Under the overtime production, the plant located at
Prot Macquarie has generated the contribution of $183
per unit against the $120 per unit of Coffs Harbour.

ANALYSIS OF THE RESULTS
(CONTD.)
Thereafter, the break even has been calculated in
numbers under both type of production.
Break even is the point where the company will have
the situation of no profit or loss. It can be calculated
in numbers as well as the amount (Kaviyani, 2014).
Under the normal production, the plant located at
Prot Macquarie has reached the break even of 73500
against the 47200 of Coffs Harbour.
Under the overtime production, the plant located at
Prot Macquarie has has reached the break even of
77115 against the 56640 of Coffs Harbour.

ANALYSIS OF THE RESULTS (CONTD.)
Operating Income is calculated with the
production of the 96000 generators at both
the plants.
Coffs harbour has earned the operating
income of $4723200 against the Port
Macquarie of $4320000.
In the last, the allocation of 192000
generators have been done. As per the
contribution per unit, port Macquarie has
been allocated 120000 units and Coffs
Harbour has been allocated 72000 units.

FINDINGS FROM THE ANALYSIS
Under both the normal production and the overtime
production, the contribution per unit is higher in case
of Port Macquarie which is $192 and $183 respectively.
From the angle of the break even point, the plant
located at Coffs harbour is best as it reaches the break
even very early under both condition – normal as well
as overtime which 47200 and 56640 respectively
(Premnath, 2014).
Again from the angle of operating income, Coffs
harbour is best is it does the overtime otherwise the
Port Macquarie is best as it has generated the
operating income of $4320000.

FINDINGS FROM THE ANALYSIS
(CONTD.)
Now the major finding that has been done is to how
to allocate the production of total 192000
generators between the two plants of the company.
The allocation has been done with regard to the
contribution per unit earned by the plant.
It has been mentioned and calculated that the
contribution earned by the Port Macquarie plant is
higher as compared to the Coffs Harbour Plant.
Thus, the higher units have been allocated to Port
Macquarie and lesser units have been allocated to
Coffs Harbour.

LIMITATIONS AND NECESSARY
ACTION
One of the major limitation is the analysis of the
overtime production.
The company shall take into consideration as to when
the plant is required to have the overtime production
and when it is required to have the normal
production.
Without this consideration, the analysis can never be
said as exhaustive and detailed (Zimmerman, 2011).
The second limitation towards which the company’s
urgent attention is required is that the other
overheads have not been considered due to which the
net income have not been corroborated.

REFERENCES
Horngren, C. T, (2012), ”Introduction to Management
Accounting”, Chapters 1-17. Prentice Hall.
Kaviyani M, (2014), “A Modern Theory to Analysis of
Break Even Point”, Research Journal of Finance and
Accounting, Vol 5, No. 11, pp 68-76.
Premnath S, (2014), “Study of Break Even Point”,
International Journal of Innovative Research and
Development, Vol3, Issue 11, pp 164-168.
Zimmerman, J. L, (2011), “Accounting for decision
making and control” Issues in Accounting
Education, 26(1), 258-259.