logo

ACC202 - Management Accounting Assignment

   

Added on  2019-10-31

4 Pages969 Words207 Views
MANAGEMENT ACCOUNTING
ACC202 - Management Accounting Assignment_1
Answer c.There are two types of cost that are involved in the process of production. These two costmay be variable or fixed in nature (Berman, Knight and Case, 2013). The variable costincreases or decreases with the level of production whereas the fixed cost remains unaffected.The company first tries to recover the variable cost from the customers and after that tries torecover fixed cost in the long run. A company’s ability to recover is fixed cost is truly reflected in the contribution value.Therefore, contribution is favourable when it is high. We have been asked that whether theacceptance of special order recover the fixed cost or not. It is only when the cost is recoveredthe company can earn profits (Bragg, 2014).Contribution perunitNormalSpecial orderSelling price per unit2.21.4Less: Direct material 0.390.39Direct labour 0.240.24Variable overhead 0.160.16Contribution perunit 1.410.61It is very obvious that if the contribution is less than the fixed cost recovery will also be lessleading to less or no profitability (Brigham and Ehrhardt, 2017).The following table shows profit with normal manufacturing:ParticularsAmountSales1672000Less: Direct material300000Direct labour 180000Variable overhead120000Fixed overhead540000Profit532000Low contribution gives low profitability which is proved hereunder:ParticularsAmountSales1656000Less: Direct material300000Direct labour 180000Variable overhead120000
ACC202 - Management Accounting Assignment_2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
T217 ACC202 Management Accounting Assignment
|7
|1263
|121

Management Accounting | Questions and Answers
|8
|1747
|194

Assignment | T217 ACC202 Management Accounting
|4
|599
|43

T217 ACC202 Management Accounting | Assignment
|8
|1664
|183

Management Accounting Assignment (DOC)
|7
|1266
|42

Assignment Management Accounting | Calculation of Costs
|9
|1533
|163