Panopticism, Management Accounting Functions, Van Halen’s Checklists, Manufacturing Statement And Income Statement

Panopticism

Panopticism can be defined as the social theory that is named after the panopticon which is originally created by the French philosopher Michael Foucault. The tern panopticism can be defined as the experimental laboratory of the power which helps in modifying the behaviour as the symbol of displaying the society surveillance.

Panopticims is important in management accounting as it calls for the attention in accounting and management components of anti-corruption project. Panopticism would help in detailing the accounting and auditing concepts as the emphasis of detecting and preventing the corruption (Scott, 2015). Panopticism helps in implementing control over the accounting records and would act as the reformation tool that would stress important on the financial controls as the anti-corruption. Panopticism would help in eliminating conflict of interest among the control and good management by implementing strong auditing programs.

Another importance of panoptcism can be highlighted in the study is that it actually helps in implementing data transparency which would help in promoting better synoptically system. The panoptical approach will help in enduring the company under the control of the private organization (Eldenburg et al., 2016). For example, implementing panoptical system in a organization would help in determining the raw nature of the data obtained and would help in side-lining the professional auditors.

The functions of management accounting are as follows;

1. Planning:The functions of management accounting includes formulation of short and long term plans that is necessary over the particular interval of time. The functions of management accounting is closely interwoven with planning since it provides information regarding decision making (Lanen, 2016). For example, decisions regarding what types or products are to be sold or what would be the product pricing.
2. Organizing:The functions of management accounting is based on creating an original framework for assigning responsibilities to the individuals that are working within the organization for attaining business goals. Management accounting helps in organizing the functions of managers by offering reports that are necessary to regulate information.  
3. Controlling:Management accounting assist in the controlling functions by generating performance reports and reports of control that helps in reflecting the variations among the anticipated performance and the actual performance (Boardman et al., 2017). The reports forms the basis for taking necessary corrective measures.

According to Otley, (2016) routine and responsibilities have turned out to be a complex thing in the modern world with mistakes are virtually inevitable in the modern world. According to the Van Helen Rock Band checklist is considered as the most important tool of control. The checklist help in careful composing and application of the same. The rock band realised that check list form the important tool of control as this helps in making sure that everyone that are involved in the job are better able to understand the goals and follow the prescribed procedure.

According to the rock band they would also benefit from the checklist as well as the checklists are highly considered portable. The check list helped the rock band in ensuring that a thoroughness is maintained along with the inventory of supply, consistency and often time savings when adding up the necessary records among the other things. Under the conditions complexity not only the check list as the help but are also required for success.  

Manufacturing Account:

In the Books of Tendulkar Manufacturing Co.
Manufacturing Statement
for the period ended 30 September 3017
Particulars	Amount (in $)	Amount (in $)
Raw Materials Purchased	8,42,000
Add: Opening Stock of Raw Materials	11,000
Less: Closing Stock of Raw Materials	26,000	8,27,000
Labour		4,56,780
Inward Charges on Raw Materials		25,340
Prime Cost		13,09,120
Manufacturing Overhead:
Manufacturing Expense		3,70,000
Depreciation on Machinery		12,900
Factory Salaries	3,67,800
Add: Accrued Salaries	12,600	3,80,400
Insurance	12,000
Add: Prepaid Insurance	3,700	15,700
Rates		9,425
Factory Cost		20,97,545
Add: Opening Work-in-Process
Material	23,000
Labour	17,000
Overhead Expenses	26,000	66,000
		21,63,545
Less: Closing Work-in-Process
Material	15,000
Labour	11,000
Overhead Expenses	8,000	34,000
Cost of Goods Manufactured		21,29,545
Add: Opening Stock of Finished Goods		50,000
Less: Closing Stock of Finished Goods		11,000
Cost of Goods Sold		21,68,545

In the Books of Tendulkar Manufacturing Co.
Income Statement
for the period ended 30 September 3017
Particulars	Amount (in $)	Amount (in $)
Sales of Finished Goods		38,56,000
Cost of Goods Sold		21,68,545
Gross Profit		16,87,455
Operating Expenses:
Advertising		24,000
Audit Fee		12,000
Discount Expense		3,450
Discount Revenue		(5,320)
Freight Outwards		6,543
Insurance	4,000
Less: Prepaid Insurance	925	3,075
Light and Power		23,000
General Expenses		54,320
Rates		3,142
Office Salaries	35,000
Add: Accrued Office Salaries	2,340	37,340
Sales Commission		47,600
Total Operating Expenses		2,09,150
Operating Income		14,78,305
Tax Expense		56,740
Net Profit		14,21,565

A perpetual system of inventory constantly updates the records for the company when it uses the raw materials or sells the product to the customers (Macve, 2015). Companies that makes the use of the perpetual inventory system should introduce the cycle of counting physical stock take in to the everyday company’s inventory account and compares the quantity against the inventory records. The physical stock take under the this system would help in investigating the discrepancies in inventory record to ascertain the reason for incorrect quantities.

Overtime payment represents the amount that is paid to the worker for the overtime worked which is greater than the normal rate of wages paid. The overtime payment is also regarded as the indirect labour cost and it is included in the overhead costs.

Material Control Account
Dr.	Cr.
Date	Particulars	Amount	Date	Particulars	Amount
1st April	To Balance b/d	60,000		By Work-in-Process Account	80,000
	To Accounts Payable Account	70,000	31st April	By Balance c/d	50,000
		1,30,000			1,30,000
Accounts Payable Account
Dr.	Cr.
Date	Particulars	Amount	Date	Particulars	Amount
				By Material Control Account	70,000
31st April	To Balance c/d	77,000		By GST Clearing Account	7,000
		77,000			77,000
GST Clearing Account
Dr.	Cr.
Date	Particulars	Amount	Date	Particulars	Amount
	To Accounts Payable Account	7,000		By Balance c/d	7,000
		7,000			7,000

Journal Entry:
Material Control Account………Dr	$     70,000
GST Clearing Account…………….Dr	$       7,000
To Accounts Payable Account	$     77,000

Accrued Payroll Account
Dr.	Cr.
Date	Particulars	Amount	Date	Particulars	Amount
	To Salary and Wages Account	50,000	1st July	By Balance b/d	18,000
31st  July	To Balance c/d	8,000		By Salary and Wages Account	40,000
		58,000			58,000
Salary and Wages Account
Dr.	Cr.
Date	Particulars	Amount	Date	Particulars	Amount
	To Bank Account	50,000		By Accrued Payroll Account	50,000
	To Accrued Payroll Account	40,000		By Salary and Wages Account	40,000
		90,000			90,000

Journal Entry:
Salary Account……..Dr	12,000
Wages Account……..Dr	28,000
To Accrued Payroll Account	40,000
Accrued Payroll Account…..Dr	50,000
To Salary and Wages Account	50,000
Salary and Wages Account…..Dr	50,000
To Bank Account	50,000

Computation of Gross Pay for September
	Amount ($)
Gross Pay per day	8000
Total gross pay for September	240000
Withholding each day	2400
Total withholding for September	72000
Net Pay	168000
Total amount credited	168000

Salaries and Wages Account
Raw Material Account
Particular	Amount	Particular	Amount
To Accrued Salaries and Wages	$ 2,40,000.00	By Salaries and Wages	$ 2,40,000.00
		By Balance C/d	$ 2,40,000.00
Total	$ 2,40,000.00	Total	$ 2,40,000.00
Accrued Salaries and Wages Account
Raw Material Account
Particular	Amount	Particular	Amount
To Salaries and Wages	$ 1,68,000.00	By Cash	$ 1,68,000.00
		By Balance C/d	$ 1,68,000.00
Total	$ 1,68,000.00	Total	$ 1,68,000.00
Cash Account
Raw Material Account
Particular	Amount	Particular	Amount
To Salaries and Wages	$ 2,40,000.00	By Accrued Salaries and Wages	$ 2,40,000.00
		By Balance C/d	$ 2,40,000.00
Total	$ 2,40,000.00	Total	$ 2,40,000.00

Journal Entry
Particulars	Amount	Amount
Salaries and Wages Expense Account ……………….Dr	240000
To Accrued Salaries and Wages Payable A/c		240000
Salaries and Wages Account ………………….Dr	168000
To Cash A/c		168000
Salaries and Wages Expense Payable ……………….Dr	2400
To Salaries and Wages Payable A/c		2400

Management Accounting Functions

The system of costing acts as the information system. The costing system generally requires particular form of information namely the direct labour hours and quantity of units produced (Henderson et al., 2015). The traditional costing system allocates the overhead under the single machine type application of overhead or rates for the operational department that are volume based. The costs of overhead usually does not vary with the quantity. Therefore assigning these costs in respect of volume based would create a distortion among the costs that is assigned to numerous lines of product.

According to Warren & Jones, (2018) activity cost simultaneously is presented as the refinement of the traditional system of costing for allocating the manufacturing overhead among the units produced. In consistent with the statement, arguably the traditional costing system regularly uses the volume based measures namely the direct labour hours or the machine hours to assign the cost of overhead for the goods produced. Conversely ABC costing assigns the cost of overhead to the products in respect of the resources that is by each activity that are engaged in the process of designing, producing and distributing the particular product. This is further escorted by allocating the cost among the cost pools representing the specified activities and distributing the costs by making use of the correct cost drivers of products.

An argument can be put forward by stating that ABC method of costing is more focussed based and adopts detailed approach rather than making use of the department or plant level for assembling costs (Williams, 2014). The ABC method of costing offers the managers with the an appropriate and informative products costs resulting in improved product profitability measurement for better strategic planning relating to product line, price, customer market and capital expenditure. The ABC method of costing provides the managers with easy access to relevant costs for making decisions and maintaining competitive position in the market.

Despite the benefits there are certain arguments against the ABC costing concerning the area of costs allocation. In spite of the availability of the data there are some costs that need requires departmental allocations and product allocation in respect to arbitration volume that is measures by discovering the particular activity (Schaltegger & Burritt, 2017). This leads to cost occurrence that might not at times be considered feasible.

The development of ABC system of costing is time consuming and usually requires more than a year for application. As the ABC system of costing produces large quantity of information thee are circumstances where certain information could provide misleading results to management and may force managers in concentrating on incorrect data (Scott, 2015). In spite of facing criticism ABC method of costing is view as more product oriented and provides managers with easy recognition of relevant business costs for decision making in order to remain more competitive. The ABC based costing can viewed as an improvement over the traditional system of costing.   

Direct Method:
Particulars	Material and Labour	Percentage	Total of Production Department	Indirect Costs	Percentage	Total of Production Department
P1	2,00,000	53.33%	93.33%	90,000	48.91%	86.96%
P2	1,50,000	40.00%	70,000	38.04%
S1	10,000	2.67%		6,000	3.26%
S2	15,000	4.00%		18,000	9.78%
Total	3,75,000			1,84,000

Apportionment of Cost:
Particulars	Material and Labour	Allocation from Service Department	Indirect Costs	Allocation from Service Department	Total
P1	2,00,000	43,750	90,000	42,667	3,76,417
P2	1,50,000	58,333	70,000	54,857	3,33,190

Step Method:
Particulars	P1	P2	S1	S2
Material and labour	60,000	45,000	20,000	25,000
Total	60,000	45,000	20,000	25,000
Add: Apportionment of S2 department	12,000	9,000	4,000
Total	72,000	54,000	24,000
Add: Apportionment of S1 department	13,714	10,286
Total	85,714	64,286

Reciprocal method of overhead Allocation
	S1	S2	P1	P2
Indirect Manufacturing Expenses	20000	25000
Allocation of S1	24000	4800	14400	4800
Allocation of S2	2214	26760	9366	13380
Total cost allocated to each P1 and P2			23766	18180
Equation
S1 = 20000 + 0.20 = x ≈
S2 = 25000 + 0.10	24000
S1 = 20000+0.20 * (38000+0.10)
S2 = 25000+0.10 * (17600.02)	27500

Reference List:

Boardman, A. E., Greenberg, D. H., Vining, A. R., & Weimer, D. L. (2017). Cost-benefit analysis: concepts and practice. Cambridge University Press.

Eldenburg, L. G., Wolcott, S. K., Chen, L. H., & Cook, G. (2016). Cost management: Measuring, monitoring, and motivating performance. Wiley Global Education.

Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting. Pearson Higher Education AU.

Lanen, W. (2016). Fundamentals of cost accounting. McGraw-Hill Higher Education.

Macve, R. (2015). A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge.

Otley, D. (2016). The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, 45-62.

Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge.

Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.

Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.

Williams, J. (2014). Financial accounting. McGraw-Hill Higher Education.