Management Accounting Assignment: Analysis and Budgeting

This document presents a comprehensive solution to a management accounting assignment, covering various aspects of the subject. It includes detailed answers to questions on process costing, equivalent units calculations, variance analysis (material price and usage, labor rate), and budgeting. The assignment delves into the construction of budgeted financial statements (income and retained earnings), along with a working schedule for the cost of goods sold. Furthermore, it examines the importance of budget construction within governmental and regulatory frameworks, emphasizing the integration of resource allocation, revenue estimations, and political considerations. The solution also explores the potential flaws in budget preparation, particularly those related to political and governmental factors, and highlights the role of decision-making power within an enterprise. The document references key accounting texts and provides a thorough understanding of management accounting principles and their practical application.

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

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Table of Contents
Answer 1:.........................................................................................................................................3
Requirement A:............................................................................................................................3
Requirement B:............................................................................................................................4
Answer 2:.........................................................................................................................................5
Answer 3:.........................................................................................................................................8
Requirement a..................................................................................................................................8
Requirement b..............................................................................................................................8
Question 4........................................................................................................................................9
Requirement a..............................................................................................................................9
Requirement b............................................................................................................................12
Answer 5:.......................................................................................................................................14
Requirement a............................................................................................................................14
Budgeted statement for income.....................................................................................................14
Budgeted statement for retained earnings......................................................................................14
Requirement B:..........................................................................................................................15
References......................................................................................................................................18

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Answer 1:
Requirement A:

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Requirement B:
A huge difference exists in the Great Pyramid of Giza’s construction at the time of its
establishment, which was done almost 4500 years before. The pyramid establishment, during
that time also, used conventional methods, involving different stages as that of planning,
initiation, designing, execution and that of closing. There were several limitations that were
faced in the construction of the pyramid, which included the cost managements, resources and
the mechanism of execution of the entire process. New process of cost management accounting,
if implemented, would lead to differences in the aspect of technique that were used for
construction purposes, including the limitation’s termination which has been discussed
previously (Ward, 2012).

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In the above aspect, in the construction mechanism, the process costing implementation
would be actually appropriate as that will be beneficial for cost segregation, which would in its
turn help in handling of the construction costs. The per unit cost of products has seen to be
estimated as the cost which has similarity to that cost which is seen in processed costing
(Warren, Reeve & Duchac, 2013). The latter in its turn depends on standard cost, which seems
beneficial in the scenarios of manufacture of a varied product range. Without the explanation of
the real cost associated with the construction process, the same would become very difficult to
gauge. The processed costing, if introduced, would prove to be efficient in the allocation of the
real product cost.
Answer 2:
Calculation of equivalent units

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Per unit cost of equivalent units

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Cost of the finished goods and the closing stock

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Answer 3:
Requirement a
Requirement b
Creation of normal profit under normal circumstances are computed as below –
As the selling price for the product A will be $ 2 per kg at the split-off, the operational
outcome will be as follows –

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It is distinguished from above figuring that the organization will endure huge loss under
the new condition. Hence, it might keep delivering the item A as opposed to offering the item
outside.
Question 4
Requirement a
Material price variance

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Material usage variance
Actual direct labor rate per hour

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Requirement b
The variance analysis process refers to the identification and the recognition of the
variance cases in the expenses and income of values, which are budgeted from present year
values. The factors contributing to the fluctuations in the amount, which is budgeted, can be
found out with the help of this analysis. The method also helps in making the budgeting
operations effective with time. The potential of the mechanism of control can be gauged with the
help of those assessments, which helps the management to find ideas augmenting in the
restriction of divergences. The same also assists in the responsibilities allocation, that in turn
implements control methods in the department.