L-4 Management Accounting Assignment-UK

Unit Learning Outcomes:
LO1-Demonstrate an understanding of management accounting systems.
LO2-Apply a range of management accounting techniques
LO3-Explain the use of planning tools used in management accounting
LO4-Compare ways in which organisations could use management accounting to respond to financial problems
L-4 Management Accounting Assignment-UK

L-4 Management Accounting Assignment

Assignment Brief and Guidance:
Learners need to have read carefully the instructions before attempting any of the questions. The assignment is to be addressed with reference to the scenario addressing all learning outcomes. The learners will be assessed through the written report submitted by them addressing the Pass, Merit and Distinction criteria.Contribution: 100% of the module.

Scenario 1
Management accounting plays a key role in organizations today and therefore decision makers in the organization must understand how to create and use good management accounting information. In today’s
business environment, business wants to track performance information that goes beyond just the cost-based information of historic general ledger systems provided by traditional financial accounting information. Good management accounting involves responsibility to manage a wide variety of critical management accounting information using management accounting system and management accounting techniques such as cost-volume- profit (break- even) analysis, budgetary control, cash budget, marginal costing and absorption costing to produce relevant management reports for informed decision making.

You are applying to work as a Trainee Management Accountant in a medium sized financial consultancy organization that has a client base of 50 small and medium-sized business. The consultancy firm has a new client – Capital Joinery Ltd., which makes a wide variety of joinery, made-to-measure doors, windows etc. The owners of this medium-sized organization have approached the consultancy firm to seek advice on how they could possibly use management accounting systems to improve their financial performance.

As part of the hiring process for new employees, the consultancy firm wants all applicants to produce a report demonstrating their knowledge and application of management accounting tools and techniques.
You are required to write a report for the new client that critically evaluates how management accounting systems and management accounting reporting is integrated within organisational processes and evaluates how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success

Your critical evaluation must include an explanation of management accounting and the requirements of different types of management accounting systems along with an explanation of the different methods used for management accounting reporting. Furthermore, your report should evaluate the usefulness of using management accounting systems and its application in an organization.
In evaluating planning tools, you must explain the advantages and disadvantages of different planning tools and an analysis of how these tools can be used and applied for preparing budgets and forecasts. You
must also include a comparison of how organisations are adapting management accounting systems to respond to financial problems along with an analysis of how adapting these systems can help the organization to achieve sustainable success.

Scenario 2
Based on your report in relation to scenario 1 the firm has now hired you as a Trainee Management Accountant. Your line manager now wishes to assess your ability to produce financial reports that accurately apply and interpret data for a range of business activities

The report must demonstrate your ability to calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costing techniques (See Appendix 1). After
appropriately applying a range of management accounting techniques, you should also include appropriate financial reporting documents and interpret the data in the report for a range of business activities. In your
report, you must show a comparison of how organisations are adopting management accounting systems to respond to financial problems. The report also requires you to analyse how management accounting
tools can be adopted by organisations to respond to financial problems

The module will be assessed and graded against the Pass, Merit and Distinction criteria as specified in the assessment grid below issued by the awarding body, Pearson Ed excel.

Learning Outcomes and Assessment Criteria

Recommended Resources
DRURY, C. (2015) Management and Cost Accounting. 9th Ed. Cengage Learning.
EDMONDS, T. and OLDS, P. (2013) Fundamental Managerial Accounting Concepts. 7th Ed.
Maidenhead: McGraw-Hill. HORNGREN, C., SUNDEN, G., STRATTON, W., BURGSTALHER, D. and SCHATZBERG, J. (2013) Introduction to Management Accounting. Global Ed. Harlow: Pearson. (This text is available electronically and is supported by access to an online course)

SEAL, W. et al (2014) Management Accounting. 5th Ed. Maidenhead: McGraw-Hill.

L-4 Management Accounting Assignment-UK

L-4 Management Accounting Assignment

This unit links to the following related units:
Unit 10: Financial Accounting
Unit 13: Financial Reporting
Unit 14: Advanced Management Accounting
Unit 15: Financial Management
Unit 29: Managing and Running a Small Business

Capital Joinery Ltd manufactures and sells a single product.The following budgeted/ actual information is provided in relation to the production of this product: All costs are in GBP. Show all workings very clearly.

Selling price per unit 250.00
Direct materials per unit 60.00
Direct labour per unit 40.00
Variable production overheads per unit 20.00

Details for the months of May and June 2020 are as follows:
May June
Production of Product A 10080
Sales of Product A (units) 10075

Fixed production overheads are budgeted at £2,000 per month and are absorbed on a unit basis. The normal level of production is budgeted at 100 units per month.

Other costs
Fixed selling £1,000 per month
Fixed Administration £3,000 per month
Variable sales commission 2% of sales revenue
There was no opening inventory of Product A at the start of May.

You are required to prepare a profit statement based on both absorption costing and marginal costing techniques and show the reconciliation of profits between the two methods.

In order to produce this single product, Capital Joinery Ltd. uses two raw materials – wood and glass of which wood is an expensive item of material and the firm is interested in the cost variances of this raw material. The
information pertaining to budgeted and actual costs of the raw material (metal) is given below and you are required to show the calculation of material variances.

During the month of May, the following purchases and issues of the raw material (glass) were made and the store assistant wishes to know the closing value of the raw material inventory at the end of the month. He
provides you with the following information relating to the purchases and issues during the month. You are required to show the inventory ledger record for the month of May using the LIFO and Average Cost methods
of inventory accounting.

The financial report produced must accurately apply and interpret data for a range of business activities in Capital Joinery Ltd.

Below is a list of some of the Command Verbs that you will see in internal assessments. Different command verbs will ask for different types of information.

Please note that sometimes command verbs may be used across the range of criteria. For example you may be asked to provide an analysis or an evaluation for a Pass criteria.

These are common command verbs for Pass Criteria
Calculate – Generate a numerical answer, with workings shown
List – Write a list of the main items (not sentences)
State – Point out the main features
Define – To state the meaning of something using the correct terms
Demonstrate – Show that you can do a particular activity or skill
Identify – Give all the basic facts which relate to a topic
Describe – Give reasons for the points you are marking so that the marker knows how you arrived at that conclusion
Summarise – Write down briefly the main points or essential features

These are common command verb for Merit Criteria
Discuss – To present an argument for and against
Explain – Give logical reasons to support your view
Describe – Give a full description including details of all the relevant features
Suggest – Give your own ideas and thoughts
Justify – Give reasons for the points you are marking so that the marker knows
Analyse – Identify the factors that apply, and state how these are linked and how each of them relates to the topic
Demonstrate – Prove you can carry out a more complex activity

L-4 Management Accounting Assignment-UK

L-4 Management Accounting Assignment

These are common command verbs for Distinction Criteria
Assess – Evaluate in terms of advantages and disadvantages
Analyse – Identify the factors that apply, and state how these are linked and how each of them relates to the topic
Recommend – Suggest changes or improvements
Evaluate – Break the information into components, examine factors methodically and in detail and bring together all of your information and make a judgement on the importance Select & Demonstrate – Select several relevant examples or pieces of related evidence which clearly
support the arguments you are making. This may include showing particular practical skills
Review – Consider each factor in turn providing a description and explanation of their uses, strength and weakness, making recommendations.

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