Assignment on ACC 202 Management Accounting

Added on - 28 May 2020

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Running head: ACC 202 MANAGEMENT ACCOUNTINGACC 202 Management AccountingName of the Student:Name of the University:Authors Note:
ACC 202 MANAGEMENT ACCOUNTING1Table of ContentsSituation 1: Decision of replacement of loader truck.................................................................2Calculating the provision whether the Flying Airline Company needs to use new or old loaderfor their services:........................................................................................................................2Situation 2: Calculating the income from flight route...............................................................3A) Identifying the viability of flight route used by the Airline purely on financial perspective:....................................................................................................................................................3B) Evaluating the other factors that could be discussed before making the decision:...............4Situation 3:.................................................................................................................................4A) Depicting with relevant calculation whether to accept special tourist charter flight whenspare capacity is present:............................................................................................................4B) Depicting whether to accept special tourist charter flight where spare capacity is notpresent:.......................................................................................................................................5Reference and Bibliography:......................................................................................................7
ACC 202 MANAGEMENT ACCOUNTING2Situation 1: Decision of replacement of loader truckCalculating the provision whether the Flying Airline Company needs to use new or oldloader for their services:Situation 1ParticularsNot replacing OldloaderReplacing OldloaderDifferentialcostDepreciation$ 25,000.00Write off$ 25,000.00Proceeds from sale$ (5,000.00)$ 5,000.00Depreciation of new loader$ 20,000.00$ (20,000.00)Operating costs$ 80,000.00$ 50,000.00$ 30,000.00Total$ 105,000.00$ 90,000.00$ 15,000.00The above table mainly helps in understanding different cost structure, which ispresented to the Flying Airline Company. However, the decision needs to be conducted bythe management regarding the implementation of new loader or utilising the old loader. Thedifference in differential cost between old loader and new loader is depicted in the abovetable, where the use of new loader is more beneficial for the Flying Airline Company. Fromthe use of old loader, the Flying Airline Company will mainly incur a total operating cost of$105,000. On the other hand, implementation of new loader could directly reduce theoperation cost to $90,000, which is lower than previously operating cost. Hence, FlyingAirline Company could directly utilise the opportunity to use new loader, as it willsubstantially decline the cost incurred by the company. This decline in differential cost coulddirectly allow the organisation for generating higher revenue from its operations due todecline in actual cost. Ax and Greve (2017) mentioned that organisation with the help of costanalysis are able to identify ways in which actual expenses incurred from operation could bereduced for increasing their revenue.
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