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MANAGEMENT ACCOUNTING AND COGS Report

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Added on  2020-07-22

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Average cost 7 Q4 Prepare COGS report for FIFO, LIFO and Average cost7 9 Q5 9 CSF and KPI 9 b) 10 Ways to reduce Costs10 Value and quality enhancement 10 TASK 210 Q6 10 Define budget 10 Budget purpose11 Methods of budgeting12 Q7 13 a) Sales budget 13 b) Production budget14 c) Raw material budget 14 d) Labour budget 14 Q8 Cash budget15 TASK 316 Q9 16 a) Budget profit 16 b) Actual

MANAGEMENT ACCOUNTING AND COGS Report

   Added on 2020-07-22

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MANAGEMENT ACCOUNTING AND COGS Report_1
Lindholm, A., and et.al., 2017Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Q1................................................................................................................................................1a) Classify costs into fixed, variable and semi-variable costs.....................................................1b) Other ways of classifying costs..............................................................................................2Q2................................................................................................................................................4a) Compute the total cost and cost per unit at different level of unit..........................................4b) Analyse cost using graphical presentation..............................................................................4Q3................................................................................................................................................61. FIFO........................................................................................................................................62. LIFO........................................................................................................................................73. Average cost............................................................................................................................7Q4 Prepare COGS report for FIFO, LIFO and Average cost.....................................................7.....................................................................................................................................................9Q5................................................................................................................................................9CSF and KPI...............................................................................................................................9b) ..............................................................................................................................................10Ways to reduce Costs................................................................................................................10Value and quality enhancement................................................................................................10TASK 2..........................................................................................................................................10Q6..............................................................................................................................................10Define budget............................................................................................................................10Budget purpose..........................................................................................................................11Methods of budgeting...............................................................................................................12Q7..............................................................................................................................................13a) Sales budget..........................................................................................................................13b) Production budget.................................................................................................................14c) Raw material budget.............................................................................................................14d) Labour budget.......................................................................................................................14Q8 Cash budget.........................................................................................................................15
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TASK 3..........................................................................................................................................16Q9..............................................................................................................................................16a) Budget profit.........................................................................................................................16b) Actual profit .........................................................................................................................17c) Material and labour sub variances........................................................................................18d) Operating statement for reconciling budgeted and actual profit...........................................18Q10 Recommendation...............................................................................................................19CONCLUSION..............................................................................................................................19
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Index of TablesTable 1: Classification of costs........................................................................................................1Table 2: Cost per unit and total cost................................................................................................4Table 3: Closing stock of FIFO.......................................................................................................6Table 4: Closing stock of LIFO.......................................................................................................7Table 5: Closing inventory of Average cost....................................................................................7Table 6: COGS report of FIFO method...........................................................................................7Table 7: COGS report of LIFO method...........................................................................................8Table 8: COGS report of Average cost method...............................................................................8Table 9: Sales budget.....................................................................................................................13Table 10: Production budget..........................................................................................................14Table 11: Raw material budget......................................................................................................14Table 12: Labour budget................................................................................................................14Table 13: Overhead budget............................................................................................................15Table 14: Cash budget...................................................................................................................15Table 15: Budgeted Profit..............................................................................................................16Table 16: Actual profit...................................................................................................................17Table 17: Reconciliation statement................................................................................................18
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INTRODUCTIONManagement accounting role has increases with the changes takes places in the externalbusiness environment as this focuses on offering both qualitative and quantitative information toall its users. Smart Looks Ltd has been selected for the given project report that focuses on usingvarious management accounting tools in imp[roving the existing conditions of an entity. Currentproject emphasises on using various costs such as fixed, variable and semi-variable costsincurred in a business is required to be identified at initial stage.TASK 1Q1a) Classify costs into fixed, variable and semi-variable costsTable 1: Classification of costsParticipantsFixed costsVariable costsSemi-variable costsMaterial for clothesBFactory rentAPower for sewingmachinesCFactory supervisor'swagesCPackaging materialsBTelephoneCOffice ratesADelivery driver's payCFactory heatingAIn the above classification of cost into three important elements of costs according to thebehaviour. Costs is segregated into three important cost types such as fixed cost, variable costsand semi-variable costs. The classification of all kinds of expenses incurred in the business getseasy with the above presentation in which coding of the data is used using A, B and C which1
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denotes fixed cost, variable costs and semi-variable costs. Fixed cost is that cost which doesn'tget affected with the production activity of the business as it remains constant in the total amountas this is not displayed in form of units (Yigitbasioglu, 2017). Different coding is used in order toclassify various kinds of cost incurred in an entity as the role of an enterprise owner is allocatedall the costs appropriately in the business in improving the existing conditions of the business.b) Other ways of classifying costsCost is regarded as that kind of monetary aspect incurred in a firm that decreases thestrength of a business over a certain period. An employer is required to identify all its costs inadvance in order to minimise all kinds of costs in a business using various cost reductionstrategies.Costs is classified into various segments that helps an entity owner in order to classify allits costs according to various types such as historical costs that is related with the time. Financialstatements based on a historical cost will depict wrong information as the external changes aretaken into consideration in the financial statements prepared by an enterprise. Standard costing isused by an enterprise owner in which current performance of the firm is compared with thestandard performance of an enterprise in order to rectify the overall business performance of anentity within a given span of time.There are various ways in which cost incurred in an entity can be classified into varioussegments in order to facilitate all needs and expectations of all the users of business are given asbelow:Cost is segregated on the basis of controlling as costs is regarded as the negative factorincurred in a business whose major objective is to minimise all the costs incurred in a businessconcern. Negative factor in form of costs will be reduced by increasing the income and revenuein a business. Revenue generated by an entity will get increases with the passage of time as theburden of costs get reduces (Kaplan and Atkinson, 2015). In terms of control ability thee are twokinds of costs incurred in a corporation such as control and uncontrollable costs incurred in anenterprise.Control costs are regarded as that kind of costs that can be regulated by an entity ownerto take correct action in order to control to reduce the burden imposed on an entity within a givenspan of time. On the other hand, uncontrollable costs can be compared with uncertain costs2
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