Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 The purpose of internal reporting and providing accurate information to management.......11.2 The relationship between the various costing systems with in Tesco plc.............................11.3 The responsibility centres, cost centres, profit centres and investment centres with in anorganisation.................................................................................................................................21.4 The characteristics of different types of cost classifications and their use in costing...........21.5 The difference between marginal and absorption costing.....................................................3TASK 2............................................................................................................................................32.1 Record cost information for material, labour and expenses in accordance with theorganisation's costing procedures................................................................................................32.2 Analyse cost information for material, labour and expenses in accordance with theorganisation's costing procedures................................................................................................32.3 Various stages of inventory...................................................................................................42.4 Value inventory using these methods...................................................................................42.5 The behaviour of costs..........................................................................................................62.6 Record cost information in costing system...........................................................................7TASK 3............................................................................................................................................83.1 Attribute overhead costs to production and services cost centres in accordance with agreedbases of allocation and apportionment........................................................................................83.2 Calculate overhead absorption rates in accordance with suitable bases of absorption.........83.3 Make adjustments for under or over recovered overhead costs in accordance withestablished procedures................................................................................................................8Overhead rate per machine hours: -............................................................................................8Over and under absorption: -.......................................................................................................93.4 Review methods of allocation, apportionment and absorption at regular intervals,implementing agreed changes to methods..................................................................................93.5 Communicate with relevant staff to resolve any queries in overhead cost data.................10TASK 4..........................................................................................................................................10
4.1 Compare budgets costs with actual costs, noting any variances.........................................104.2 Analyse variances for management reports........................................................................114.3 Provide information for budget holders of any significant variances, making validsuggestions for remedial action.................................................................................................114.4 Prepare management reports in an appropriate format, presenting these within the requiredtimescales..................................................................................................................................11TASK 5..........................................................................................................................................125.1 Prepare estimates of future income and costs for decision making....................................125.2 The effect of changing activity levels on unit costs............................................................125.3 Calculate the effect of changing activity level on units costs.............................................125.4 Identify factors affecting short term and long term decision making.................................13CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONThe terms costs and revenues are likely two of the most important concepts in businessand management. No business can survive without profit and it depends on cost control and salesrevenues. Cost and revenues are helping to improve and maintain profitability (Burchell andListokin, 2012). Revenue is the total amount of money received which are acquired by sold ofgoods or services. Costs of goods sold are included in direct costs referable to the production ofthe goods sold by a company. In other terms, every business wants to make more revenues forcover its costs. In the present report selecting company Tesco plc, is a British multinationalgroceries and general merchandise retailer. It was founded in 1919 by Jack Cohen as a group ofmarket stalls. The report focused on nature and role of costing system in the context of tesco plc.Record and analyse cost information and absorption cost according to organisationalrequirements. Analyse deviations from budget and report of management and use information togather from costing systems to assist decision making. TASK 11.1 The purpose of internal reporting and providing accurate information to managementInternal reporting plays an important role in current business environment and it providesa clear picture to executive teams about the financial health of Tesco plc. But it does not provideaccurate and over all information that helps to understand hoe the business is performing at anoperational level. In internal reports including forecast report, cash reports, financial reports andbudget books etc. There is mention purpose of internal reporting that are provided accurateinformation to management of tesco plc - The internal report measure and monitor specific performance of KPIs and metrics. It is determine benchmarks to know minimum expected result. The purpose of this report to provide status report, board report and packages tomanagement for decision making (Terpstra and Verbeeten, 2014). 1.2 The relationship between the various costing systems with in Tesco plcIn Tesco plc applies various costing system like job costing system, process costing anddirect costing. Each of these methods apply by company to different production and decisionenvironments. 1
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