Pixar Ltd is one of the leading food processing companies in Gulf region. Food processing sector is indispensable for overall development of an economy as it provides a vital linkage and synergy between the agriculture and industry. It helps to diversify and commercialize farming; enhance income of farmers; create markets for export of Agro- foods as well as generate greater employment opportunities. The CEO wants to explore more about management accounting systems and its implementation within this company.

(a) Manufacturing and Merchandising Divisions of Pixar Ltd

Pixar Ltd has two divisions of operations i.e., manufacturing division and merchandising division. The Cost and Sales details of Manufacturing and Merchandising Divisions

Information	Merchandising Division			Manufacturing Division
	For the year 2020 ($)	Beginning of 2020 ($)	End of 2020 ($)	For the year 2020 ($)	Beginning of 2020 ($)	End of 2020 ($))
Sales	800,000			1,200,000
Inventory		140,000	130,000		70,000 (Materials)	65,000 (Materials)
Purchases of inventory	700,000			700,000 (Materials)
Direct Labor				338,000
Manufacturing Overheads				166,000
WIP inventory					160,000	54,000
Finished Goods inventory					0 (zero)	120,000
Administration Expenses	50,000			55,000

(b) Production and Cost details of one of the Products being manufactured by its Manufacturing Division

Production and cost details of one of the products of Pixar Ltd is as given below:

Information		$ per unit
Selling Price		500
Direct Material	300 (per unit of material)	300
Direct Labour cost	$ 50 per hour	150
Number of labour hours needed to manufacture one unit of product	6 hours
Fixed Costs for the company		$ 40,000

(c) Estimations Sales and Cost details for one of its products for the next 3 months

The company has estimated its sales and production cost for one of its products for the next three months as below:

Particulars	March	April	May
Units expected to be sold	10,000 units	20% more than March sales units	40% more than March sales units
Selling Price per unit ($)	40	45	50
Variable cost per unit ($)	15 per unit	15 per unit	15 per unit
Fixed Cost for this period	800,000

(1) As the company wants to implement management accounting systems, the CEO wants to know more about management accounting.

Considering the above, Discuss the usefulness of management accounting for merchandising and manufacturing companies like Pixar Ltd. (15 marks)

(2) Prepare an income statement for Merchandising and Manufacturing divisions of Pixar Company Ltd for 2020 based on the data given above in (a). Show the cost of goods manufactured and cost of goods sold calculations clearly here.