Management Accounting: Ethical Standards, Quality Costs, Overhead Rates

Accounting 1
Management Accounting

Accounting 2
Table of Contents
Introduction......................................................................................................................................3
Question 1: Ethical Standards Provided by IMA............................................................................4
Question 2: Quality Costs................................................................................................................5
(a) Classification of Costs into Four Types of Quality Costs......................................................5
(b) Example of an Appraisal Cost................................................................................................6
(c) Analysis of behavior of Four Types of Costs.........................................................................6
Question 3: Valuation of Overheads Rates......................................................................................7
(a) Calculation of Predetermined Overhead Rates used for Assembly and Painting...................7
(b) Valuation of Total Overhead Cost for Job 105......................................................................7
(c) Valuation of Total Manufacturing Cost for Job 105..............................................................7
(d) Calculation of Unit Product Cost for Job 105........................................................................8
(e) Impact of Change in Manufacturing Overhead for Painting..................................................8
Question 4: Application of High-Low Method...............................................................................8
(a) Cost Formula for Shipping Expense using High-Low Method..............................................8
(b) Reasons of Difference between Actual Delivery Expenses and Estimated Delivery
Expenses.......................................................................................................................................9
(c) Contribution Format Income Statement...............................................................................10
Question 5:.....................................................................................................................................10
(a) Valuation of Predetermined Overhead Rate.........................................................................10
(b) Amount of Over-applied or Under-applied Overheads........................................................10
(c) Implications of Having Large Over-applied or Under-applied Overheads..........................11
Question 6: Pricing Techniques.....................................................................................................11
(a) Limitations of Cost-plus Pricing...........................................................................................11
(b) Value Based Pricing Technique...........................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

Accounting 3

Accounting 4
Introduction
The purpose of this report is development of secondary knowledge about different concepts
related to management accounting. This report will help to understand ethical standard provided
by IMA. Further the report focus on developing practical knowledge about classification of
available different types of activities into four types of quality costs. It will facilitate example of
an appraisal cost. Further section of this report will focus on understanding about calculation of
predetermined overhead rates for given data. Apart from this, the report will also focus on
application of high-low method for cost valuation. Final section of this report will focus on
identifying different limitations of cost plus pricing method. It will also help to understand the
value based pricing technique adopted by different organizations.