Graduate Business School: Management Accounting and Control Report

This assignment requires a comprehensive report on management accounting and control, focusing on variance analysis and budgeting. The report begins with preparing an original budget statement for October based on the provided data from Procter & Gamble's new product, Alpha 577. It then involves calculating and explaining various variances, including sales margin price and volume, materials price and usage, labor rate and efficiency, and fixed and variable overhead expenditures and efficiency. A key element is the reconciliation of the budgeted and actual profit figures, highlighting favorable and adverse variances. Finally, the report critically analyzes the usefulness of variance analysis in directing management attention, considering its role in planning and control. The assignment assesses the student's ability to apply management accounting concepts, analyze financial data, and provide insightful recommendations.

Graduate Business School
Assignment Title Sheet
Lecturer Name: Ivan Toner
Subject: Management Accounting and Control
Study Mode: Full time Yes Part-time No
Assignment No.: 1
Assignment Title/Brief: Individual Assignment
Please refer to assignment question provided. WORK SUBMITTED MUST BE THE STUDENTS’ OWN
WORK. This assignment should be completed in a report format, be typed in a 12-point font and space and
a half.
Word count: 3,000 words Total %: 50%
Due date(s): 22nd July 2016
Submit assignment to: Ivan Toner
Additional Information:
Procter & Gamble is the global leader in beauty and personal care. Its key brands here include
Olay, Gillette and Pantene. The company has however underperformed some of its rivals including
Unilever and L’Oréal, which have made significant gains in the Chinese market to Procter & Gamble’s
detriment. Procter & Gamble may suffer from being too mid-range for premium-focused China, while too
premium for lesser developed emerging markets such as India.
Proctor & Gamble wants to produce a new product codenamed ‘Alpha 577’. The product requires a single
operation, and the standard cost for this operation is presented below:
Standard Cost Card for ALPHA 577 €
Direct Materials:
2 kg of material A @ €10 per kg 20.00
1 kg of material B @ €15 per kg 15.00
Direct labour (3 hours @ €9 per hour) 27.00
Variable overhead (3 hours @ €2 per direct labour hour) 6.00
Total standard variable cost 68.00
Standard contribution margin 20.00
Standard Selling Price 88.00

Practor & Gamble planned to produce 10,000 units of Alpha 577 for the month of September 2014. It
anticipated that the Budgeted Contribution would be €200,000 and that they would have budgeted fixed
costs of €120,000 with a budgeted profit of €80,000.
The actual results for October were:
Sales (9000 units @€90) €810,000
Direct Materials:
A: 19,000 kg @ €11 per kg 209,000
B: 10,100 kg @ €14 per kg 141,400
Direct labour (28,500 @ €9.60 per hour) 273,600
Variable overheads 52,000
(€676,000)
Contribution 134,000
Fixed costs (116,000)
Profit 18,000
Required:
(a) Prepare the original budget in the same format as the ‘Results for September, clearly showing the
budgeted profit of €80,000.
(b) Reconcile the budgeted and actual profit in a table clearly showing the following variances whether
‘adverse’ or ‘favourable’ and discuss their meaning:
a. Sales margin price
b. Sales margin volume
c. Materials price
d. Material usage
e. Labour rate
f. Labour efficiency
g. Fixed overhead expenditure
h. Variable overhead expenditure
i. Variable overhead efficiency
(c) Draft a report which critically analyses the usefulness of variance analysis as part of directing
management attention in a business.

Assessment Criteria:
1. Prepare an original budget statement for October. 20%
2. Preparation of variances, with explanations along with reconciliation
from actual to budget.
40%
3. Draft a report which critically analyses the usefulness of variance
analyses as part of directing management attention in a business.
40%
Criteria
Descriptor
Preparation of Original
Budget for October
Preparation of
variances along with
explanations and
reconciliation
Draft Report
Weighting to
total 100 20 40 40
100
A (80-100) Statements correct Variances are correctly
calculated and
explanations are
thorough.
Report is of an
exceptional
standard.
B+ (70-79) Vast majority of
statements are correct
- mistakes are only of
an arithmetical nature.
Mistakes are only of
an arithmetical nature.
Report deals
with the main
issues in a
comprehensive
manner
B (60-69) Some mistakes
including mistakes
relating to the input of
figures
Some input mistakes
made
Report deals
with the vast
majority of
issues that
would be
expected from
the student
C+ (55-59) Mistakes in relation to
both the input and
calculation of figures
Errors with the input of
source figures as well
as computational
mistakes
Report is of a
standard which
would be
acceptable at
this level
C (50-54) Mistakes in relation to
both the input and
calculation of figures,
plus some figures
missing
Erros made with the
input of figures and
calculation of figures,
plus some figures not
included
Report just
about reaches
the required
level. Shows
student
understands the
issues but fails
to deal with
them
D (45-49) Student encounters
problems with
preparation fo
statements
Student demonstrates
a lack of knowledge of
how to calculate
variances
Report is poorly
constructed and
is disjointed.

F ( 0-44) Serious problems in
inputting figures into
the statements.
Student demonstrates
that he/she does not
understand the
process
Serious problems
apparent. Student
demonstrates that
he/she does not
understand variances
Student
demonstrates
that he/she put
no real effort
into preparing a
professional
report.
Assignment Learning Outcomes Assignment
1. Display comprehensive and detailed
knowledge of the terms and concepts
relating to contemporary management
accounting.
Yes
2. Critically evaluate the role of management
accounting in providing information for
planning and control.
Yes
3. Critically evaluate the management
accounting techniques used for cost
determination.
Yes
4. Employ accounting data to identify, analyse
and evaluate managerial choices to
maximise economic benefits including
budgeting techniques.
Yes