StudentShare solutions
Triangle menu

Management accounting & decision making - Essay Example

Nobody downloaded yet

Extract of sample
Management accounting & decision making

As at September 30, 20X0 Property, Plant and Equipment 1,840,000 Less: Depreciation (133,167) Net Book Value 1,706,833 Inventory 9,000 Receivables 144,585 Cash 172,700 Total Assets 2,033,118 Owner's Capital 2,000,000 Profit for the year (92) Creditors 12,960 Overhead cost payable 20,250 Total capital and liabilities 2,033,118 The above statement presents the cash budget, income statement and the statement of financial position for the six months ended September 30. In the forecasting of the cash budget, the effect of inflation has been ignored. During the six months period the inflation is expected to rise and it will impact all the variables of the projections. In addition, it has been assumed, in the cash flow forecast, that the credit sales will be settled at the end of two months. Same assumption has been applied in the cost of purchases which is being assumed to be settled at the end of the next month in which the sales were made. It has also been assumed that purchases, in order to maintain the inventory level to ? 10,000, are included in the total cost of purchase. In the income statement, it has been assumed that China glass and cutlery, bed linen and towel and miscellaneous items including toiletries are revenue expenditure and will be consumed entirely during the current period. The loss in inventory is proportionately divided between the two half of the years and half of the expected loss is taken. The corresponding impact has been taken in the inventory. Task 2 (a) As per the given scenario, the average spending has decreased by 15% which means that the average spending in actual turned out to be 127.5. If we substitute this figure with the current expected occupancy rate, the revenue is likely to decrease. The following table presents the revised income statement Income Statement In ? For the six months ended September 30,20X0 Revenue 386,325 Cost of Purchases (77,265) China glass and cutlery (10,000) Bed linen and towel (10,000) Miscellaneous items including toiletries (5,000) Labor Cost (77,265) Overhead Cost (96,581) Depreciation (133,167) Losses in inventory (1,000) Net loss (23,953) As apparent from the above table, the net loss has further increased which would adversely affect the financial outlook of the company. In order to maintain the previous less of profitability (in this case net loss of 92) the company is required to maintain the same level of sales. This can only be done by increasing the level of occupancy so that the sales remain the same at ?454,500. In order to maintain the same level of sales the monthly occupancy should be increased by 20% monthly. Since the occupancy rate of august is already 90%, it can only by increased to a perfect 100%. Following is the revised occupancy rate if the previous level of sales is desired Monty Occupancy Rate April 24% May 36% June 61% July 97% August 100% September 73% Average 65% Thus the revise sales ...Show more


Task 1 Cash Budget   Months Particulars April May June July August September Revenue 27,000 41,850 67,500 111,600 125,550 81,000 Cash Purchases 5,400.0 8,370.0 13,500.0 22,320.0 25,110.0 16,200.0               Cash Sales 8,100 12,555 20,250 33,480 37,665 24,300 Cash from credit sales - - 18,900.0 29,295.0 47,250.0 78,120.0 Cash Purchases (1,080.0) (1,674.0) (2,700.0) (4,464.0) (5,022.0) (3,240.0) Credit Purchases - (4,320.0) (6,696.0) (10,800.0) (17,856.0) (20,088.0) Labor Cost (5,400) (8,370) (13,500) (22,320) (25,110) (16,200) Overhead Cost - (6,750) (10,463) (16,875) (27,900) (31,388)               Net Cash 1,620 (8,559) 5,792 8,316 9,027 31,505 Opening Cash 125,000 126,620 …
Author : deanna17
Management accounting & decision making essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Management accounting & decision making"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Managerial Accounting for Decision Making
Tanya should have explained that management accounting systems are planning and control systems which are usually concerned with the planning and controlling activities of the organization. Management accounting can be defined as: ‘The process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information that assists executives in fulfilling organizational objectives… a formal mechanism of gathering and collecting data for the ends of aiding and coordinating collective decisions in light of the overall goals and objectives of an organization.
16 pages (4000 words) Essay
Accounting Information in Decision Making
Accounting Information in Decision Making Outline i. Introduction ii. Models of decision-making and their limitations (constraints) a. Individual: Subjective Expected Utility b. Group: Theory of the Firm iii. Role of managerial accounting in providing information to aid individual and group decision-making a.
4 pages (1000 words) Essay
Accounting and Decision Making
Q1 –Four critical areas of subjective judgment There are pre-invoiced sales for a customer and the goods will be sent in January 2013. The revenue has been already been recognized in December 2012. Under the Accrual principle, income is recognized in the period in which income has been earned even if an invoice has not been delivered.
6 pages (1500 words) Essay
Accounting for Decision Making
Analyzing the statements prepared under the absorption system, the company seems to have made a significant improvement in the second quarter. The gross profit margin has improved from 28% in the first quarter to 40% in the second quarter; whereas the net profit margin has increased from 14% in the first quarter to 28% in the second quarter as seen in appended figure 5.
5 pages (1250 words) Essay
Accounting For Decision Making
This is a financial report that focuses its analysis on two companies; Fantastic holdings limited and super retail group which previously was called Super cheap auto group limited. The report analyses the performance of the two companies over time and tries to evaluate which company between the two has good economic performance.
9 pages (2250 words) Essay
Accounting for Decision Making
Break-even Analysis and Planning.Accounting for Decision Making Break-even for the two strategies at each level of output Strategy #1 Fixed Cost = $20,000,000 Selling Price = $170 Variable Cost = $35 Break-even level of output = (Keiso, 1999) Break-even level of output = = 148,148 units.
5 pages (1250 words) Essay
Management accounting for business
To make a business successful, the management of a company individually and collectively, needs to be fully informed of the trends and situation prevailing in the market in which it operates. It needs to be fully aware of the costs it takes to run the business, to produce and to distribute its products.
3 pages (750 words) Essay
Management accounting for business
s aspects of business activities, the most important aspect being the minimisation of costs and maximization of profit that is the major objective of any business activity. To make a business successful, the management of a company individually and collectively, needs to be
6 pages (1500 words) Essay
Decision and accounting making
From the look of the reports, the company still needs key decisions to make in order for the company to maintain its positive growth since acquisition. This report evaluates the company’s status and the necessary actions that can be taken to ensure that the
10 pages (2500 words) Essay
Accounting decision making
The second part (done in excel) is the restatement of Ausdrill’s financial statements (Balance sheet, income statement and statement of changes in equity). The third part includes Ausdrill’s five services,
9 pages (2250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Let us find you another Essay on topic Management accounting & decision making for FREE!
Contact us:
Contact Us Now
  • About StudentShare

  • Testimonials

  • FAQ

  • Blog

  • Free Essays
  • New Essays
  • Essays

  • The Newest Essay Topics
Join us:
Contact Us