A requirement in Management Accounting Part I

Submitted By: Roshelle B. Mondia

Submitted To: Ms. Corazon T. Villegas, CPA

A CASE ON PROFESSIONAL ETHICS

It is very important to follow all rules and regulations as well as the policy of
the company. It should be the company first before any other things. The reputation
of the company should always be in mind and should take good care of it. If I were
Franklin, I will not abide the policy of the company, no matter what the situation is.
Even if I’m the sales manager of marketing department, I should always rely with the
opinion or suggestions of my seniors and should always look for the approval of the
Board, whether the project is of small cost or not the project should always undergo
with proper procedures. In the case of Franklin, I know that being the manager and
being in that situation is not really easy. Of course as a “manager” you should think
of the possible solution for the problem. It is good to be resourceful sometimes but
not in a situation that the policy of the company will be abide. If that’s the case, then
you will lose your integrity.

So, if I were Franklin, it is my fault that I didn’t make it through the meeting,
given the fact that I have a proposed project to be presented and it needs approval, I
should be there. If I didn’t able to attend the meeting, I should wait for the next
meeting or I’ll set an appointment with the Board of Directors. I think that would be
possible as my decision as a manager. I should take care of my personal issue and
the reputation of the company. Once a policy is always a policy.
 CASE ON ACTIVITY BASED COSTING

I think JIT inventory is applicable to Laredo Enterprise. If I’m with the

management of Laredo I would suggest to adopt a Just-in-time inventory policy
because it can lower the inventory cost that will lead to savings and can be use as
an investment. Although it needs a lot of supervision, I think it would be beneficial for
my enterprise. With JIT, my enterprise will only purchased materials when needed
and produced only the specific product that my customer demands, with that, costly
inventory are avoided and I have an assurance that the materials I purchased for the
product to be produced are just and no product will having the possibility to be stock.
Every system has its own advantage and disadvantages; it just depends upon the
management what system is applicable and would be good for their company or
enterprise.

For me, in doing business there’s always a non-value added activities and for
my personal point of view it only adds to the cost of doing business and I think it can
be eliminated without impairing a process. It will generate a zero or negative return
on my investment or resources.

In the case of “which two markets – sales to bookstores or sales to individuals

resulted in lower overall costs for incoming receipts, warehousing, and outgoing
shipments?”
 In my point of view, sales to bookstore resulted in lower overall costs because
it sells in bulk order. Selling in a large volume of goods sold in single transactions
lowers cost compare to individual sales.

If I were Clark Corporation, it would be costly to deal with Midwest because of

its customer’s related costs. For me, the higher the customer related cost, the costly
it is to deal with.

CASE ON BASIC COST MANAGEMENT CONCEPT

This case was all about basic cost management on how to calculate Cost of
Goods Manufactured, Cost of Goods Sold and Net Income, through it was stated
basic, it doesn’t mean that it was easy as piece of cake. I learned that it was a
foundation of Cost Accounting and Management. So, in our Cost Accounting before,
honestly our discussion of this topic is limited so I need to study it for myself and the
result was I didn’t fully understand it. But as the time goes on my learning skills
somehow improved. So as our group answer this case, I always tend to look for my
Cost Accounting book. I realized that it is very important to have your basic
foundation well or to have strong foundation because you can use it for your better
future.
 CASE ON COST-VOLUME-PROFIT ANALYSIS

In this case, I learned about break-even point, contribution margin, and

margin of safety or safety margin. So, for me it is important to know this three and
how to compute each for the sale of company’s financial stability. In break-even
point, revenue exactly equals estimated costs; where loss ends and profit begins to
accumulate. It is important to break-even because this is the point at which business,
product, or project becomes financially viable.

Contribution margin is the sales less variable cost. I learned that the
contribution margin should always be higher to cover up fixed cost otherwise loss
may occur. If I’m going to have a business I will plan a lower fixed cost because it is
not favorable for a business to have a higher fixed cost. The operating income
depends upon the contribution margin, the higher the contribution margin the higher
the possibility that it will cover fixed cost the higher the operating income.

Margin of safety for me is a borderline. It is very important to have a margin of

safety because it tells how much only the company should lower its sales before any
losses may occur or if the sales may lower, it should be at this point only otherwise it
will result to loss. See? It is very important because it gives you a hint and warns you
for possible losses. The greater this margin, the less sensitive the company to any
abrupt fall in revenue.
 CASE ON DECISION MAKING, RELEVANT COSTS AND BENEFITS

In this group case activity, I learned that decision making is really important for
it affects the overall performance of the company or entity. We should not decide
without taking all the necessary data or information. Just like any other things,
decision making has its own process, just like how we decide in our group when
there’s a group activity. First, we clarify and define the problem; then we set our
objectives, next is the courses of action that we need to take of course we also need
to identify our alternatives and develop a decision model after that is the gathering of
information or data that will support our decision and finally we will make a decision.
The information should be relevant, accurate and timely.

In our group, I was assigned as secretary so while writing our answer I also
learned. In this case, I realized that it was really hard to decide, I imagined how it is
to be in a real world of business, and how I will allocate the resources especially if
there is scarcity. How will I account sunk cost and etc. It was really great that my
imagination is working. As they said, “Your imagination is your limit.”
 CASE ON PROFIT PLANNING and ACTIVITY-BASED BUDGETING

Budget/Budgeting plays a great role in our daily life. As a student, budgeting is

important especially in my case where I lived far from my parent. It is important to
allocate my allowance for my expenses, so in the end I will not incur shortage just
like how important the budget/budgeting in our life and to a business.

Budget is important in business because it serves as a detailed plan

expressed in quantitative terms that specify how resources will be acquired and used
during a specified period of time, on how will they allocate the scare resources,
control the operations, evaluate performance and etc.
 CASE ON CASH FLOW

In all cases, I think this is the most difficult one, maybe because for now it is
hard for us (I personally) to interpret data especially numerical data. But of course,
we tried our best to analyze and interpret the given data. So in this case, the class
was divided into two groups, 1 and 2. Assumption 1 is for Group 1 and assumption 2
is for Group 2 where I belong. Each group has given time to discuss it. We, the
group 2 really don’t know what to do, what and how, even Ate Marzan said she didn’t
know. So the day before the reporting, it was Thursday yet we don’t have
accomplishment, that same day was also the JPIA General Assembly. So were really
don’t have enough time and we actually worried. But then as the cooperation of our
group, we discuss this case while in assembly the some of our group mates said that
they have an ideas already on how we can solve this case. So we work as a team
and divided eventually the task. After the assembly, we go home immediately and
study the case, each group member was actually busy and render their efforts we’re
really exhausted. But great thing happened because the case was done and we can
able to have our report.

Analyzing and interpreting data is not easy especially in real world of

business. This case was not easy (for me) but the most important is what I learned in
it. The group cooperation was also important. Team work makes the dream work.