Management Accounting Fundamentals Report Writing - Accounting Assignment Help

Assignment Task

COURSE ASSESSMENT
Learning Outcomes Description Assessment
1 Explain the nature, source and purpose of management information and the role of management accounting within an organization; understand how the costs flow through the system, the types of costs and how they behave; describe and illustrate income analysis under various costing assumptions, thus increasing your communication skills. Individual Report
2 Calculate costs in a job order, batch, service and a process cost accounting system, cost-volume-profit relationships; and compare actual costs with standard costs and analyse basic variances, utilizing your numerical and problem solving skills. 3 Understand what makes revenues and costs relevant to decisions and be able to apply that knowledge to analyze particular decisions to make a reasoned recommendation regarding that decision requiring organization & planning and problem solving skills. Minimum Secondary Research Source Requirements:
Secondary Research Level HE5 - It is expected that the Reference List will contain between eight and fifteen sources. As a MINIMUM the Reference List should include one refereed academic journals and two academic books.
ASSIGNMENT GUIDELINE
Question 1: Demonstrate an understanding of management accounting. (20 marks)
Concepts of management accounting.
The roles of management accounting.

Types of Management Accounting Reports:
• Budgeting Report
• Accounts Receivable Aging Report
• Job Cost Report
• Inventory and Manufacturing Report
• Income Statement
Management accounting vs Financial accounting
Question 2: Relevant information for decision making.
2.1 Explain the terms relevant and irrelevant costs and revenues in Management Accounting decision making and conduct small example for the case of Continue or Discontinue decision making and Make or buy decision making.
What is decision making? The relationship between management accounting and decision making
Process of decision making (steps to make decision)
Concepts of relevant information: relevant revenues and relevant costs.
Role of relevant information in decision making
Distinguish relevant costs and irrelevant costs.
Relevant costs Irrelevant costs
Only future costs are relevant Sunk cost
Only costs which differ between alternatives are relevant fixed cost (unless it is directly attributed to products)
Only cash costs are relevant Depreciation
Some additional terms related to relevant: Avoidable costs, opportunity costs and variable costs Unavoidable costs (rent, cost purchased-sunk cost, fixed cost…)
List different types of decision making
Equipment replacement decision making
Make or Buy (In house or Outsourcing) decision making
Special Order decision making
Continue or Discontinue decision making
Financial/Quantity and Non-financial/Quality issues/factors for decision making
Short definition of financial issues/factors and non-financial issues/factors
Conduct small example for each scenario:
- Continue or Discontinue decision making
Definition of continue or discontinue decision making
Identify financial issues in Continue or Discontinue decision making
Conduct situation to illustrate the case: should state the assumption: spare capacity and in short run, one department or product get loss
Conduct an example Make decision applying quantity/financial issues.

- Make or Buy decision making
Definition of make or buy decision making
Identify financial issues in make or buy decision making
Conduct situation to illustrate the case: should state the assumption: spare capacity and in short run.
Conduct an example Make decision applying quantity factors/financial issues.
2.2 Explain how to use quality /non-financial information in decision making for each relevant case
- Continue or Discontinue decision making
Quality factors/Non-financial issues: Explain the influences of non-financial issues to Continue or Discontinue a segment decision making: List and explain some non-financial issues/factors (at least 3 factors) that involve with the case.
+ Customer’s convenience: increase extra services
+ Company’s innovation: The company needs to change technology to improve product quality
+ Affect to workforce (labour fire problem): negative impact on labour
+ Strategic fit: Does the location, product, or customer have any strategic significance to the business that outweighs any short-term losses?
+ Customer relations: Discontinuing a product line may cause an adverse reaction from customers (e.g., discontinuation of spare parts).
+ Supplier relations: Relationship with suppliers may suffer if a product line is dropped, causing loss of goodwill.
+ Employee relations: Shutting down may cause redundancies, which could hurt staff morale.
+ Loss leader: Certain products are not profitable on their own, but they may help generate sales for other products that are more profitable.
+ Timing of shutdown: If a shutdown is inevitable, the timing of the move should be considered carefully to minimize the potential losses.
- Make or Buy decision making
Quality factors/Non-financial issues: Explain the influences of non-financial issues to Make or Buy decision making: List and explain some non-financial issues/factors (at least 3 factors) that involve with the case.
Question 3: Variances Analysing

Concept of variance and benefit of variances
Prepare original budget, flexible budget and actual budget
Calculate sales variances, direct materials variances, direct labour variances, variable overhead costs variances; and explain your calculations.
Draw a brief report to provide critical investigation for sales variance, direct materials costs variance, direct labour costs variances and variable overhead cost variance (including calculation’s explanation)
Identify and critically evaluate the possible causes of direct material variance and direct labour variance noted above for ABC Ltd
Characteristic of variances: favourable variance and adverse/unfavourable variance
Indicate reason why the company needs to investigate causes of variances.
Investigate reasons for variances: find at least 3 reasons for each case and give explanation for each relevant reason.
Direct Material Cost Variances:
Material Price Variances: indicate the reasons of materials price’s changes that make actual materials costs greater than standard materials costs
a) Discounts offered by suppliers (purchases a large amount) controllable F
b) Materials price rises A
c) Using different suppliers F
d) Using high quality materials A
e) Using low quality materials F
f) Bad negotiation skills in purchases contract discussion A
g) Good negotiation skills in purchases contract discussion F
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=602067 : The Pure Rate Variance
Usage Variances: indicate the reasons of materials usage’s changes that make actual materials costs less than standard materials costs
a) Using poorer quality materials resulting in more waste A
b) Using poorly trained/low skilled employees resulting in more waste A
c) Using higher quality materials resulting in saving materials F
d) Using well trained/high skilled employees resulting in saving materials F
e) Better materials management F
Note that in some cases there may be a relationship between variances. For example a favourable price variance and adverse usage variance may both be due to buying poor quality materials at a lower price that resulted in higher wastage levels.
Direct Labour Cost Variance:
R D Banker, S Devaraj, R G Schroeder, K K Sinha
Performance Impact of the Elimination of Direct Labor Variance Reporting: A Field Study
Journal of Accounting Research, volume 40, p. 1013 – 1036
(Wage) Rate Variances: indicate the reasons of wage rate’s changes that make actual labour costs greater than standard labour costs
a) Using higher cost labour A
b) Using lower cost labourF
c) Paying bonuses/premiums that were not planned A
d) Good skill of labour contract negotiation F
e) Bad skill of labour contract negotiation A
f) Market wage rate increase A
g) Wage rate increase due to labour law A
h) Labour charge A : accident fee (special case and not often)
Efficiency Variances (Labour hours): indicate the reasons of labour hours need’s changes that make actual labour costs less than standard labour costs

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