Cost and Revenue - Assignment Solution
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Added on 2020-12-26
Cost and Revenue - Assignment Solution
Added on 2020-12-26
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Costs and revenues
Table of ContentsTask 1...............................................................................................................................................11.1-The purpose of internal reporting and providing accurate information to management......11.2- The relationship between the various costing system within an organisation.....................11.3 The responsibility centres, cost centres, profit centres and investment centres within anorganisation.................................................................................................................................11.4 The characteristics of different types of cost classifications and their use in costing...........21.5-The difference between marginal and absorption costing....................................................2Task 2...............................................................................................................................................32.1 Recording cost information for labour, material and expenses.............................................32.2 Analyse cost information for material, labour and expenses according to organisation'scosting procedure........................................................................................................................32.3 The various stages of inventory............................................................................................42.4 Inventory valuation using different methods........................................................................42.5 Behaviour of these costs :.....................................................................................................82.6- Record cost information using job, batch, unit, process and service costing system..........8Task 3...............................................................................................................................................93.1 Attribute overhead costs to production and service cost in according allocation andapportionment.............................................................................................................................93.2 calculate overhead absorption rates in according machine hours and labour hours...........103.3- Make adjustments for under or over recovered overhead costs in accordance establishedprocedure...................................................................................................................................113.4 Methods of allocation, apportionment and absorption at regular intervals, implementingagreed changes to method.........................................................................................................113.5 Communicate with relevant staff to resolve any query in overhead cost data....................12Task 4.............................................................................................................................................124.1- Compare budget cost with actual cost, noting any variance..............................................124.2- Analyse variances for management report.........................................................................124.3-Provide information for budget holders of any significant variances, making validsuggestions for remedial action.................................................................................................13
4.4-Prepare management report in an appropriate format, presenting these within the requiredtime scales.................................................................................................................................13Task 5.............................................................................................................................................145.1 Estimate of future incomes and costs for decision making................................................145.2 The effect of changing activity levels on unit cost.............................................................155.3 Calculate the effect of changing activity levels on unit cost..............................................155.4- Factors affecting short-term and long-term decision making............................................15
Task 11.1-The purpose of internal reporting and providing accurate information to managementInternal reporting is financial data and other information to investors and creditors for knowingthe position of the important operating units of a company. Internal report involves financial andoperational information on a frequent basis which is distributes to manager and those who canuse it to improve performance. This information includes expenses trends, failure rates andemployee turnover which gives the accurate information to management for knowing the exactposition of company in market. The main purpose of maintaining this report is to measure theability to generate revenue and profit. It gives the accurate information to management whichenable them in judging the effectiveness of their responsibility for taking the corrective measure.The aim and purpose of maintaining internal report is to examine cash flow, businessperformance and the financial health of the business.1.2- The relationship between the various costing system within an organisationEvery organisation design costing system to monitor the costs which are incurred by a business.There are four types of costing such as marginal costing by which only the variable cost areallocated, absorption costing to absorb the fixed and variable cost to production, standard costingis the ideal cost to find the actual cost in the accounting records and historical costing whichrefer the original cost of an asset. For measuring the cost and accumulate the information thereare mainly two types of costing system that are- 1.Job costing system 2-Process costing system Job costing and process costing system have the same goal such as determines the cost ofproduct. They both have the same cash flows.1.3 Theresponsibilitycentres, cost centres, profitcentresandinvestmentcentres within anorganisationResponsibility centre : Responsibility centre is a part of the organisation where managerresponsible for the decision-making, activities and the result. All information related to the costand revenues are collected and reported through responsibility centres.Cost centres : cost centre manager handled over all cost incurred but they do notresponsible for revenues. They ensure that no more difference between budget and actual cost.Cost centre manager and their subordinates are responsible for the control production cost.1
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