ACCT5000: Detailed Analysis of Management Accounting and Cost Issues

This report, prepared for ACCT5000 Intermediate Management Accounting, delves into critical aspects of business operations and financial management. It begins with an introduction highlighting the importance of cost accounting, financial information, and cost behavior in decision-making. The report is structured around two key issues. Issue 1 examines cost ascertainment, its significance in pricing strategies, and the role of the breakeven point. It also contrasts the information needs of external and internal stakeholders. Issue 2 focuses on cost behavior analysis, including the impact of operational changes on costs, and different approaches to cost formula determination, such as account and regression analysis. The report also addresses challenges in data collection, such as time constraints and information sensitivity. The conclusion summarizes the key findings, and recommendations are provided for management to implement effective cost calculation methods, understand cost behavior, and maintain robust management accounting information. The report references relevant academic sources to support its analysis.

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ACCT5000 management Accounting

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Table of Contents
Introduction................................................................................................................................3
Issue 1.........................................................................................................................................3
a).............................................................................................................................................3
b)............................................................................................................................................4
Issue 2.........................................................................................................................................5
a).............................................................................................................................................5
b)............................................................................................................................................5
Conclusion..................................................................................................................................6
Recommendations......................................................................................................................6
Reference....................................................................................................................................7

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Introduction
In the undertaking of any business,, there are various aspects that need to be considered and
evaluated. The carrying out of the operations involved the use of various systems and
methods and that helps in maintaining the required position. In the complete process, there
are several issues that are faced and all of them will be discussed in the given report. The
importance of cost accounting and other elements will be considered so that they can be dealt
with in an appropriate manner in the coming period. The importance of financial information
and cost behavior will be considered to gain the required understanding.
Issue 1
a)
In the business, there are several products that are manufactured and in that, a particular cost
is incurred. It is very important that the same shall be ascertained as that will be beneficial for
the business in various manners. The cost shall be calculated so that management knows the
amount which has been spent by the business and on that basis only there will be the proper
price which will be set (Christ, Katherine and Roger, 2015). In fixing the price the cost is
very important as then only the profit margin can be added to the same.
All the strategies which are required to be followed in the coming period will be formulated
after taking into consideration the current cost detail. It will be possible to set the target cost
for the future once the present cost is identified and if there are certain irrelevant costs that
are incurred then they can be eliminated (Vaidya, Purushottam and Sharanappa, 2017). It is
necessary to recover all the costs and that will be possible when the point at which cost will
be recovered will be identified and sales will be managed accordingly. This will be made

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possible with the help of a breakeven point in which the minimum level of sales which is
required to be maintained will be identified.
The availability of such information will help the management in taking the required
decisions on a timely basis. They will be having all the information about important aspects
and that will help them in deciding about the future projects and plans which are to be
undertaken.
b)
The information which is presented for external and internal users have difference among
them as the external users require specific information but the management needs the various
type of information to make proper decisions. In the management accounting information,
there is involvement of all the areas and the data in relation to all of them is involved so that
they are available at the time of need. In that information the future aspects are also covered
and the current situation which is involved is also considered (Siyanbola and Trimisiu, 2012).
The information which is provided for the management is verifiable and accurate as all the
data involved in that is evaluated and that helps the management in verifying the facts in case
of need.
The information is comparable and that helps management in making the relevant
comparison by which the various elements and situations can be compared and that helps in
making the best decision. The data is based on true events and is also involved in accounting
after proper evaluation which makes it reliable (Noordin et al., 2015). In that, all the areas
whether financial or non-financial is considered and complete reliance on the same can be
made by the management. They require all the information as they have to make decisions
about all.

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Issue 2
a)
In the corporation, there are various activities which are performed and in that different cost
are involved. It is very relevant or understands the cost behavior which is involved as with
that the impact of change in the operations and activities on cost will be determined. In the
given case it is identified that only the perspective of shareholders is considered in investment
but the cost and its impact will also be required to be taken into account (Holzhacker et al.,
2015). With the understanding of the cost behavior, it will be possible for the management to
ascertain the cost element that is not required and take the decision for its elimination so that
overall reduction in the cost can be attained. This will also be affecting the profitability of the
business as the decreased cost will lead to a corresponding increase in the profitability of the
company.
The cost formula is required in the business to ascertain the cost of any product and for that
various approaches are involved which shall be used. The account analysis is one approach
that is used so that the variable and fixed cost can be ascertained separately (Uy and Arnel,
2014). In this, all the accounts which are prepared are analyzed so that the total cost can be
determined. In addition to this regression analysis is also used in which an equation is
formulated and that is used to derive the cost.
b)
In the process of collecting data, there are various challenges and issues which are faced. It is
necessary that they are identified so that the steps to eliminate them can be undertaken. The
main challenge is in relation to the time that is involved with this process. Sometimes there is
a higher duration which is involved and by that, the production time is reduced. There is

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various type of information which is involved and some of them are sensitive which cannot
be disclosed to all (Shiau et al., 2015). In collecting such information the other party does not
support. It is not necessary that all the information will be available in one place and that will
also be a challenge for the business. The collection of information from different places is a
difficult task and involves more time and cost.
The information may be available in some other form or language and it will also act as a
barrier as that that will not be understandable by all and experts will be required to
understand the same. All of these are certain problems and management will be required to
take care of them to manage the proper information.
Conclusion
The report has been prepared and in that, all of the issues which were faced by the chartered
accountant have been considered. The proper discussion is carried about all the aspects which
are relevant to the issue. The manager in which management accounting information is
relevant and shall be used has been considered. The cost calculation is necessary for the
success of the business and that has been explained in a better manner. The issues faced in the
collection of information are identified and will help management in avoiding them.
Recommendations
On the basis of the above findings, it can be recommended to management that they should
start calculating the cost of all the products and that will help them in taking the required
decisions. They will be able to maintain sustainable success with the help of this. The cost
behaviour will be identified and the approaches which will be used in the identification of
cost formula should be chosen in an appropriate manner. The company should maintain the
management accounting information in an effective manner.

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Reference
Christ, Katherine L., and Roger L. Burritt. "Material flow cost accounting: a review and
agenda for future research." Journal of Cleaner Production 108 (2015): 1378-1389.
Holzhacker, Martin, Ranjani Krishnan, and Matthias D. Mahlendorf. "Unraveling the black
box of cost behavior: An empirical investigation of risk drivers, managerial resource
procurement, and cost elasticity." The Accounting Review 90, no. 6 (2015): 2305-2335.
Noordin, Raman, Yuserrie Zainuddin, Rasid Mail, and Noor Kaziemah Sariman.
"Performance outcomes of strategic management accounting information usage in Malaysia:
insights from electrical and electronics companies." Procedia Economics and Finance 31, no.
2 (2015): 13-25.
Shiau, Wen-Lung, Shu-Yi Chen, and Yu-Cheng Tsai. "Management information systems
issues: co-citation analysis of journal articles." " International Journal of Electronic
Commerce Studies" 6, no. 1 (2015): 145-162.
Siyanbola, Trimisiu Tunji. "Accounting information as an aid to management decision
making." International Journal of Management and Social Sciences Research (IJMSSR)
ISSN (2012): 2319-4421.
Uy, Arnel Onesimo O. "The dynamics of firm competitiveness: evidence from cost behavior
of Filipino Firms." Academy of Accounting & Financial Studies Journal 18, no. 4 (2014).
Vaidya, Purushottam N., and A. Sharanappa Alur. "Study on Cost and Management
Accounting Practices by Selected Firms at Hubballi-Dharwad." International Journal of
Management 8, no. 3 (2017).