Management Accounting Report: Cost Accounting and Cash Flow Strategies

This management accounting report provides an in-depth analysis of cost accounting and cash flow analysis. It explores activity-based costing for overhead allocation and product costing. The report also examines the impact of a new membership plan on sales revenue and cash flow, considering different scenarios and assumptions. Furthermore, it discusses the benefits of the new plan, potential challenges, and factors to consider during implementation. The analysis includes calculations of sales revenue under existing and new membership plans, highlighting the increase in revenue and cash flow. The report concludes by summarizing the key findings and offering insights into strategic financial planning and decision-making within a business context. The report is a comprehensive study on the importance of financial planning and accounting methods for informed decision-making in business.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author Note:

2MANAGEMENT ACCOUNTING
Table of Contents
Executive Summary.........................................................................................................................2
Assessment Task Part A..................................................................................................................3
Requirement a:.............................................................................................................................3
Requirement b:.............................................................................................................................5
Requirement c:.............................................................................................................................6
Assessment Task Part B...................................................................................................................7
Requirement a:.............................................................................................................................7
Requirement 2..................................................................................................................................8
Requirement 3................................................................................................................................13
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15

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Executive Summary
Management accounting is one of the processes used for preparation of management
reports as well as accounts that render accurate and timely financial information in front of
managers so that they can undertake both short-term and long-term decisions. On the other
hand, Financial Accounting provides information to the financial users that help managers inside
the business enterprise with decision-making. The role of management accounting in business
enterprise helps in forecasting the future and make or buy decisions. Furthermore, management
accounting employs different tools for forecasting business trends that include financial
modeling, simulations, ratio analysis, Management Information System, Key Performance
Indicators, Game theory as well as balance scorecards and skills to analyze financial statements.
The tools as well as techniques used in the management accounting can be categorized
under certain heads. The current segment or study explains two methods of management
accounting and these methods are cost accounting as well as cash flow analysis.
Cost accounting help in calculating cost of goods sold, produced by using various tools as
well as techniques or methods. In the first assignment, the main purpose of the report is to
compute the overhead costs for calculating the production cost. In addition, there are different
techniques used in the assignment that help in allocating the overhead expenses to specific
product. After evaluating several techniques, it is found that Activity based costing help in
allocating overheads as well as determining the product cost in an accurate way. It is even
mentioned in the first assignment that there are different overheads that are allocated to the

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product based on its benefits consumed from various related activities as shown in the Activity
based costing method.
As far as second assignment is concerned, it deals with explaining cash flow analysis as it
is treated as one of the significant tool used by the managers to understand the cash flows of any
business in an effective way. Cash flow analysis techniques had been used in the second
assignment for measuring the potentiality of a new plan.
Assessment Task Part A
Requirement a:
Activity
Activity
Cost Activity Driver
Annual
Quantit
y
Cost per
Unit of
Activity
Process Receivables $15,000 No. of Invoices 5000 $3.00
Process Payables $25,000
Nos. of Purchase
Orders 2500 $10.00
Program Production $28,000
Nos. of
Production
Schedule 1000 $28.00
Process Sales Order $40,000
Nos. of Sales
Order 4000 $10.00

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Dispatch Sales Order $30,000
Nos. of
Dispatches 2500 $12.00
Load Mixers $14,050 Nos. of Batches 1000 $14.05
Operate Mixers $45,900
Nos. of
Kilograms 200000 $0.23
Clean Mixers $6,900 Nos. of Trays 1000 $6.90
Move mixture to filling $3,450
Nos. of
Cakes/Pastries 200000 $0.02
Clean Trays $20,000 Nos. of Trays 16000 $1.25
Fill Trays $16,000
No. of
Cakes/Patries 800000 $0.02
Move to baking $8,000 No. of Trays 16000 $0.50
Set up Oven $50,000 No. of Batches 1000 $50.00
Bake Cake/Pastries $1,30,000 No. of Batches 1000 $130.00
Move to Packing $40,000 No. of Trays 16000 $2.50
Pack Cake/Pastries $80,000
No. of
Cakes/Patries 800000 $0.10
Inspect Patries $2,500 No. of Pastries 50000 $0.05

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Requirement b:
Bill of Activities
Activity Consumed
Annual
Quantity of
Activity
Driver
Cost
per
Unit of
Activit
y
Total
Cost
Process Receivables 500 $3.00 $1,500.00
Process Payables 200 $10.00 $2,000.00
Program Production 100 $28.00 $2,800.00
Process Sales Order 400 $10.00 $4,000.00
Load Mixers 100 $14.05 $1,405.00
Operate Mixers 30000 $0.23 $6,885.00
Clean Mixers 100 $6.90 $690.00
Move mixture to filling 30000 $0.02 $517.50
Clean Trays 2000 $1.25 $2,500.00
Fill Trays 100000 $0.02 $2,000.00
Move to baking 2000 $0.50 $1,000.00
Set up Oven 100 $50.00 $5,000.00
Bake Cake/Pastries 100 $130.00 $13,000.0

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0
Move to Packing 2000 $2.50 $5,000.00
Pack Cake/Pastries 100000 $0.10
$10,000.0
0
Dispatch Sales Order 500 $12.00 $6,000.00
Develop & Test Product $600.00
Total Overhead Cost
$64,897.5
0
Annual Volume 100000
Cost per unit for
Lamington $0.65
Requirement c:
The above table shows overhead costs and these are the indirect cost that supports the
production process or in that case, distribution purposes (van Helden and Uddin 2016).
Furthermore, there are several direct costs that need to be mentioned in the case study but it was
not mentioned. Direct costs are the cost that attributed to the manufacturing of any rendered
goods or services. It is one of the significant elements used in production cost. It is where it is
not possible to manufacture the goods without incurring any associated cost (Van der Stede
2016). Therefore, in order to calculate product cost of Lamington, it is important to include direct
costs that are listed below:

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Direct Labor Costs
Direct Material Costs
Freight Inward charges

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Assessment Task Part B
Requirement a:
From the given case study, it can be seen that HLW earn fees from two different sources
and these sources are annual membership fees as well as court fees (Taylor and Scapens 2016).
With that, more than 40% of the total revenue is generated in the form of annual membership for
a given period of 2 months. As far as the balance part is concerned, it is generated from the court
fees for each year annually (Soderstrom, Soderstrom and Stewart 2017). Furthermore, the cash
inflow from court fees does not remain even per month. During Peak season (that is October to
April), it is noted that the cash inflow from court feeds uses to be high that is more than 45% of
the total revenue. On the contrary, during the months May to September, it is noted that the
amount of court fees collected is very low as it covers only 15% of the total revenue (Solovida et
al. 2017).
In case where HLW implement new membership plan, it is important to collect 80% of
the total revenue within the first month of the accounting period. Addition to that, HLW can get
several benefits that are listed below with proper justification if they implement this new plan:
Implementation of new plan will benefit HLW in generating unrestricted cash flow from
general operating sources in form of annual one-time membership (Nuhu, Baird and
Appuhami 2016). As far as current plan is concerned, the club need to be dependent upon
individual programs like hourly court fees for earning more than 50% of the total revenue
Implementation of new plan will benefit HLW in preparing such platform that assist the
club for generating steady as well as cash flows every month (Modell 2014).

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Implementation of new plan will benefit HLW as club management can accumulate more
than 80% of the total revenue for initial months as per new plan rather than waiting for 6
complete months (Lopez-Valeiras, Gomez-Conde and Naranjo-Gil 2015). Therefore, the
benefits will help in planning for proper utilization of the accumulation fund as well as
taking different financial decisions as and when required.
Requirement 2
In the case study, several issues are highlighted and for that, certain assumptions needs to
be made for understanding the effect of new membership plan on the sales revenue (Lachmann,
Trapp and Trapp 2017). Some of the assumptions are mentioned below with proper justification:
Court usage is 100% during peak season
60% utilization of capability during non-prime time
40% court usage during off-season
Sales revenue under existing plan
Below, calculation is made for determining the effect and earned current sales by using
systematic method by determining the aforementioned assumptions
Annual membership revenue
Particulars
Weightag
e
No. of
Members
Annual
Membershi
p Fees
Total
Fees

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Total Members 100% 2000
Individual Members 25% 500 $45 $22,500
Student Members 25% 500 $30 $15,000
Family Members 50% 1000 $100
$1,00,00
0
Total Membership
Fees
$1,37,50
0
Total court fees
Particulars
Hourly
Court
fees
No of
Courts
No. of
Days Usage % Hours
Total
Fees
Peak Season- Prime
Time 8 10 181 100% 4 $57,920
Peak Season- Non Prime
Time 12 10 181 60% 8 $1,04,256
Off Season 6 10 184 40% 12 $52,992
Total Court Fees $2,15,168

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