Management Accounting 1

Management Accounting 1

Part 1

A: Revenues budget

Revenue Budget

 

Quantity

Values

Revenue

Large

3000

3

9000

Giant

1800

4

7200

Total Revenue

 

 

16200

B: Production budget in units

 

Production Budget

Large

Giant

 

Unit required to meet sales budget

3000

1800

Add

Desired ending inventory

300

180

 

Total Unit Required

3300

1980

Less

Estimated beginning inventory

200

150

 

Planned production

3100

1830

C: Direct material usage budget and direct material purchases budget

Direct material usage budget

Large

Giant

Planned production

3100

1830

Sugar Usage ( $0.25 & $0.3 )

775

915

Sticks Used ( $0.3 )

3100.3

549

 

3875.3

1464

Direct material purchases budget

Large

Giant

Sugar Usage

775

915

ending

240

480

Beginning inventory

1015

1395

desired

125

125

 

890

1270

D: Direct manufacturing labour cost budget

Direct manufacturing labour cost budget

Large

Giant

( 3100 * 0.2 ) & ( 1830 * 0.25 )

620

457.5

direct material labour hour cost ( 8 )

4960

3660

E: Manufacturing overhead cost budgets for processing and set - up

Manufacturing overhead cost budgets for processing and set - up activities

Large

Giant

Set - ups ( 3100/10 ) & ( 1830/10 )

310

183

( 310/20 ) & ( 183/20 )

6200

3660

Processing OH ( 310 * * 0.08 * 1.7 ) & ( 183 * 0.09 * 1.7 )

42.16

27.999

F: Budgeted unit cost of ending finished goods inventory and ending inventories budget

Budgeted unit cost of ending finished goods inventory and ending inventories budget

Large

Giant

Material ( 0.25 * 0.5 )+ ( 1 * 0.3 ) & ( 0.5 * 0.5 )+ ( 1 * 0.3 )

0.425

0.55

Direct labour ( 0.2 * 8 ) & ( 0.25 * 8 )

1.6

2

Over head ( ( 0.08/10 ) * 20 ) & ( 0.09/10 ) * 20 )

0.16

0.18

( 0.8/10 ) * 1.7

0.136

0.136

 

0.296

0.316

Per unit cost

2.321

2.866

Total value of finished goods ( total units 300 )

696.3

515.88

G: Budgeted income statement

Income Statement

For the Month Of December

 

Large

Giant

Sales

 

9000

7200

Cost of Goods Sold

 

 

 

Martial

2925.0

1755.0

 

Labour

10800.0

6480.0

 

Over Heads

1836.0

1101.6

Cost of Goods Manufactured

15561.0

9336.6

Beginning Finished goods inventory

600

600

Cost of goods Available for Sale

16161.0

9936.6

Ending Inventory

900

720

Cost of Goods Sold

15261.0

9216.6

Gross Profit

- 6261.0

- 2016.6

Marketing Expense ( 10% of Sales Revenue )

900.0

720.0

Net Income/loss

 

- 7161.0

- 2736.6

Part 2

Why Incentive Plans Cannot Work

Most of the managers understand that it is understood that there is a compulsion and fear destroy motivation and this also create rage, disobedience and also defensiveness in the organisations. They do realize that disciplinary management is a term which is almost a disagreement. Rewards and punishment are the two sides of one coin. Further, not receiving a reward one had expected to receive is also indistinguishable from being punished. Whether the incentive is withheld or withdrawn deliberately, or simply not received by someone who had hoped to get it, the effect is identical. And the more desirable the reward, the

More demoralizing it is to miss out (Alfie, 1993).

The real motivational factor behind conducting this study was to make it more clarify that in what manner this has happened and how the manager can stop the counterproductive cycles. The obliteration is not what is actually needed; the actual requirement is the fact that dynamic methods in the organizations for paying people are real efforts which must be made. This requires counterproductive behaviour and the organizations must keep away from the target settings and the budgeting in compensation systems which is being followed and must also for promotion of the employees and also the managers. These are the non-linear behaviours which are a real threat and must not be pursued with the pay-for-performance profile for all the manager and also ...