Managerial Accounting Report
The Purpose and Context
This assignment will help you develop your understanding of the managerial accounting processes and you
will earn how different accounting methods create different pictures for a company given the same
data.
Case Scenario
Swipe 50 limited manufactures a specialized screen protector for laptops computers. The
plus swipe is a screens protector that prevent scratches on laptop screens. The company
has been in operation for 3 years and now that company has refined its production
process, the directors have decided to focus on the income and cost arising from the
activities. Therefore, the CFO, Tamara J. Blooms, wants to focus on product costing. She
wants to look into how both absorption and variable costing affect the profits of the
company. The following information is available for the month February and March:
February March
Production (units) 12,500 14,500
Sales (units) 11,500 15,500
Direct Materials € 29,000 € 33,250
Direct Labour € 19,000 € 22,000
Variable Production Overhead € 7,300 € 8,500
Total Selling and Administrative Expenses € 44,500 € 57,100
Additional Information
1. Swipes 50 Ltd. production capacity 20,000 units per month.
2. Fixed production overheads are €28,600 per month.
3. Swipe 50 sells Plus Swipes at €22 each.
4. On 31st January,the company’s warehouse has noPlus Swipesininventory.
5. Fixed and variable elements(variable portion is incurredbased on units sold) are included
in the total administration expenses.
Assignment Instructions
Please create a report for 50 swipes limited and please include the following in your report.
1. Preparea profitstatementforSwipe50Limitedforthemonthof FebruaryandMarchusing:(20%)
a. Absorption costing
b. Variable costing
2. Reconcilethe profitcalculatedusing absorption costingto thatusingvariablecosting.(20%)
3. Explain howeachmethoddiffers fromthe othermethod and also explain the importanceof the
eachmethods.
(20%)
4. Explain three waysthat Swipes 50 Ltd. can improve its accounting systems. (20%)
5. State why managing accountingjobs are importantinamanufacturingcompany.(20%)
