Costing System Management Accounting Report 2022

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Authors Note:

MANAGEMENT ACCOUNTING
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Executive summary:
A detailed discussion along with analysis on the job costing system is provided in this document
to understand the importance of appropriate costing system in determining the cost of products
correctly. Connectta Limited is a furniture manufacturer shall use an appropriate costing method
for costing purpose. The report below makes it clear that the job costing system in place within
the company is not exactly appropriate for the company as the product cost calculated from the
costing system does not properly reflect the actual cost of the furniture manufactured by the
company.

MANAGEMENT ACCOUNTING
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Contents
Executive summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Part 1:...............................................................................................................................................3
Part 2:...............................................................................................................................................4
Part 3:...............................................................................................................................................5
Part 4:...............................................................................................................................................7
Part 5:...............................................................................................................................................8
Part 6:.............................................................................................................................................10
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12

MANAGEMENT ACCOUNTING
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Introduction:
The selection of an appropriate costing system for an organization is the responsibility of the
management of the organization. Looking at the sheer importance of an effective costing system
in place to calculate the cost of manufacturing it must be given the top priority by the
management to firstly select a suitable costing system for the company’s manufacturing activities
and operations. Taking into consideration the nature of manufacturing operations of Connetta
lets discuss the appropriateness of the current costing system in place within the company.
Part 1:
In order to determine the unit cost of any individual product a manufacturer must use either of
two costing methods, i.e. job order cost system or process costing. In case of production of
furniture since there was no different processes used to produce the finished goods the
management of Connetta Limited has decided to use job costing to ascertain the unit cost of
indidviauls product of the company (Askarany, 2011).
When a company accumulates manufacturing costs firstly in three accounts, namely raw
materials, factory labor and manufacturing overheads. Secondly, these costs after accumulation
are transferred to work in process and finally to finished goods then use of job costing is
appropriate to determine the unity cost of individual products manufactured by the company. A
company that manufactures custom made machines, designs custom made machine tools,
constructs custom designed building, manufactures ships, and aircrafts etc. shall use job costing
method to ascertain the unit cost production (Eldenburg and Wolcott, 2009).