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Cost and Revenue Assignment - Solved

Added on - 23 Nov 2020

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Cost and RevenueTable of Contents
INTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Purpose of internal reporting and providing accurate information to management..............11.2 Relationship between various costing systems.....................................................................11.3 Identification of responsibility, cost, profit and investment centres.....................................21.4 Characteristics of different types of cost classifications and their use..................................21.5 Difference between marginal and absorption costing...........................................................2TASK 2............................................................................................................................................32.1 Record of cost information for material, labour and expenses.............................................32.2 Analysis of cost information for material, labour and expenses...........................................32.3 Various stages of inventory...................................................................................................32.4 Valuation of inventory using different methods...................................................................42.5 Description of behaviour of different types of costs.............................................................52.6 Record of cost information using different costing systems.................................................6TASK 3............................................................................................................................................63.1 Attribution of overhead cost to production and service cost centres using agreed bases.....63.2 Calculation of overhead absorption rates according to suitable bases of absorption............73.3 Adjustments for under or over recovered costs.....................................................................73.4 Methods of allocation, apportionment and absorption at regular intervals...........................83.5 Communication with staff to resolve queries related to overhead cost data.........................9TASK 4............................................................................................................................................94.1 Comparison of budgeted and actual costs noting any variances...........................................94.2 Analysis of variances for management reports...................................................................104.3 Information for budget holders of any significant variances..............................................104.4 Formulation of management reports in an appropriate format...........................................10TASK 5..........................................................................................................................................115.1 Estimation of future income and costs for decision making using difference elements.....115.2 Effect of changing activity levels on unit costs..................................................................125.3 Calculation of the effect of changing activity levels on unit costs.....................................125.4 Identification of factors that are affecting short and long term decision making...............13CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
INTRODUCTIONCost and revenues are two separate elements of a business. Cost is the total amount whichis involved in the manufacturing process of a products and revenues are the incomes that aregenerated by a business entity on the sales of those items. All the expenses that are related tomaterial, labour and other overheads are considered by the companies while deciding prices oftheir manufactured products. This assignment is based on the concept of these two components.In this report various topics are discussed such as nature and role of costing system, recordingand analysis of cost information, apportionment of costs according to organisationalrequirements etc. Analysis of deviations from budgets, reporting of them to the management andability to use information which is gathered from costing system in decision making is alsocovered in this report.TASK 11.1 Purpose of internal reporting and providing accurate information to managementPurpose of internal reporting:Internal reporting is conducted in all the business entitiesto analyse that organisation is performing well or not. If it is not good then strategic decisionscan be taken by the managers in order to improve it.Purpose of providing accurate information to management:It is very important toprovide accurate, reliable and appropriate information to the management. Main purpose of this,is to facilitate managers in making right decisions for business and its betterment.1.2 Relationship between various costing systemsAll the business entities use two major type of costing system these are job and processcosting systems. Both of them are interrelated with each other. In job costing material, labourand overheads are recorded for every task which is performed by the company. In second methodall these elements are transcribed for entire production procedure (Yang and Chen, 2018).When managers have any problem regarding production process as brief information isrecorded in it, then job costing can be used to get detailed information for each expense henceboth are related to each other.1
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