Management Accounting Report - Finance Module, University Name

This report delves into the core concepts of management accounting, providing a comprehensive analysis of various topics. It begins by exploring the application of process cost accounting in the context of constructing the Great Pyramid of Giza, highlighting the differences between traditional ...Read More

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the University
Name of the student
Authors note

1MANAGEMENT ACCOUNTING
Table of Contents
Answer to Question 1:................................................................................................................2
Requirement A:......................................................................................................................2
Requirement B:......................................................................................................................3
Answer to Question 2:................................................................................................................4
Answer to Question 3:................................................................................................................5
Answer to Question 4:................................................................................................................6
Requirement B:......................................................................................................................6
References:.................................................................................................................................8

2MANAGEMENT ACCOUNTING
Answer to Question 1:
Requirement A:
DR. CR.
Date Particulars Amount Date Particulars Amount
To, Balance b/d. 24855 31/8/14 By, Work-in-Process A/c. 6010
To, Accounts Payable A/c. 6155 By, Balance c/d 25000
31010 31010
Direct Material Account
DR. CR.
Date Particulars Amount Date Particulars Amount
1/8/X4 To, Balance b/d 6700 31/8/X4 By, Finished Goods A/c. 30110
To, Direct Labor A/c. 14800 By, Balance c/d 9400
To, Manufacturing Overhead A/c. 12000
To, Direct Material A/c. 6010
39510 39510
Work-in-Process
DR. CR.
Date Particulars Amount Date Particulars Amount
1/8/X4 To, Balance b/d 8790 31/8/X4 By, Cost of Goods Sold A/c. 30000
31/8/X4 To, Work-in-Process A/c. 30110 By,Balance c/d 8900
38900 38900
Finished Goods
DR. CR.
Date Particulars Amount Date Particulars Amount
31/8/X4 To, Bank A/c. 6700 1/8/X4 By, Balance b/d 2345
31/8/X4 To, Balance c/d 1800 By, Direct Material A/c. 6155
8500 8500
Accounts Payable

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DR. CR.
Date Particulars Amount Date Particulars Amount
31/8/X4 To, Finished Goods A/c. 30000 31/8/X4 By, Profit & Loss A/c. 32800
To, Manufacturing
Overhead A/c. 2800
32800 32800
Cost of Goods Sold
Requirement B:
A wide difference exist in constructing great pyramid of Giza now and its
construction 4500 years. Construction of pyramid involved application of traditional
approach that incorporated stages of initiation, planning, executing, designing and closing.
There was some of the constraints faced in constructing the great pyramid and this involves
resources, cost and techniques. Application of the modern cost management accounting
would bring difference in construction techniques along with elimination of such constraints
(Bhimani et al., 2013).
In this regard, that is for constructing the great pyramid, application of processed cost
accounting would be suitable. It would enable cost segregation that would help in managing
construction cost. Cost of each unit of products is assumed same of cost of other unit in
processed accounting. Processed costing is based on standard cost that is useful when a broad
mix of products are produced. Construction of such pyramid would become difficult without
determining the actual cost involved (Maas et al., 2013). Nonetheless, implementation of
processed costing would help in assigning actual cost of products.

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Answer to Question 2:
Process 1 Physical Flow
Material Conversion
O/WIP 2000 0 1400
Started in May 6000
Total Production 8000
Completed in Process 7000 7000 7000
C/WIP 1000 1000 500
Total Equivalent Units 8000 7500
Process 2 Physical Flow
Material Conversion
O/WIP 1000 0 500
Started in May 7000
Total Production 8000
C/WIP 750 0 225
Completed I Process 7250 7250 7250
Total Equivalent Units 7250 7975
Equivalent Units
Equivalent Units
Particulars Material Coversion Transferred-in Total
Process 1:
O/WIP Cost $3,000 $2,000 $5,000
Current Cost $30,000 $60,000 $90,000
Total Production Cost of Process 1 $33,000 $62,000 $95,000
Total Equivalent Units 8000 7500
Cost per Equivalent Units of Process 1 $4.13 $8.27 $12.39
Process 2:
O/WIP Cost $3,000 $4,000 $8,000 $15,000
Current Cost $35,000 $45,000 $86,742 $166,742
Total Production Cost of Process 2 $38,000 $49,000 $94,742 $181,742
Total Equivalent Units 7250 7975 7000
Cost per Equivalent Units of Process 2 $5.24 $6.14 $13.53 $25

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Particulars Amount
Finished Goods Completed during May 7250
Cost per Equivalent Units $25
Cost of Finished Goods Completed $180,671
Closing Stock in Process 1 1000
Cost per Equivalent Units for Process 1 $12.39
Cost of Closing Stock in Process 1 $12,391.67
Closing Stock in Process 2 750
Cost per Equivalent Units for Process 1 $24.92
Cost of Closing Stock in Process 2 $18,690.08
Answer to Question 3:
Variance analysis is the process of recognizing and identifying the variance case in
expenses and income of the budgeted values from current year values. Reasons that leads to
arriving of fluctuations in budgeted value is identified by variance analysis. Moreover, it
helps in better budgeting activities eventually. The strength of control mechanisms is
evaluated by performing such analysis that assist management in coming up with ways that
will help in avoiding such deviations. It helps in facilitating in assigning responsibility
making departments engaged with control mechanisms.
Analysing the variance is considered a crucial tool in business management and is
applicable in process of management accounting. It helps in analysing the cause of deviation
between actual and estimated values that helps in improving efficiency and thereby
performance of organization. Application of variance analysis tools would help in
maintaining the control over the expenses of project by effective monitoring the actual versus
planned expenses (Otley & Emmanuel, 2013). Several opportunities, issues and trends to

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long-term and short-term success to any project of organization is spotted by effective
variance analysis. It helps in ascertaining the revenue and cost variances (Williams, 2014).
Quantitative investigation is of crucial importance in various other areas such as
human resource department, organizational behaviours and in evaluation of performance. It
helps in providing open communication about expectation of feedback and the performance
in several other departments. The financial outcome of organization is directly related with
the human resource performances and the variance analysis helps in establishing the
relationship between the deviations in several departments. Application of variance analysis
helps in analysing the response of employees in various respect that will help in gaining
feedback. Managers at various level in different departments make use of variance analysis
that assist them in implementing effective techniques and mechanism of controlling costs
(Messner, 2016). They intend to derive maximum benefits from the material usage variance.
Answer to Question 4:
Requirement B:
The preparation of budget in organization should be made to ensure than it fits into
policies and priorities of government. It is required to selected cost effective variants while
budget preparation. There are four major dimensions involved in the process of budget
formulation. Budget incorporates allocating resources strategically and control expenditures
aggregately. Means of political pressure needs to be constantly exerted for improving revenue
forecasting that helps in strengthening linkage between expenditure and budgetary policies.
While executing budget, it is required to consider some of the political factors and lacking
needed information. Budgetary preparations on core projects is involved and is dependant in
strong political support of organization. An organization is always politically as well as
financially accountable as they both are interlinked with each other (Hopper & Bui, 2016).

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Weakness in budget preparation is dependent upon several political factors and in case of
government; budget preparation is regarded as the political process. Budgetary analysis by
government is prepared while considering while considering monetary and fiscal policies.
The proposal of budget is a socialist manifesto as depicted in above figure. Since
many departments of organization are involved in preparing budget, it is certainly possible
that there can be alterations in the estimated figures that might be in their own interest and
not serving organisational purpose. Essential ingredients involved in preparation of budget
are mainly associated with decision-making authority in organization.

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References:
Bhimani, A., Horngren, C. T., Sundem, G. L., Stratton, W. O., &Schatzberg, J.
(2013). Introduction to management accounting. Pearson Higher Ed.
Bromwich, M., &Scapens, R. W. (2016). Management accounting research: 25 years
on. Management Accounting Research, 31, 1-9.
Hopper, T., & Bui, B. (2016). Has management accounting research been
critical?. Management Accounting Research, 31, 10-30.
LaviaLópez, O., &Hiebl, M. R. (2014). Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of
Management Accounting Research, 27(1), 81-119.
Maas, K., Schaltegger, S., &Crutzen, N. (2016). Integrating corporate sustainability
assessment, management accounting, control, and reporting. Journal of Cleaner
Production, 136, 237-248.
Messner, M. (2016). Does industry matter? How industry context shapes management
accounting practice. Management Accounting Research, 31, 103-111.
Otley, D., & Emmanuel, K. M. C. (2013). Readings in accounting for management control.
Springer.
Williams, J. (2014). Financial accounting. McGraw-Hill Higher Education.