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Activity-Based Costing and Service Allocation

   

Added on  2020-03-01

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Running head: MANAGEMENT ACCOUNTING FOR COST AND CONTROLManagement Accounting for Cost and ControlName of the Student:Name of the University:Author’s Note:Course ID:
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1MANAGEMENT ACCOUNTING FOR COST AND CONTROLTable of ContentsAnswer to Question 1:.....................................................................................................................2Answer to Question 2:.....................................................................................................................2Answer to Question 3:.....................................................................................................................3Answer to Question 4:.....................................................................................................................3Answer to Question 5:.....................................................................................................................5Answer to Part A:........................................................................................................................5Answer to Part B:.........................................................................................................................6Answer to Question 6:.....................................................................................................................6Answer to Question 7:.....................................................................................................................7Answer to Question 8:.....................................................................................................................9Answer to Question 9:...................................................................................................................11Answer to Question 10:.................................................................................................................13Answer to Part A:......................................................................................................................13Answer to Part B:.......................................................................................................................14Answer to Part C:.......................................................................................................................15References:....................................................................................................................................19
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2MANAGEMENT ACCOUNTING FOR COST AND CONTROLAnswer to Question 1:There are several purposes of management accounting reports, some of which arediscussed briefly as follows:Budget report:With the help of budget reports, the business owners could evaluate the performance oftheir organisations and in case of large-sized organisations, the managers evaluate theperformance of the department and control costs. For instance, the managers and owners coulduse these reports for providing incentives to their staffs (Drury, 2013).Accounts receivable aging:This report is a crucial tool to manage cash flow for the organisations extending credit tothe clients or customers. With the help of this report, the customer balances could be brokendown owing to their owed duration. For instance, if a large group of customers is unable to cleartheir balances, it is necessary for the organisation to tighten its credit policies. In addition, ithelps the collection department to look into past debts. Answer to Question 2:Control is the method of assessing, gauging, monitoring and rectifying actual results toassure that the plans and goals of the business organisation are accomplished. This has beenachieved through feedback. Feedback could be considered as the information that could be usedin evaluating or rectifying the steps taken in implementing a plan. Management accounting
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3MANAGEMENT ACCOUNTING FOR COST AND CONTROLenables in the control function by producing reports of performance and control reports thatdepict variances between actual and expected performances. The use of control and performance reports follows the principle of management byexception. These reports act as the basis to undertake essential corrective actions to controloperations. In case of considerable variations between actual and budgeted outcomes, a managerwould investigate to ascertain what is not going well and probably that the units or subordinatesmight require assistance. Answer to Question 3:In the words of Fullerton, Kennedy & Widener (2013), product costing is the method ofidentifying and understanding the different accrued expenses in the manufacture and sale of aproduct. This initiates with the purchase of raw wahes materials to expenses related totransportation of the final product to retail establishments. This is broadly considered as highlysignificant component on planning and evaluating the overall strategies of business. Thus, aproduct costing system gathers the cost incurred in the process of production and apportionsthose costs to the final products of the organisation. The product costing system is required forthe following four purposes:Use in financial accountingUse in managerial accountingUse in cost managementUse in reporting to the interested firms
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4MANAGEMENT ACCOUNTING FOR COST AND CONTROLAnswer to Question 4:Manufacturing statement (Normal view):Manufacturing statement (Formula view):
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5MANAGEMENT ACCOUNTING FOR COST AND CONTROLIncome statement (Normal view):
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