Part A. Question 1:. Concept Of Management Accounting:.

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Part A
Question 1:
Concept of management accounting:
“Management Accounting is the utilization of proper strategies and ideas in preparing chronicled and anticipated financial information of a substance to help administration in setting up arrangements for sensible monetary goals really taking shape of judicious choices with a view towards these destinations."
Management accounting helps organizations to generate and preserve value:
Management accounting provides information for three major purposes as follow:
1. External reporting:
These reports are utilized financial specialists, leasers, government experts, and other outside gatherings.

2. Routine internal reporting:
These reports which are intermittently created are utilized by
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otal
Sales price per unit 60 180 200
(-) Variable Cost per unit (30) (60) (140) contribution 30 120 60 sales mix 3 2 1 6
Weight contribution 90 240 60 390

Weighted Average Contribution per unit = Total weighted contribution _______________________ Total weights

= 390 ________ = $ 65per unit 6

Break Even Point
(Units) = Fixed Costs _______________________ Weighted Average Contribution per unit

= 162,500 __________ = 2500 units 65

Proof:
Information A B C Total
Sales units
A – 2500 x 3/6
B – 2500 x 2/6
C – 2500 x 1/6 1250 833 417 2500
Sales 75,000 149,940 83,400 308340
Less: Variable Cost 37,500 49,980 58,380 145860
Contribution 453,750 99,960 25,020 162480
Less: Fixed Cost 162500
Operating Income 0 (approx.)

Question 3 (ii):
Break Even Point
(Units) = Fixed Costs + Target Profit ____________________________ Weighted Average Contribution per unit = 162,500 + 227,500 _________________ = 6,000 units 65

Break Even Point ($)
Information A B C Total
Sales units
A – 6,000 x3/6
B –6,000 x 2/6
C –6,000 x 1/6 3000 2000 1000 6,000
Sales 180,000 360,000 200,000 740,000

Question 4:
Exiting situation:
Information/Products A B C
Sales Units 1500 1000 500 3000

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