Management Accounting Assignment PDF
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Added on 2020-01-28
Management Accounting Assignment PDF
Added on 2020-01-28
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Different types of cost classification......................................................................................31.2 Calculating unit cost and total job cost by using job costing.................................................31.3 Calculating cost of Exquisite using absorption costing technique.........................................41.4 Analyzing cost of Exquisite...................................................................................................8TASK 2............................................................................................................................................82.1 Preparing and analyzing cost report for the month of September.........................................82.2 Using performance indicators to identify areas for potential improvement........................102.3 Ways to reduce cost and enhance value, quality..................................................................10TASK 3..........................................................................................................................................113.1 Purpose and nature of budgeting process.............................................................................113.2 Selecting appropriate budgeting methods for organization.................................................113.3 Preparation of different types of budget..............................................................................123.4 Preparing cash budget..........................................................................................................13TASK 4..........................................................................................................................................164.1 Calculating variances...........................................................................................................164.2 Preparing reconciliation operating statement.......................................................................184.3 Findings to management in accordance with identified responsibility centers...................19CONCLUSION..............................................................................................................................19REFERENCES..............................................................................................................................212
Index of TablesTable 1: Working note.....................................................................................................................6Table 2: Table 3: Allocation of cost on the basis of machine hours...............................................8Table 3: Allocating of criteria of cost..............................................................................................8Table 4: Units to be produced..........................................................................................................8Table 5: Overhead absorption rate ..................................................................................................8Table 6: Absorption rate of Exquisite..............................................................................................8Table 7: Calculating of absorption rate on the basis of labor hours................................................9Table 8: Cost of Exquisite................................................................................................................9Table 9: Cost report for September month......................................................................................9Table 10: Calculating of standard budget at 1900 units................................................................10Table 11: Production budget..........................................................................................................13Table 12: Material purchase budget...............................................................................................13Table 13: Material purchase budget .............................................................................................14Table 14: Material usage budget....................................................................................................14Table 15: Cash budget...................................................................................................................14Table 16: Receivable from debtors................................................................................................14Table 17: Overhead payment.........................................................................................................15Table 18: Production cost..............................................................................................................15Table 19: Sales budget...................................................................................................................15Table 20: Cash budget...................................................................................................................15Table 21: Variable overhead..........................................................................................................16Table 22: P & L..............................................................................................................................17Table 23: Operating profit statement for month of May................................................................193
INTRODUCTIONManagement accounting refers to profession which involve in management decision,planning and performance management system. It provides assistance in financial report andcontrol of organizational activities. The management accounting consists of three main aspectssuch as strategic management, performance and risk (Griffith, Stephenson and Watson, 2014).Present report is based on case of Jeffrey and Son's that manufacture popular brand productcalled Exquisite. This organization has basically two departments such as service and production.Further, different types of cost classification has been done. In addition to this, cost of Exquisitehas been calculated by using absorption costing technique. Apart from this, various performanceindicator are explained in order to assess organizational performance in the marketplace.TASK 11.1 Different types of cost classificationClassification of cost has been done as follows-Element-According to element cost is divided into direct and indirect segment. In thisregard, it can be said that the direct and indirect elements are associated with prodctionactivities (Backer, 2004). It also covers various kinds of direct and indirect cost thatrelates with the production.Function- Number of functions are present that need to be consider for effectiveaccomplishment of goals (Arroyo, 2012). Classification of key functions can be asproduction, finance, sales and marketing. It assist in better flow of production withinmarket.Nature- It is also classified in diverse factors such as labour, overhead expense andmaterial.Behaviour- According to behavior cost is mainly divided into three parts such fixed, semifixed and variables (Chapman, 2008). 1.2 Calculating unit cost and total job cost by using job costingTotal and unit cost of project has been calculated as follows which in turn company caneffective decision for the growth and prospective.4
ParticularsAmount (£)Direct cost Direct material200Direct labour270Indirect cost Variable production overhead180Fixed production overhead120Cost per unit770Units to be produced200Total cost 770*200154000Working note: 1Fixed production overhead = (Budgeted overhead / total direct labor hours) * Direct labor hoursused in Job 444=(£80000 / 20000 hours) * 30 hours =£120According to the above calculation it has been found that per unit cost of job 444 is£3.85.1.3 Calculating cost of Exquisite using absorption costing techniqueProductionDepartmentsService DepartmentBasisofApportioningTotalMachineShopXMachineShopYAssemblyStoresMaintenance000’sIndirectWagesAllocated36210000099500925001000060000IndirectMaterialsAreaoccupied2531000001000004000040009000LightingHeating&AreaOccupied5010000500015000150005000RentAreaOccupied1002000010000300003000010000Insurance&MachineryBookvalueofMachinery15794749679934975965
DepreciationofMachineryBookvalueofMachinery1507947049669993449675960InsuranceofBuildingAreaOccupied2550002500750075002500SalariesWorksofNo.employeesof8024000160002400080008000SubTotals103534641728763621992779964101056Re-ofservicedept.costStoresDept.39982299879995(79964)Maintenance485073233820211(101056Totals43490634996125013300Table 1: Working noteLighting&Heating:MachineryX10/50x£50000—f10000MachineryY5/50x£50000—£5000Assembly15/50x£50000—f15000Stores15/50x£50000=£15000Maintenance5/50x£50000=£15000RentMachinery X 10/50x£100000=f20000MachineryY5/50x£100000 = £10000Assembly 15/50x£100000=£30000Stores15/50x£100000=£30000Maintenance5/50x£100000=£10000Insurance&MachineryMachineryX800/1510x£15000=£7964MachineryY500/1510x£15000—£4966Assembly 100/1510 x 15000 —£994Stores6
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