Components of Management Accounting System - Assignment
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Added on 2021-02-22
Components of Management Accounting System - Assignment
Added on 2021-02-22
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MANAGEMENT ACCOUNTING.
TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 PART A...........................................................................................................................................3 1. Types of cots with their individual example............................................................................3 2. Relevant and irrelevant information in context with purchasing of appliances.......................3 3. Cost of laundering from different alternatives........................................................................3 4. Decision in relation to the hiring of new and additional employees........................................3 5. Computation regarding decision-making for enrolling more children...................................3 PART B............................................................................................................................................3 1. Different components of management accounting system and its importance inmaking effective and efficient decisions...................................................................................................3 2. Contribution of the management accounting in the innovation process of the companies.....3 3. Lesson and outcome obtained from the given article..............................................................3 CONCLUSION................................................................................................................................3 REFERENCES................................................................................................................................4
INTRODUCTION Managementaccountingisthepartneringoftheprocessofevaluationand communication of the financial information to the internal users of the company. This accounting helps in preparation of the internal reports so that it aids the users in decision making. The present report is based on row different article and the first article will explain about the different type of cost which incurredbuy the business and also the relevant and irrelevant information which is used for making the purchase decisions . The second article will be based o apple computer and Canon Inc which will helps to understand about the role of management accounting and it components in innovation process of the company. The report will further explain about the result and outcome which can be obtained from the articles for better and efficient understanding. PART A 1. Types of cots with their individual example. There are different types of costs which are ned to ascertain and consider by the business in calculating the cost of their operations. Thesecosts helps the businessin taking corrective measures which leads to controlling of any excess cost in order to earn sufficient amount of profit. different costs which business needs to consider are as follows: Variable cost: This is the cost which changes with the change in level of production that is variable cost is attached to the products which in includes cost of raw material, wages to workers, etc. are considered under the category of thevariable cost(Dekker,2016). There is direct relationship between the variable cost and the level of production. With increase in production, variable cost also tends to increase. For Example:Depending on the number of children, cost of meal will also changes as per child meal cost$3.20 and with increasing number of child this will also tend to increase and hence it can be considered s the variable cost. Fixed cost Fixed costs the cost which remains constant or fixed even when there is change in the level of production(Ax and Greve, 2017). This cost remains constant while increasing or decreasing the production level. This is considered to be the cots which business have to pay whether they are performing any activity to produce the goods and services or not. Rent, Fixed
insurance premium, Taxes etc are some of the costs which comes under the head of the fixed cost. For example:Insurance premium cost of $ 3840 is considered to be the fixed cost which the couple has to pay irrespective of the number of children they are enrolling into the day care home. Opportunity cost- This is the cost which is the cost for the next best alternative. This can also defined as the cost which is foregone for taking the advantage of the next best alternative(Nitzl, 2016). This considered to be the essential in the entire management accounting as this helps the managers in helping and aiding them in making the most useful and effective decisions for selecting the best from various alternatives available by efficiently evaluating each and which is also capable of achieving the organizational goal. For example:The opportunity cost in theirbusiness relies on different alternatives available with the couple for laundering their clothes. Say if the couple choose Red Oak for laundering the clothes which cost for $52 per month than they have to foregone the another benefit which might derived from using different alternative that cost $57.16. as this alternative might giving different benefits which cannot be obtained from Red Oak. Hence, Forgone cost of another alternative for first alternative is said to be the opportunity costs. 2. Relevant and irrelevant information in context with purchasing of appliances. Relevant information is the information which concluded as very important and essential for the business and is capable of helping the manger in decision making or contributing in something useful and productive for the business(van Helden and Uddin, 2016). this information will helps them in making most effective and efficient decisions regarding the purchasing of washing appliances . Relevant information also helps the couple in ascertaining them the cost of purchasing appliances and also the gain which they can derived by owing the assets(Hall,2016). This is considered to be thecapability and potential of the formation the is to affect the mind of the person in aiding useful decisions. The article consist of both the relevant and irrelevant information, relevant information contained by the article regarding purchasing of the washing appliances is the cost ODF different alternatives that is laundering clothes from Red Oak company, cost incurred fro mega mart. this
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