Management Accounting Assignment (solved)

Added on - 22 Nov 2020

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Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Q1 Cost per unit of basic and advance models under current traditional costing system...........1Q2 Cost per unit of basic and advance models under Activity based costing system................2Q3 Explaining the major reason in context of overseas buyers for buying advanced model.....5Q4 Explaining reasons on the basis of same overheads and recommending ways for dealingwith its fluctuations.....................................................................................................................6Q5 Merits and demerits of activity based costing system...........................................................6CONCLUSION................................................................................................................................8REFERENCES..............................................................................................................................10
INTRODUCTIONManagement accounting can be referred as process of preparing accounts and reportswhich will be helping manager for finding financials which are accurate and even theinformation which will be useful for short term decision making such as statistical information.On the perspective of business unit, better planning has been ensured by management accountingand proper control over the organization. This report is totally based on case scenario of Scenarioeasy pvt ltd whose business model can be described as basic and advanced especially inmanufacturing context. The main objective of organization is to enhance the base of customerand profit level should be maximised as each business units has a desire to explore thereoperations at global level. This report is giving very deep insight about two methods i.e.traditional based costing and activity based costing. The report will be elaborating there merits aswell as demerits.Q1 Cost per unit of basic and advance models under current traditional costing systemTraditional costing systemParticularsAmount of basic modelAmount of advancemodelManufacturing overhead250000 (working note 1)451700 (Working note 2)Labour cost(Working note 3)240000390000Overhead rate$1.04$1.16Working notesW.N 1 Representation of total indirect overheads (Basic model)1
W.N 2 Representation of total indirect overhead cost by taking consideration of operatingexpenses (Advance model)W.N 3 Aggregate of labour costQ2 Cost per unit of basic and advance models under Activity based costing systemAssessing unit cost on the basis of activity based costingParticulars/Relevantcost driversOverhead costsSum of activitiesOverhead cost/ sumof activity ($)Inspection2000095021.05Assembly90000800011.25Production scheduling105000550190.91Machine set up35000350100AActivity rateBActivity usage by basic modelCActivity Cost Assigned to basic model [C2
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