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Management Accounting - Jeffrey & Son's

   

Added on  2020-01-28

18 Pages5067 Words40 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION......................................................................................................................1TASK 1 .....................................................................................................................................1AC 1.1 Cost classification on various types..........................................................................1AC 1.2 Determining the unit cost using job costing method.................................................3AC 1.3 Cost calculation using absorption costing method....................................................3AC 1.4 OAR using labour hours basis..................................................................................5TASK 2 .....................................................................................................................................5AC 2.1 Preparation and analysing the cost report and comment on the variances................5AC 2.2 Performance indicator to identify areas for potential improvement.........................6AC 2.3 Ways to reduce cost, improve product quality and enhance value...........................7TASK 3......................................................................................................................................8AC 3.1 Nature and purpose of budgeting process.................................................................8AC 3.2 Appropriate budgeting method and its need.............................................................8AC 3.3 Production and Material purchase budget.................................................................9AC 3.4 Preparing Jeffrey & Son's cash budget...................................................................10Working note: .....................................................................................................................10TASK 4....................................................................................................................................11AC 4.1 Computing variances, identify possible causes and recommend corrective actions.............................................................................................................................................11AC 4.2 Operating statement................................................................................................12AC 4.3 Responsibility centres.............................................................................................13CONCLUSION........................................................................................................................13REFERENCES.........................................................................................................................14

INTRODUCTIONManagers play a crucial role in the organizations as they make policies, analyseoperational difficulties and take better decisions to remove hazards and run the businesssuccessfully. Management accounting is a process of identifying, analysing and interpretationof the financial information in order to take qualified decisions. In the present project report,its importance will be discussed in accordance with a manufacturing organization namedJeffrey & Son's. The company has a wide range of popular and branded product calledExquisite. In the present age, competition is rising at exponential rate. Thus, managementaccounting plays a satisfactory role in the firms as it provides reliable and prominentinformation’s to the managers and help to take effective decisions. In this report, numerousmanagerial tools such as cost sheet, budgeting process and variance analysis have beendiscussed. The report determines that how the techniques contribute to achieve organizationaltargets and ensure long term survival.TASK 1 AC 1.1 Cost classification on various typesElements Material Jeffrey & Sons need raw material to produceits Exquisite product. Thus, the amount ofexpenditure incurred on material purchase isknown as material cost (Paul, 2012.). LabourLabours are the individuals who convert theraw material into finished products throughputting their efforts (Datar and et. al., 2013).Jeffrey & Son's make payment of wages tothe labours that are known as labour calledlabour cost. OverheadAll the other incurred expenses are known asoverheads. It includes salary, printingexpenditures, rent and rates and etc.1 | P a g e

Functions Production department cost The amount of expenses that has beenincurred for producing the goods of Jeffrey &Son's is identified as production cost such asfactory lighting, rent and so on.Office/Administrative costJeffrey & Son's administrative staff managethe business functions thus, incurred officeexpenditures such as office lighting,stationery and photo copy charges.Selling and distribution department cost After producing Exquisite, Jeffrey & Sonssales and marketing manager are responsiblefor selling the product in the market. Itincludes all the marketing, advertisement andfree sample distributions.NatureDirectChargeable business expenses directlytowards the product Exquisite is known asdirect cost such as material's purchase andlabour's wages.IndirectA payment that cannot be directly charged tothe Exquisite product is known as indirectcost such as insurance, depreciation andmanager's salary (VanDerbeck, 2012).BehaviourFixedExpenditures that are unrelated to changingthe production volume of Jeffrey & Son's isknown as fixed cost such as depreciation andbuilding insurance (Blocher, Chen and Lin,2008).Semi variableExpenses that are partially fixed or partiallyvariable are semi variable cost such as2 | P a g e

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