BBAC501 T2 2018: Management Accounting Group Assignment Report

This Management Accounting assignment solution analyzes the financial performance of Arimo-Hobity Best Furniture PLC, focusing on the computation of missing values in financial statements. It includes calculations for the cost of goods manufactured and cost of goods sold, alongside an income statement analysis. The assignment also delves into break-even point analysis, crucial for business decision-making, and discusses the relevance of non-financial performance measures such as corporate social responsibility and share valuation. The solution incorporates figures and tables to illustrate calculations and concepts, providing a comprehensive understanding of management accounting principles. The assignment also includes references to support the analysis and findings.

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

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Table of Contents
Computation of Missing Values......................................................................................................2
Statement showing Cost of Goods Manufactured and Cost of Goods Sold....................................4
Statement showing Income..............................................................................................................5
Analysis of Breakeven Point...........................................................................................................5
Relevance of Non-Financial Performance Measures......................................................................6
Reference.........................................................................................................................................8

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Computation of Missing Values
Figure 1: (Computation of Closing Balance of WIP)
Source: (Created by Author)
Figure 2: (Computation of Direct Labour Cost)
Source: (Created by Author)

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Figure 3: (Computation of Sales Revenue)
Source: (Created by Author)
Figure 4: (Figure showing Account Payable A/c)
Source: (Created by Author)
Figure 5: (Figure showing Raw Material A/c)
Source: (Created by Author)

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As per the assessment, the company Arimo-Hobity Best Furniture PLC is engaged in the
business of custom made furniture and the requirement of the assessment is computed the
missing value. The manufacturing concern has raw materials, WIP which is shown in the
calculations and table above. The opening balance of raw materials which is shown in the above
calculation is shown $ 4,32,000. The closing stock of WIP as shown in the calculations which is
shown above as $ 392,720.
Statement showing Cost of Goods Manufactured and Cost of Goods Sold
Figure 6: (Figure showing Computations of Cost of Goods Sold)
Source: (Created by Author)

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The above table shows the cost of goods sold figure is computed to be $ 3,600,000 which
considers the opening and closing stocks of both raw materials and WIP for the purpose of
computing the cost of goods sold figure.
Statement showing Income
Figure 7: (Figure showing Income Statement which shows Net profit)
Source: (Created by Author)
Analysis of Breakeven Point
The breakeven point of the business shows the position of the business where the
business does not generate any profits or loss in such a situation (Scarborough 2016). The
breakeven analysis is very useful for taking important decisions as to the level of goods or units
which are to be offered for sales. A business which is engaged in the production and sales of
multiple products can use breakeven analysis to estimate effectively the level of production and
sales which the business needs to undertake in order to generate profits for the business
(Lanfranchi and Giannetto 2013).

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In such businesses breakeven analysis is conducted by following the total fixed expenses
which are undertaken by the business is divided by weighted average contribution margin. The
fixed costs represent the unavoidable expenses which are a part of the products which are offered
by the business (Walther and Skousen 2014). Contribution margin refers to the revenue which is
collected from sales less the variable expense which are related to the business. The contribution
margin reflects the ability of the company to meet the fixed expenses of the business effectively
and also generate profits from the same. In addition to this, computation of Breakeven point
under multiple products considers product and sales mix. Sales mix may be defined as the
proportion at which the business sales the products which are produced by the business.
However certain assumptions are to be taken for the purpose of computation which are the
proportion of sales mix must be predetermined and the sales mix should not change within the
relevant time period. The calculations of Breakeven point in units is significant in the decision-
making process for a company which is engaged in production of Multi products. The breakeven
analysis in case of a company which has multiple product lines is useful for selecting the best
possible sales mix in order to ensure that the business is easily able to achieve the breakeven
point and also maximize the profits of the business.
Relevance of Non-Financial Performance Measures
Any business nowadays is not only measured by only comparing the financial
performance of the business but also the non-financial aspects of the business are considered. In
a business, the non-financial performance measures of the business are generally shown with the
help of ratio analysis (de Lima et al. 2013). Ratio analysis includes significant ratios which
covers specific areas of business such as profitability, solvency, liquidity, efficiency and
stability. The ratios are considered to be important measures for the purpose of measuring the

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performance of the business. Certain ratios such as current ratio, debt ratio and other significant
ratios are considered to be financial indicators of the overall development of the business. In
addition to ratios, other non-financial performance measures are corporate social responsibility
which can be analyzed from the Sustainability report which is prepared by the company (Mio
and Venturelli 2013). Another significant non-performance measure which is considered by the
management of the company and also the shareholders of the company is the share valuation of
the business. This refers to the market valuation of the shares as per the market conditions.

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Reference
de Lima, E.P., da Costa, S.E.G., Angelis, J.J. and Munik, J., 2013. Performance measurement
systems: A consensual analysis of their roles. International Journal of Production
Economics, 146(2), pp.524-542.
Lanfranchi, M. and Giannetto, C., 2013. Analysis of the economic evaluation of an italian farm
in response to the economicfinancial crisis that the EU is going through. Calitatea, 14(2), p.119.
Mio, C. and Venturelli, A., 2013. Non‐financial Information About Sustainable Development
and Environmental Policy in the Annual Reports of Listed Companies: Evidence from Italy and
the UK. Corporate Social Responsibility and Environmental Management, 20(6), pp.340-358.
Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Walther, L.M. and Skousen, C.J., 2014. Cost Analysis. Bookboon.