Description
Includes:
- budgeting
- profitability calculating
- etc..
Answer to all questions clear and carefully. Proceed step by step.
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Explanation & Answer
Attached.
Running head: COMPANY COCO MANAGEMENT ACCOUNTING CASE STUDY
Management Accounting Case Study: Company Coco
Names:
Institution:
1
COMPANY COCO MANAGEMENT ACCOUNTING CASE STUDY
2
Management Accounting Case Study: Company Coco
Company Coco’s budget
Direct costs and revenues
Volume
chocolate
bars
Sell
ing
pric
e
per
bar
£
Cocoa Total
grams Cocoa
per bar in Kg
Sugar
grams
per
bar
Tot
al
Sug
ar
in
Kg
Milk
Total
millilitre milk in
s per bar litres
Revenues
Dark
80,000
2
170
0.47
30
2.6
7
0
0
£160,000
Milk
140,000
1.8
130
1.08
40
3.5
30
4.67
£252,000
White
60,000
2
0
0
70
0.8
6
130
0.46
£120,000
5.13
£532,000
Raw material
costs
Total
£4 per
kg
280000
Indirect costs
Indirect
costs*
£k
Rent
£18,200
Utilities
£13,800
Factory
£12,700
administration
Marketing
and sales
£47,400
Administrativ
e salaries
£38,500
Packaging
estimates
£56,000
£2
per
kg
1.55
£1 per
litre
7.0
2
COMPANY COCO MANAGEMENT ACCOUNTING CASE STUDY
Direct labor
costs
£140,000
Raw materials
163,600
Total costs
£490,200
Estimated
revenues
£532,000
Net income
£41,800
Ensuring that the estimates are realistic
It is common for management accounts to develop budgets that fail to conform to their
expectations. According to the Harvard Business Review Staff (2015), this is often as a result
of errors arising from being too ambitious or underestimating possibilities. A realistic budget
should be neither too ambitious nor should it estimate the possibilities. There are a number of
ways that the management accountant should follow so as to ensure that the budget is
realistic. They should begin with setting organizational goals. However, these should be based
on the organizations’ capabilities as well as an achievable target that the organization focuses.
In fact, these should include clearly defined parameters such as the estimated period of time
and the expected proportion of change. At the same time, the Harvard Business Review Staff
(2015) recommends that the set shifts, for example, a 5% increase in profit after raising the
prices of item...