ASSIGNMENT BRIEF

QUALIFICATION UNIT NUMBER AND TITLE

PEARSON BTEC HIGHER NATIONAL DIPLOMA IN BUSINESS (RQF) 05. MANAGEMENT ACCOUNTING (LEVEL 4)
INTERNAL VERIFIER UNIT TUTOR
MARIAM QASIM AWAIS ARSHAD
DATE ISSUED SUBMISSION DATE RESUBMISSION DATE
MONDAY, 26TH AUGUST 2019 MONDAY, 2ND DECEMBER 2019 MONDAY, 16TH DECEMBER 2019

ASSIGNMENT TITLE MANAGEMENT ACCOUNTING PRINCIPLES

LEARNING OUTCOME AND ASSESSMENT CRITERIA

PASS MERIT DISTINCTION
LO1 DEMONSTRATE AN UNDERSTANDING OF MANAGEMENT ACCOUNTING SYSTEMS
P1 EXPLAIN MANAGEMENT ACCOUNTING AND D1 CRITICALLY EVALUATE HOW MANAGEMENT
GIVE THE ESSENTIAL REQUIREMENTS OF DIFFERENT M1 EVALUATE THE BENEFITS OF MANAGEMENT ACCOUNTING SYSTEMS AND MANAGEMENT
TYPES OF MANAGEMENT ACCOUNTING SYSTEMS. ACCOUNTING SYSTEMS AND THEIR APPLICATION ACCOUNTING REPORTING IS INTEGRATED WITHIN
P2 EXPLAIN DIFFERENT METHODS USED FOR WITHIN AN ORGANISATIONAL CONTEXT. ORGANISATIONAL PROCESSES.
MANAGEMENT ACCOUNTING REPORTING.
LO2 APPLY A RANGE OF MANAGEMENT ACCOUNTING TECHNIQUES
P3 CALCULATE COSTS USING APPROPRIATE M2 ACCURATELY APPLY A RANGE OF D2 PRODUCE FINANCIAL REPORTS THAT
TECHNIQUES OF COST ANALYSIS TO PREPARE AN MANAGEMENT ACCOUNTING TECHNIQUES AND ACCURATELY APPLY AND INTERPRET DATA FOR A
INCOME STATEMENT USING MARGINAL AND PRODUCE APPROPRIATE FINANCIAL REPORTING RANGE OF BUSINESS ACTIVITIES.
ABSORPTION COSTS. DOCUMENTS.
LO3 EXPLAIN THE USE OF PLANNING TOOLS USED IN MANAGEMENT ACCOUNTING
P4 EXPLAIN THE ADVANTAGES AND
M3 ANALYSE THE USE OF DIFFERENT PLANNING
DISADVANTAGES OF DIFFERENT TYPES OF
TOOLS AND THEIR APPLICATION FOR PREPARING
PLANNING TOOLS USED FOR BUDGETARY LO3 & 4
AND FORECASTING BUDGETS.
CONTROL. D3 EVALUATE HOW PLANNING TOOLS FOR
LO4 COMPARE WAYS IN WHICH ORGANISATIONS COULD USE MANAGEMENT ACCOUNTING TO RESPOND ACCOUNTING RESPOND APPROPRIATELY TO
TO FINANCIAL PROBLEMS SOLVING FINANCIAL PROBLEMS TO LEAD
M4 ANALYSE HOW, IN RESPONDING TO ORGANISATIONS TO SUSTAINABLE SUCCESS.
P5 COMPARE HOW ORGANISATIONS ARE
FINANCIAL PROBLEMS, MANAGEMENT
ADAPTING MANAGEMENT ACCOUNTING SYSTEMS
ACCOUNTING CAN LEAD ORGANISATIONS TO
TO RESPOND TO FINANCIAL PROBLEMS.
SUSTAINABLE SUCCESS.

SUBMISSION FORMAT
THE SUBMISSION IS IN THE FORM OF AN ESSAY; A COMPLETE PORTFOLIO OF FINANCIAL STATEMENTS; A FORECASTED SHEET; AND 3 REPORTS.

THE PORTFOLIO OF INCOME STATEMENTS SHOULD DEMONSTRATE CALCULATIONS USING DIFFERENT COSTING METHODS.

THE REPORTS SHOULD BE WRITTEN IN A CONCISE, FORMAL BUSINESS STYLE USING SINGLE SPACING AND FONT STYLE CALIBRI AND SIZE 11. YOU ARE REQUIRED
TO MAKE USE OF HEADINGS, PARAGRAPHS AND SUBSECTIONS AS APPROPRIATE, AND ALL WORK MUST BE SUPPORTED WITH RESEARCH AND REFERENCED USING
THE HARVARD REFERENCING SYSTEM. PLEASE ALSO PROVIDE A BIBLIOGRAPHY USING THE HARVARD REFERENCING SYSTEM. THE RECOMMENDED WORD LIMIT IS
SPECIFIED.

ASSIGNMENT SCENARIO AND GUIDANCE

SCENARIO 1

You have been hired as a Management Accountant in a medium-sized organization.

SCENARIO 2

GH manufactures and sells a single product. The company operates a standard absorption costing system and absorbs
overheads based on direct labour hours. The standard selling price and standard costs for one unit of the product are as
follows:
Per unit (£)
Selling price 300
Direct material 15 meters @ £9 per meter 135
Direct labour 5 hours @ £12 per hour 60
Variable production overheads 5 hours @ £6 per hour 30
Fixed production overheads 5 hours @ £3 per 15
Gross profit 60

The budgeted production and sales for February were 1, 000 units. The fixed overhead absorption rate has been calculated
based on budgeted production for the month. Actual results for February were as follows:

Production 1, 400 units

Sales 1, 200 Units
Selling price £306 per unit
Direct materials 22, 000 meters @ £12 per meter
Direct labour 6, 800 hours @ £15 per hour
Variable production overheads £33, 000
Fixed production overheads £18, 000

No materials inventories are held.

SCENARIO 3

A business had opening stock valuation going on. The following receipts and issues were recorded in May:

Date Transaction Units Purchased/(Sold) Unit Cost Inventory Units

January 1 Opening Inventory 700 £10 700
January 3 Purchases 100 £12 800
January 8 Sold (500) ?? 300
January 15 Purchases 600 £14 900
January 19 Purchases 200 £15 1,100
January 25 Sold (400) ?? 700
January 27 Sold (100) ?? 600
January 31 Closing Inventory ??

SCENARIO 4

MARGINAL AND ABSORPTION COSTING CONCEPT

3 Aplha Ltd makes and sells two products, Alpha and Beta. The following information is available for period 3:

Alpha Beta
Production (Units) 2,500 1,750
Sales (Units) 2,300 1,600
Opening Stock (Units) 0 0

Fixed production overheads for the period were £105,000 and fixed administration overheads were £27,000.
 Financial Data Alpha £ Beta £
Unit Selling Price 90 75
Unit Cost
Direct Materials 15 12
Direct Labours 18 12
Variable Production Overheads 12 08
Fixed Production Overheads 30 20
Variable Selling Overheads 1 1

SCENARIO 5

A company produces two products, A1 and A2 that are sold to retailers. The budgeted sales volumes for the next quarter are as
follows:
Product Units
A1 32,000
A2 56,000
The inventory of finished goods is budgeted to increase by 1,000 units of A1 and decrease by 2,000 units of A2 by the end of the
quarter.

Materials B3 and B4 are used in the production of both products. The quantities required of each material to produce one unit
of the finished product and the purchase prices are shown in the table below:
B3 B4
A1 8KG 4KG
A2 4KG 3KG
Purchase price per kg £1.25 £ß1.80
Budgeted opening inventory 30,000 kg 20,000 kg

The company plans to hold inventory of raw materials, at the end of the quarter, of 5% of the quarter’s material usage budget.
TASK 1 – SCENARIO 1 (LO1)
Commence your essay explaining the principles of management accounting and how it is distinct from financial accounting.
Define what a management accounting system is and then explain any three management accounting systems used by your
department, specifying their requirements. Further explain the role and function of these different management accounting
systems and the management accounts department in the organisation, with particular reference to how management
accounting is integrated within the organisation. Subsequently evaluate the benefits of the function to the organisation.

Explain the importance of presenting financial information in a reliable, accurate, up-to-date and understandable format for the
relevant users. Explain the different techniques and methods used for management accounting reporting. Give examples from
your organisation. Explain the relevance of any three types of managerial accounting reports generated by your department for
the organisation. Evaluate why is it important to integrate the management accounting systems and management accounting
reporting into this organisation.
TASK 2 – SCENARIO 2, 3 & 4 (LO2)
Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption
costs, using the information in scenario 4.

For the company in scenario 3, accurately apply a range of management accounting techniques for stock valuation and prepare
financial reporting documents of closing stock and gross profit using FIFI and LIFO.

Produce financial reports that accurately apply and interpret data for a range of business activities. Calculate all possible
variances and reconcile the budgeted profit with the actual profit in scenario 2.
TASK 3 – SCENARIO 5 (LO3)
Explain the advantages and disadvantages of different types of planning tools used for budgetary control. Analyse the use and
application of different planning tools and prepare functional budgets for the quarter production budget (in units); the material
usage budget (in kg); the material purchases budget (in kg and £).

Suggest any two financial problems that this organisation can face and which planning tools for accounting can be used to solve
these problems to lead this organization to sustainable success. Your judgements should be supported by evidence.
TASK 4 - (LO4)
Compare how organisations are adapting management accounting systems to respond to financial problems. Use specific case
studies as examples. Analyse whether such an approach is successful in organisations to solve problems. Evaluate how planning
tools for accounting respond appropriately to solving financial problems to lead organizations to sustainable success.

EVIDENCE CHECKLIST SUMMARY OF EVIDENCE REQUIRED BY STUDENT

TASK 1 Essay (1000-1500 words)
TASK 2 Report and Financial Statements Portfolio
TASK 3 Report and Forecasted Sheet
TASK 4 Report (800-1200 words)