You are on page 1of 21

UNIT 9 MANAGEMENT ACCOUNTING: COSTING AND

BUDGETING
Posted on Mar 25, 2016

UK COLLEGE
BUSINESS AND COMPUTING
Module Booklet
Course: EDEXCEL BTEC (HND) BUSINESS
Group: Edexcel Level 4
Module: Unit 9 Management Accounting Costing And Budgeting
Module type: Optional
Module Code: R/601/0836
Module Credit: 15
Teaching Period: (15+6 weeks)
Level: 4 (QCF)
Contact Hours: (15*3+ 6*3 = 63)
Lecturers: 15 weeks
Revision Clinic and assignment guidance: 3 week
Feedback and assessment: 3 weeks
Module Leader: Mr Emmanuel Ofori
Lecturer: Mr. Olumide Ologan
Start date: 28/01/2014
Day: Tuesday
Time: 10:00 13:00
Campus: Cricklewood
Term: Winter Term
CONTENTS
1. INTRODUCTION, AIMS AND OBJECTIVES
2. MODULE OUTLINE AND TEACHING METHODS
3. READING AND COURSE PREPRATION
4. LECTURE WITH DETAILED COURSE PROGRAMME AND OBJECTIVES
5. ASSESSMENT DETAILS
1. INTRODUCTION
Organisations operate in a very competitive and continually changing environment where
effective decision making is crucial if an organisation is to survive or even be profitable. An
important resource for decision making is financial information and it is important for managers
to be able to interpret, analyse and evaluate this information effectively. This unit will give
learners a foundation in management accounting and techniques relevant to the strategic
management process. It encourages learners to explore the nature of cost-based financial data
and information, the impact of the budgeting process on the organisation, and the development of
cost reduction and management procedures and processes. It also focuses on the management of
these costs through the use of forecasting, appraisal and financial reporting procedures. One of
the main objectives of this unit is for learners to develop the confidence to apply, analyse and
evaluate management and cost information.
The aim of this unit is to provide learners with the understanding and ability to use,Cost
information for budgeting and forecasting purposes in the management of business.
This unit looks at the cost information, both current and future, of businesses.
It looks at how cost data is collected, compiled and analysed, and processed into information that
is useful for business managers. Learners will have the opportunity to apply these principles to
practice. The unit then deals with budgetary planning and control. It looks at how to prepare
forecasts and budgets and to compare these to actual business results. Learners will again have
practical experience of this. Finally, the unit considers different costing and budgetary systems
and the causes of resulting variances, together with the possible implications and the corrective
action the business will need to take.
Learners will develop the ability to judge the sources, nature, accuracy and completeness of cost-
based information and influence others to make decisions that are based on well-researched
options. These important decision-making skills will be enhanced further through the use and
validation of forecasting techniques, the consideration of financial statements and making
judgements on the validity of information sources used in the decision-making process. Learners
will also apply strategies associated with determining sound management information with
reference to sources of funds, the potential investment of resources and the interpretation of
financial statements.
Learners will study issues of cost, responsibility and control in the contexts of management
accounting and the management process. This unit gives learners the opportunity to enhance
their competency in the construction, review and evaluation of cost-based financial information,
and introduces them to the analysis and control or reduction of costs in a range of situations.
Aim:
This unit will give learners a foundation in management accounting and techniques relevant to
the strategic management process. It encourages learners to explore the nature of cost-based
financial data and information, the impact of the budgeting process on the organization, and the
development of cost reduction and management procedures and processes. It also focuses on the
management of these costs through the use of forecasting, appraisal and financial reporting
procedures.
This unit looks at the cost information, both current and future, of businesses. It looks at how
cost data is collected, compiled and analysed, and processed into information that is useful for
business managers. Learners will have the opportunity to apply these principles to practice. The
unit then deals with budgetary planning and control. It looks at how to prepare forecasts and
budgets and to compare these to actual business results. Learners will again have practical
experience of this.
Finally, the unit considers different costing and budgetary systems and the causes of resulting
variances, together with the possible implications and the corrective action the business will need
to take.
Key Objectives: One of the main objectives of this unit is for learners to develop the confidence
to apply, analyse and evaluate management and cost information. This unit provides the learner
with the skills to apply management accounting techniques relevant to operations management in
an organisational context, including forecasting, capital appraisal, budgeting, cost control and
analysis.
Explain the nature and role of management accounting
Identify the main users of cost and management accounting information and discuss the
needs
Distinguish between financial and management accounting
Explain why an understanding of finance is likely to be relevant to ones needs
Understand the accounting conventions
Make decision on the use of capacity, using knowledge of the relationship between fixed
and variable costs.
Discuss the purpose of costing techniques.
Learning Outcomes and assessment criteria:
On successful completion of this unit a learner will:
Be able to analyse cost information within a business
Be able to propose methods to reduce costs and enhance value within a business
Be able to prepare forecasts and budgets for a business
Be able to monitor performance against budgets within a business.
Knowledge and Understanding:
Differentiate between management accounting, cost accounting and financial accounting
List and describe each of the factors involved in decision making, planning and control
process
Justify the view that, broadly, firms seek to maximize the present value of future net cash
inflows
Explain the factors that have influenced the changes in competitive environment
Outline the key success factors that directly affect customer satisfaction
Describe the functions of management accounting system
Indicative content:
1. Be able to analyse cost information within a business
Types of costs and classification: materials; labour; overheads; direct and indirect; fixed; variable
and semi-variable Costing methods: job costing; batch costing; process costing; contract costing;
service costing Cost measurement: absorption and marginal costing; traditional overhead
absorption and activity-based costing; stock valuation methods (FIFO, LIFO, AVCO, standard
costing) Costing as basis for pricing and stock valuation: cost plus pricing; market pricing; target
costing Data collection and analysis: sampling methods and purpose; presentation of data eg
tabular, diagrammatical, graphical; index number
2. Be able to propose methods to reduce costs and enhance value within a business
Cost reports: preparation; comparison with other data; explanation and implication of
Variances Performance indicators: monitor and assess to identify potential
improvements Quality and value: definitions and interaction; added value; total quality
management
3. Be able to prepare forecasts and budgets for a business
The budgeting process: purpose; benefits; links with organisational objectives/strategy; the
budget manual; budgets as planning, coordinating, motivation and control devices
Budget preparation: limiting or key factors; master, subsidiary and functional budgets; cash
budgets; the preparation of sales budget, debtors budgets, creditors budgets, production costs,
raw materials and finished goods budgets Budgeting methods: incremental; zero-based; fixed and
flexible Behavioural consequences of budgets: padding the budget; spending to budget; creative
budgets
4 Be able to monitor performance against budgets within a business
Variances: types; analysis; calculation; possible causes; corrective action
Reporting: operating statement; reconciliation of budgeted and actual results
Responsibility centres: relevance to budgeting; identification of responsibility for variances
Programme Specification
Accrediting Body: EDEXCEL
Course: BTEC HND IN BUSINESS
Unit: 9 MANAGEMENT ACCOUNTING
Wk Lecture Schedule Outcome of session Activity/seminar Resources
and formative
assessment
1 Introduction to the module. Introduction to the
Importance of Management module, mode of Background of the Module
Accounting and reflection of the assessment, awareness expectations fo the handbook.
learning outcomes of the awarding body, awarding body
assessment criteria and
the mode of assessment
2 Be able to analyse cost
information within a business Classify different types Case study and Power point slide
of cost: materials, addressing the from:
labour, direct and learning outcome Management
indirect, fixed, variable 1.1 Accounting: Pet
and semi variable Atrill
Costing methods: job,
batch, process, contract
and service costing.
3 Calculate costs By using appropriate Case study and Power point slide
techniques, analyse addressing the from:
cost data using learning outcome
appropriate techniques, 1.2
Practical problems, to
the above tasks
4 Assignment and addressing
criterias, 1.1,1.2,1.3

5 Be able to propose methods to Prepare and analyse Case study and Management
reduce costs and enhance value routine cost reports, addressing the Accounting: Pet
within a business use performance learning outcome 2 Atrill
indicators to identify
potential
improvements,
6 Methods to reduce cost Importance towards Learning outcome 2 Power point slide
decision making and from:
performance Management
management Accounting: Pet
Atrill
7 Performance indicators and its use Suggest improvements Case study and Power point slide
towards business enhancement to reduce costs, addressing the from:
enhance value and learning outcome Management
quality, variances Accounting: Pet
analysis 2.1 Atrill
8 Assignment discussed and revised. Case study and
Addressing the LO and addressing the Assignment cas
learning outcome study
case study an
2.2,2.3 workshop
9 Role and importance of budgeting Addressing LO 3 Scenario based PowerPoint slide
and forecasts activity
10 Be able to prepare forecasts and Explain the purpose Case study and Power point slide
budgets for a business: and nature of the addressing the from:
Explain the purpose and nature of budgeting process, learning Management
the budgeting process, select select appropriate outcome3.1 Accounting: Pet
appropriate budgeting methods for budgeting methods for Atrill
the organization and its
the organization and its needs
needs Prepare budgets
according to the chosen
budgeting methods ,
prepare cash budgets
11 DO Case study and Power point slide
addressing the from:
learning outcome Management
3.2,3.3 Accounting: Pet
Atrill
12 Introduction to LO 4
13 Be able to monitor performance Calculate variances, Case study and Power point slide
against budgets within a business: identify possible causes addressing the from:
identify and recommend learning outcome Management
Calculate variances,
possible causes and recommend corrective 4.1 Accounting: Pet
action , Prepare an Atrill
corrective action
opening statement
reconciling budgeted
and actual results
14 Report findings to management in Addressing the LO and Case study and Power point slide
accordance with identified case study addressing the from:
responsibility centres. learning outcome Management
4.2 Accounting: Pet
Atrill
15 Revision. Summarising all the tasks Case study and
addressing the
learning outcome
4.3
16 ASSIGNEMNT SUPPORT IN THE Case study and
ASSIGNEMTN TERM addressing the
learning outcome
Recommended text and links:
Core Text: Peter Atrill Introduction to Management accounting: Costing and Budgeting
Colin Dury Management Accounting
Brammer J and Penning A Managing Costs and Resources (Osborne Books, 2007)
ISBN: 1872962440
Jones M Accounting for Non-Specialists (Wiley, 2008) ISBN: 0471495727
Journals and newspapers
The financial and mainstream press can be a useful source of information, both in terms of data
for case studies and background understanding.
Videos
A variety of videos is available covering financial topics.
Websites
www.aat.co.uk The Association of Accounting Technicians
www.accountingtechnician.co.uk Accounting Technician magazine
www.bized.ac.uk provides case studies appropriate for educational purposes
www.iasb.org.uk International Accounting Standards BoardModule Leader: Mr Emmanuel
Ofori
Campus:
Contact details:
Assessment:
The module will be assessed meeting all the LO as specified by the awarding body, Ed
Excel.
Please read the instructions carefully while addressing the tasks specified.
Contribution: 100% of the module
Outline Details: Individual report approx 4000 words. Details enclosed in the assignment
brief.
Teaching and Learning Activities: The module tutor(s) will aim to combine lectures with
tutorial activities. This environment will provide opportunities for the student to understand the
course material through case study and text and to apply it in a practical way. The intent is to
facilitate interactive class activities, and discussion about the significant role of research in a
global and local business environment.
2.3 Teaching Ethos: The colleges approach towards teaching and learning is simple and
effective. The main aim of UKCBC is to assist learners in maximising their potential by
ensuring that they are taught clearly and effectively. This will enable students to engage in the
learning environment and promote success in both their academic studies and subsequent career.
2.3.1 Methods of Delivery:
LECTURES:
These will be developed around the key concepts as mentioned in the indicative course content
and will use a range of live examples and cases from business practice to demonstrate the
application of theoretical concepts. This method is primarily used to identify and explain key
aspects of the subject so that learners can utilise their private study time more effectively.
SEMINARS:
These are in addition to the lectures. The seminars are designed to give learners the opportunity
to test their understanding of the material covered in the lectures and private study with the help
of reference books. This methodology usually carries a set of questions identified in advance.
Seminars are interactive sessions led by the learners. This method of study gives the learner an
excellent opportunity to clarify any points of difficulty with the tutor and simultaneously develop
their oral communication skills.
CASE STUDIES: An important learning methodology is the extensive use of case studies. They
enable learners to apply the concepts that they learn in their subjects. The learners have to study
the case, analyse the facts presented and arrive at conclusions and recommendations. This assists
in the assessment of the learners ability to apply to the real world the tools and techniques of
analysis which they have learnt. The case study serves as a supplement to the theoretical
knowledge imparted through the course work.
Plagiarism:
Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies
regulations. In this context the definition and scope of plagiarism are presented below:
Plagiarism is presenting someones work as your won. It includes copying information directly
from the web or books without referencing the material; submitting joint coursework as an
individual effort; copying another students coursework; stealing coursework form another
student and submitting it as your own work. Suspected plagiarism will be investigated and if
found to have occurred will be dealt with according to the college procedure. (For further details
please refer to the plagiarism policy and the student code of conduct.)
Assessment:
The module will be assessed meeting all the LO as specified by the awarding body, Ed
Excel.
Please read the instructions carefully while addressing the tasks specified.
Contribution: 100% of the module
Outline Details: Individual report approx 4000 words. Details enclosed in the assignment
brief
ASSESSEMENT
Unit: 9 MANAGEMENT ACCOUNTING : COSTING AND BUDGETING
Learning Hours: 60 Hours. Self-learning hours: 90 hours.
Course: HND Business Level 4 CREDIT VALUE: 15 CREDITS
Term:
Module Leader: Mr Emmanuel Ofori Internal Verifier: Mrs. Sunita Kotta
Lecturer: Mr. Olumide Ologan

Learners Name
Registration Number
Learners Declaration: I certify that the work submitted for this unit is my own:
Signed:
Hand out Date: 25/02/2014 Submission Date:
The Following Sections to be completed by the assessor:
Center Name: UKCBC
Center Number: 08640
Please note that the assessors signature below denotes conformation that he/she has in no way
influenced the outcome of the assessment:
Assessors Name:
Assessors Signature:
Has the unit been Internally Verified? Y/N
Date of verification:
Internal verifiers signature:
Internal verifiers assignment brief:

Due Dates
Issue Date 25/02/2014 Final Due Date 15th week
Due Task- 1 04/03/2014 Final due date where e-learning 06/08/14
will be blocked for Sept 2013
intake
Due Task- 2 25/03/2014 Final due date where e-learning 6TH WEEK OF YOU
will be blocked for Jan 2014 ASSIGNMENT TERM
intake
Due Task- 3 22/04/2014
Due Task 4 13/05/2014
Unit Outcomes
Outcome Evidence for the criteria to pass. Assessors Internal
decision verification
decision. (agre
disagree)
TASK 1
You are required to carry out a research by using supportive materials like books, websites, etc., and give
feedback of the findings on P1.1, P1.2,1.3, 1.4, The answers need to be reflected to the CASE STUD
chosen for this task.
P1. Be able to analyze P1.1- Classify the different types of P1.1 P1.1
cost information within cost. How are the costs classified in (P,M,D) (P,M,D)
the business of the case study?
Buccaneers Ltd P1.2- What are the different costing P1.2 P1.2
methods. Identify and explain the (P,M,D) (P,M,D)
costing method used by the org.
P1.3- How is the cost calculated, P1.3 P1.3
using appropriate techniques. What (P,M,D) (P,M,D)
is the costing technique used by the
org to calculate its costs
P1.4- Analyze the cost data of the P1.4 P1.4
org focusing on the technique used (P,M,D) (P,M,D)
for the purpose.
Summarized Feedback
for Task 1(reflecting 1.1,
1.2, 1.3, 1.4, Pass merit
and distinction.)
IV comments towards
Task 1
TASK 2
Choose a case study or an organization of your choice and present before the class on your finding
with the help of PowerPoint presentation, followed by a word report not exceeding 1000 words. Yo
are required to carry out a research by using supportive materials like books, websites, etc., and give
feedback of the findings on P2.1, P2.2, 2.3.
P2. Be able to propose P2.1-How are the costs reports P2.1 P2.1
methods to reduce costs prepared and analyzed. (P,M,D) (P,M,D)
and enhance value within
the business P2.2- What are the various P2.2 P2.2
performance indicators used by the (P,M,D) (P,M,D)
org to identify its potential
improvements.
P2.3 If you were their P2.3 P2.3
Management accountant what would (P,M,D) (P,M,D)
you suggest to the org to reduce its
costs, enhance value and quality?
Summarized Feedback
for Task 2(reflecting 2.1,
2.2, 2.3, 2.4, Pass merit
and distinction.)
IV comments towards
Task 2
TASK 3
You are required to carry out a research by using supportive materials like books, websites, etc., and give
feedback of the findings on P3.1, P3.2, P3.3, and P3.4. The answers need to be reflected to the CAS
STUDY chosen for this task. The case study will be given to you at the start of Task 3 session.
TASK 3 P3.1- Explain the purpose and nature P3.1 P3.1
P3. Be able to prepare of the budgeting process adopted. (P,M,D) (P,M,D)
forecasts and budgets
P3.2- What is the budgeting method P3.2 P3.2
for a business
used and reflect its needs. Comment (P,M,D) (P,M,D)
with your advice and suggestions.
P3.3- How is the budget prepared, P3.3 P3.3
what is the method used for this (P,M,D) (P,M,D)
purpose. Comment with the
budgeting statement published in the
report.
P3.4 Illustrate the cash budget and P3.4 P3.4
comment on its findings. (P,M,D) (P,M,D)
Summarized Feedback
for Task 3(reflecting 3.1,
3.2, 3.3, 3.4, Pass merit
and distinction.)
IV comments towards
Task 3
TASK 4
You are required to carry out a research by using supportive materials like books, websites, etc., and give
feedback of the findings on P4.1, P4.2, P4.3, and P4.4. The answers need to be reflected to the CAS
STUDY chosen for this task. The case study will be given to you at the start of Task 4 session
TASK 4 P4.1 How are the variances P4.1 P4.1
P4. Be able to monitor calculated?Identify possible causes (P,M,D) (P,M,D)
performance against and recommend corrective action.
budgets within the P4.2 Reflect the operating statement P4.2 P4.2
business. and how it is reconciled with the (P,M,D) (P,M,D)
budget and actual result. Comment on
a few findings analyzing the budget
and the actual.
P4.3 Comment on the report findings P4.3 P4.3
and address as instructed. (P,M,D) (P,M,D)
Summarized Feedback
for Task 4(reflecting 4.1,
4.2, 4.3, Pass merit and
distinction.)
IV comments towards
Task 4
Merit grades M1 M2 M3 P1 P2 P3 P4
awarded
Distinction grades D1 D2 D3 Resubmit :
awarded
Any other comments
Grade given by the Assessor:
Pass Merit Distinction
Assessors Signature: Date:
IV Grading Check: Comments if any:Agree
Disagree Modify grade to IV signature:
Date:
Students feedback:
Student Signature: Date:
Plagiarism:
Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodie
regulations. In this context the definition and scope of plagiarism are presented below:
Plagiarism is presenting someones work as your won. It includes copying information directly from th
web or books without referencing the material; submitting joint coursework as an individual effort; copyin
another students coursework; stealing coursework form another student and submitting it as your ow
work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with accordin
to the college procedure. (For further details please refer to the plagiarism policy and the student code o
conduct.)

ASSIGNMENT
TASK 1 to TASK 4: You are required to follow the instructions as specified towards each task
and support with a research by using supportive materials like books, websites, etc., and give a
feedback on the findings by relating your arguments to the relevant case studies as specified
towards each task:
Task 1
Address the case study for the purpose (soft copy on e-learning) and answer the following
(approx 1000 words)
P1. The student should be able to analyze cost information within the business of the chosen case
study.
P1.1 Classify the different types of cost. How are the costs classified for Buccaneers Ltd?
P1.2 What are the different costing methods? Identify and explain the costing method used for
the case study.
P1.3 How is the cost calculated, using appropriate techniques? What is the costing technique
used to calculate its costs
P1.4 Analyze the cost data focusing on the technique used for the purpose and address the
following for the information given below:
1. Allocate and apportion overheads to the three production departments
2. Deduce overhead recovery rates for each department using two different bases for each
department overheads.
3. Calculate the full cost of a job with the following characteristics for the information in
the case study:
Direct Labour hours:
Forming department 4 hours
Machining department 4 hours
Finishing department 1 hour
Machine Hours:
Forming department 1 hour
Machining department 2 hours
Finishing department 1 hour
Direct Materials:
Forming department 40
Machining department 9
Finishing department 4
Use whichever of the two bases of overhead recovery, deduced in (b) that you consider the more
appropriate.
1. Explain why you consider the basis used in (c) to be the more appropriate.
Case study for the purpose:
The manufacturing costs for Buccaneers Ltd for next year are expected to be as follows:
000
Direct Material:
Forming department 450
Machining department 100
Finishing department 50
Direct Labour:
Forming department 180
Machining department 120
Finishing department 75
Indirect Materials:
Forming department 40
Machining department 30
Finishing department 10
Administration department 10
Indirect Labour:
Forming department 80
Machining department 70
Finishing department 60
Administration department 60
Maintenance costs: 50
Rent and rates 100
Heating and lighting 20
Building insurance 10
Machinery insurance 10
Depreciation of machinery 120
Total manufacturing costs 1,645
The following additional information is available:
1. All direct labour is paid 6 an hour for all hours worked.
2. The administration department renders personnel and general services to the production
departments.
The area of the premises in which the business manufactures amounts to 50,000 sq m,
divided as follows:
Sq m
Forming department 20,000
Machining department 15,000
Finishing department 10,000
Administration department 5,000
1. The maintenance employees are expected to divide their time between the production
departments as follows:
%
Forming department 15
Machining department 75
Finishing department 10
1. The machine hours are expected to be as follows:
Hours
Forming department 5,000
Machining department 15,000
Finishing department 5,000
Task 2
Choose a case study or an organization of your choice and present before the class on your
findings with the help of PowerPoint presentation, followed by a word report and answer
the following (approx 1000 words)
P2. . Be able to propose methods to reduce costs and enhance value within the business
P2.1 How are the costs reports prepared and analyzed?
P2.2- What are the various performance indicators used to identify its potential improvements
P2.3- If you were their Management accountant what would you suggest to reduce its costs,
enhance value and quality?
TASK 3
Address the case study for the purpose (soft copy on e-learning) and answer the following
(approx 1000 words)
P3. Be able to prepare budgets for the case study
P3.1- Explain the purpose and nature of the budgeting process adopted
P3.2- What is the budgeting method used for the case study and reflect its needs. Comment with
your advice and suggestions
P3.3- How is the budget prepared, what is the method used for this purpose. Comment with the
budgeting statement for the chosen case study.
P3.4 For the chosen case study of Antonio ltd draw up the following for the six months ending
31 December:
1. A raw materials inventories budget, showing both physical quantities and financial
values.
2. Trade payables budget.
A cash budget.
1. The cash budget reveals a potential cash deficiency during October and November. Can
you suggest any ways in which a modification of plans could overcome this problem?
Case study to address task 3:
Antonio Ltd has planned production and sales for the next nine months as follows:
Months Production in units Sales in Units
May 350 350
June 400 400
July 500 400
August 600 500
September 600 600
October 700 650
November 750 700
December 750 800
January 750 750
During the period, the business plans to advertise in order to generate these increases in sales.
Payments for advertising of 1,000 and 1,500 will be made in July and October respectively.
The selling price per unit will be 20 throughout the period. Forty % of sales are normally made
on two months credit. The other 60% are settled within the month of the sale.
Raw materials will be held for one month before they are taken into production. Purchases of
raw materials will be on one month credit (buy one month, pay the next). The cost of raw
materials is 8 per unit of production.
Other direct production expenses, including labour, are 6 per unit of production. These will be
paid in the month concerned.
Various production overheads, which during the period to 30 th June had run at 1,800 a month,
are expected to rise to 2000 each month from 1 st July to 31st October. These are expected to
raise again from 1st November to 2,400 a month and to remain at that level for the foreseeable
future. These overheads include a steady 400 each month for depreciation. Overheads are
planned to be paid 80% in the month of production and 20% in the following month.
To help to meet the planned increased production, a new item of plant will be bought and
delivered in august. The cost of this item is 6,600; the contract with the supplier will specify
that this will be paid in three equal amounts in September, October and November.
Raw materials inventories are planned to be 500 units on 1 st July. The balance at the bank on the
same day is planned to be 7,500.
TASK 4
Address the case study for the purpose (soft copy on e-learning) and answer the following
(approx 1000 words)
P4. Be able to monitor performance against budgets for the chosen case study.
P4.1 How are the variances calculated?
P4.2 Reflect the operating statement to deduce the budgeted profit for may and reconcile it,
through variances with the actual profit in as much detail as the information provided will allow.
P4.3 Comment with the report findings and state which manager should be held accountable, in
the first instance, for each variance calculated. Assuming that the standards were all well set in
terms of labour times and rates and materials usage and price, suggest at least one feasible
reason for each of the variances that you identified for above, given what you know about the
business performance for may. If it were discovered that the actual total world market demand
for the business product was 10% lower that estimated when the may budget was set, explain
how and why the variances what you identified in the above could be revised to provide that
would be potentially more useful.
Case study for the purpose:
Toscanini Ltd makes a standards product, which is budgeted to sell at 4/ unit, in a competitive
market. It is made by taking a budgeted 0.4 kg of material, budgeted to cost 2.40, and working
on it by hand by an employee, paid a budgeted 8/hour, for a budgeted 6 minutes. Monthly fixed
overheads are budgeted at 4, 800. The output for May was budgeted at 4000 units.
The actual results for May were as follows:

Sales revenue (3,500 units) 13,820


Materials (1,425 kg) (3,420)
Labour (345 hours) (2,690)
Fixed overheads (4,900)
Actual operating profit 2,810
No inventories of any description existed at the beginning and end of the month. Address 4.1,
4.2, 4.3 with the relevant information.
Assignment Guidelines:
Use a standard report structure, Word-process the report and use Normal script of a
proper font size 12.
Produce an academic report, detailing the above issues with an approx word limit of 4000
to 4500 words.
Complete the title page and sign the statement of authenticity.
The Assignment sheet should be attached in the front.
Submit the document in a folder in the form of a file as well as a soft copy on the
submission date.
It should be uploaded on E-Learning platform before the deadline and submitted to
and sign the submission form of the college.
Assignments submitted after the deadline will not be accepted unless mitigating and may
be entitled for a late fee.
Collusion and Plagiarism must be avoided.
Start each answer on a new page and pages should be numbered. Highlight each question
clearly.
Include a Bibliography at the end of the assignment and use the Harvard referencing
system.
All work should be comprehensively referenced and all sources must be fully
acknowledged, such as books and journals, websites (include the date of visit), etc.
Try to give the page numbers, publishers details and the year of publication
In order to pass you need to address all the LO
In order to get a merit you need to address the characteristics of M1, M2,M3
In order to get a Distinction you need to address the characteristics of D1, D2 and D3.
Use a common format for the questions, for example:
Introduction (analyze the question.)
Underpinning Knowledge (write about the relevant theory/points)
Applied knowledge(Data Analysis)
Conclusions and Recommendations (summarizing the whole scenario keeping in view
pass, merit, distinction criteria.)
Student feedback form with the Assessment Grid indicating their pass, merit and
distinction:
Name: Registration Number:
Unit: Management accounting
Outcomes/criteria: Indicative characteristics Possible evidence Feedback
P1. Be able to analyze cost As per the assessment criteria Task 1
information within the specified for pass
business
P2. Be able to propose Do Task 2
methods to reduce costs and
enhance value within the
business Do Task 3

P3. Be able to prepare


forecasts and budgets for a Do Task 4
business
P4. . Be able to monitor
performance against budgets
within the business .
Merit Description:
M. Identify and apply strategies . Relevant theories and
to find appropriate solutions. techniques have been applied.
. Effective judgments have been
made.
. Complex problems with more
than one variable have been
explored.
. An effective approach to study
and research has been used.
M2. Select/ design and apply . A range of methods and
appropriate methods/ techniques has been applied.
techniques.
. A range of sources of
information used.
. The selection of methods and
techniques justified.
. Complex information/data have
been synthesized and processed.
.Appropriate learning methods/
techniques applied.
. Appropriate structure and
M3. Present and communicate approach has been used.
appropriate findings. . Logical and coherent arguments
have been presented
. Technical language accurately
used.
. A range of methods of
presentation has been used.
. Familiar and unfamiliar contexts
have been used.
. It is appropriate for familiar and
unfamiliar audiences.
Distinction Description:
D1. Use critical reflection to . Synthesis has been used to
evaluate own work and justify generate and justify valid
valid conclusion. conclusions
. The validity of results has been
judged
. Self-criticism of approach has
taken place.
. Evaluation has taken place using
defined criteria
. Realistic improvements have
been proposed against defined
characteristics for success.
D2. Take responsibility for Autonomy/independence
managing and organizing demonstrated
activities.
Substantial activities/projects or
investigations have been planned,
managed and organized.
The unforeseen has been
accommodated.
The importance of
interdependence has been
recognized.
D3. Demonstrate convergent, Ideas generate and decisions
lateral and creative thinking taken
Convergent and lateral thinking
have been applied
Capacity for innovation and
creative thought has been used.
Receptiveness to new ideas has
demonstrated.
Unfamiliar contexts have been
applied.