Introduction to Management  Accounting

Question: CompletetheT accountsanddeterminethefollowing: i. WorkinProcessattheendofApril; ii. RawmaterialspurchasedinApril; iii. OverheadappliedinApril; iv. CostofGoodssoldinApril; v. RawmaterialsusedinApril;and, vi. Over orunder appliedoverheadinApril. Answer: The following account elucidates accounting aspects, more precisely using ledger accounting in the form of T procedure (Christ and Burritt 2013). The subsequent computation would elucidate to what extent raw materials are being used in the month of April and other key indicators (Bjrnenak 2013). Here, overheads play an important role too. The computation of Total Cost of Goods sold in the month of April is explained below. Particulars Amount Opening Goods Inventory 11,000 Add: Cost of Goods Manufactured 489000 Goods available for sale 500,000 Less: Closing goods for Inventory -16000 Add: Under-allocation 12,500 Total Cost of Goods Sold 496,500 Further to that the overall computation of Overheads applied in April is explained below: Particulars Amount Amount Direct Materials Raw Materials Inventory 12000 Add: Cost of Raw Materials purchased 180000 Total Raw Materials 192000 Less: Closing Raw Materials -12000 Raw Materials (Total) 180000 Direct Labor 182000 Overheads Indirect Labor 118000 Depreciation: Factory Building 16000 Depreciation: Factory Equipment 14000 Insurance: Factory 8000 Tax: Factory 4500 Repairs and maintenance: 8000 Total 168500 Less: Under-allocation -12500 Applied Manufacturing Overheads 156000 Total Manufacturing Costs 518000 Add: Opening WIP Inventory 4500 522500 Less: Closing WIP Inventory -33500 Cost of Goods Manufactured 489000 The computation of Work-In-Progress at the end of April in T-Accounts form is laid below: Work-In-Progress Dr. Cr. Date Particulars Amount Date Particulars Amount April To, Bal b/f 4,500 31/03/.. By, Finished Goods 489,000 To, Raw Materials 180,000 By Bal c/f 33,500 To, Direct Labour 182,000 To, Overheads 156,000 522,500 522,500 The Computation of Cost of Goods sold at the end of the year in T-Accounts form is laid below: CGS Dr. Cr. Date Particulars Amount Date Particulars Amount April To, Finished Goods 484,000 31/03/.. By, P L A/c 496,500 To, Overheads 12,500 496,500 496,500 Total Overheads being applied in the month of April: Overheads Dr. Cr. Date Particulars Amount Date Particulars Amount April To, Act. Overheads 168,500 31/03/.. By, WIP 156,000 By, COGS 12,500 168,500 168,500 Accounts payable computation: Account Payable Dr. Cr. Date Particulars Amount Date Particulars Amount To, Payment 18,000 01/04/.. By, Bal b/f 12,000 31/03/.. To, Bal c/f 174,000 By, Raw Materials 180,000 192,000 192,000 Here, finished goods form a vital segment and hence the computation is laid below: Finished Goods Dr. Cr. Date Particulars Amount Date Particulars Amount 01/04/.. To, Bal b/f 11,000 31/03/.. By, Cost of Goods Sold 484,000 To, WIP 489,000 By Bal c/f 16,000 500,000 500,000 The Raw materials that are being utilized during the year are computed below: Raw Materials Dr. Cr. Date Particulars Amount Date Particulars Amount April To, Bal B/F 12,000 31/03/.. By, WIP 180,000 To, Purchases 180,000 By Bal c/f 12,000 192,000 192,000 The overall analysis and computation portray the financial and cost segment of the firm in consideration on a broader perspective (Leauby and Wentzel 2012). The vital aspects like Cost of goods sold, WIP or Work in progress clearly outlines that the organization is in good stead as far as operations are concerned (Leauby and Wentzel 2012). References: Bjrnenak, T., 2013. 4. Management accounting tools in banks: are banks without budgets more profitable?. Managing in Dynamic Business Environments: Between Control and Autonomy, p.51. Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of contingent variables for adoption. Journal of Cleaner Production, 41, pp.163-173. Leauby, B.A. and Wentzel, K., 2012. Linking Management Accounting and Finance: Assessing Student Perceptions. Strategic Finance, 93(11). Lukka, K. and Vinnari, E., 2014. Domain theory and method theory in management accounting research. Accounting, Auditing Accountability Journal, 27(8), pp.1308-1338.