Department Cost Allocation

Running head: MANAGEMENT ACCOUNTING FOR COST AND CONTROL
Management Accounting for Cost and Control
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................2
Answer to Question 3......................................................................................................................3
Answer to Question 4......................................................................................................................3
Answer to Question 5......................................................................................................................7
Requirement A.............................................................................................................................7
Requirement B.............................................................................................................................8
Answer to Question 6......................................................................................................................9
Answer to Question 7......................................................................................................................9
Answer to Question 8....................................................................................................................11
Requirement A...........................................................................................................................11
Requirement B...........................................................................................................................11
Requirement C...........................................................................................................................12
Answer to Question 9....................................................................................................................14
Answer to Question 10..................................................................................................................16
a. Direct Method........................................................................................................................16
b. Step Method...........................................................................................................................16
c. Reciprocal Service Method....................................................................................................17

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References......................................................................................................................................19

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Answer to Question 1
Management accounting refers to a specific process of accounting that largely assists the
managers to analyze organizational performance for the process of busies decision-making
(Ward, 2012). Management accounting requires different accounting and financial information
that can be collected from various accounting and financial statements. Different financial
reports are used for different purposes (Fullerton, Kennedy & Widener, 2013). The below
discussion states the purposes of some of the major managerial financial reports:
Profit and Loss Statement: Financial managers use the profit and loss statement in order to
determine the organizational capacity for generating earnings, profit and return (Sheet, 2014).
Accounts Receivable Aging Report: From this particular report, financial managers can
determine the total amount owed from the debtors. This statement is also assists the managers to
determine the credit collection period of the company along with the identification of older
debts.
Operating Budget: Financial managers use this statement for the estimation of different
operating expenses in order to achieve the targeted revenue.
Answer to Question 2
One of the four functions of management accounting is Control. Control refers to the
process to monitor and evaluate the business operations so that various corrective steps can be
taken for the revision of actual outcome in order to achieve the objectives of the companies
(DRURY, 2013). With the help of control function in management accounting, the financial
managers can prepare the performance and control reports of the companies and these reports
helps the managers in for the measurement of variances between actual and projected financial

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performance (Hall, 2012). Financial managers use these variances for identifying the factors
causing issues in the achievement of targeted performance so that corrective actions can be taken
against them. Hence, from the above analysis, it can be seen that control function assists in the
identification of issues in the business operations so that the performance of the companies can
be enhanced (Otley, 2015).
Answer to Question 3
Below are the four purposes of product costing.
 The accumulation of relative cost of production
 To assign of cost of production to the product units
 For the determination of costs of production more accurately for large variety of nearly
identical products, and
 For the implementation of effective control over the cost of production (Stark, 2015)
Answer to Question 4
Normal View

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