Differentiate between financial accounting and managerial accounting, and the employment of right tool for respective decision making.

Learning Outcomes:
1. Demonstrate a basic understanding of managerial accounting concepts
2. Differentiate between financial accounting and managerial accounting, and the employment of right tool for respective decision making.
3. Collect required information from the internal accounting information system for making managerial decisions.
4. Apply management accounting tools for assessing the feasibility of the projects.
5. Strategize short-term and long-term managerial decisions to improve business efficiency.
6. Plan and prepare departmental and organizational budget and analyze the same so as to take corrective actions.
7. Employ quantitative methodologies for evaluation of capital budgeting decisions.

Task 1:

Explain the stakeholders of the organisation and how management accounting is different from financial accounting.

Task 2:

Inverta Inc. manufactures two types of inverters 1. Power and 2. Normal.

Following are the expenses incurred on manufacturing:

(see pic. Task 2)

1. Consider that overhead is allocated on the basis of direct labor hours, calculate cost price per unit using pre-determined overhead application rate.

2. Now using the activity base costing, calculate cost price per unit.

3. Compare the pricing from two different methods POHR and ABCand suggest which method do you think give more precise answer. What strategies could have gone wrong by adopting POHR?

4. How supervisors would make an assessment of cost driver to use for ABC costing?

Task 3:
Disano Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price, and fixed costs are $8,400 a month.

Management decides to decrease the selling price from $160 to $145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.

(a) At the original selling price of $160 a unit, what is the contribution margin ratio? _______________%
(b) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to break-even? (Round your answer to the nearest whole dollar) $_______________
(c) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to earn a monthly operating income of $6,500? (Round your answer to the nearest whole dollar) $________________
(d) At the reduced selling price of $145 a unit, what is the contribution margin ratio? _______________%
(e) At the reduced selling price of $145 a unit, what dollar volume of sales per month is required to break-even? (Round your intermediate percentage to one decimal place and final answer to the nearest whole dollar) $_______________
(f) Show the break-even point by extracting relevant information from the case in MS Excel.

Task 4:
McClary Custom Printers is considering whether to purchase a printer. The printer costs $200,000 to purchase, and McClary expects it can earn an additional $1.2 million in cash flows in the printers first year of use. However, there is a problem with purchasing the printer today because it will require a very large expenditure in year 2, such that year 2s cash flow is expected to be -$2.2million. Finally, in year 3, the printer investment is expected to produce a cash flow of $1.2 million. Evaluate, using the appropriate method, whether the printer purchase will be worthwhile. Why have you chosen this method? Can you use more than one method of investment evaluation to answer this? If yes, show those methods and assess differences in their results.

Last Completed Projects