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MANAGEMENT ACCOUNTING TABLE OF CONTENTS

   

Added on  2020-02-17

27 Pages4551 Words367 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3QUESTION 1...................................................................................................................................31.1 Segregation of expenditures.............................................................................................3QUESTION 2...................................................................................................................................4Calculating total as well as unit cost of production................................................................4QUESTION 3...................................................................................................................................5Inventory or stock method for costing....................................................................................51. FIFO...................................................................................................................................62. LIFO...................................................................................................................................63. Weighted Average Method.................................................................................................7Cost of goods sold for the month ending January for three stock valuation methods............8QUESTION 4...................................................................................................................................9Analysis of financial data such as cost...................................................................................9QUESTION 5.................................................................................................................................11A) Key performance indicators to measure and analyse business performance..................11B) Ways to reduce cost and improve quality........................................................................14QUESTION 6.................................................................................................................................14A) and B) Budget along with its importance for firm..........................................................14C) Methods or ways to prepare budget.................................................................................15QUESTION 7.................................................................................................................................16Preparation of different budgets for three months................................................................16QUESTION 8.................................................................................................................................19Preparation of cash budget in order to take decision............................................................19QUESTION 9.................................................................................................................................19A) Budgeted profit ...............................................................................................................19B) Actual profit.....................................................................................................................20C) Material and sub variances..............................................................................................21D) Reconciliation Operating statement:-..............................................................................22QUESTION 10...............................................................................................................................23Report on budgetary for board of directors..........................................................................23

CONCLUSION..............................................................................................................................24REFERENCES..............................................................................................................................25

INTRODUCTIONFor every company it is compulsory to manage different financial and accounting dataand information to enhance its financial health. In the current case there is Smart Looks Limitedcompany is selected which is operating in the textile industry and produces cloths for differentretail firms. It shows about the classification of different kinds of expenditures which areincurred for producing cloths. Apart from this, it describes about various methods for reducecost, enhance quality of products and assess business performance in the industry. Moreover, ithelps to analyse about importance of budget and various types of budget statements for the SmartLooks company. At the last, report looks upon calculation of actual as well as budgeted andstandard profit.QUESTION 11.1 Segregation of expendituresA) Classification of cost:In the business there are several kinds of costs and expenditures are occurred whichcomes in different categories. In the current case the Smart Looks Limited is producing clothsand for that number of costs are to be incur (Introduction to cost classification, 2017). Further,various kinds of costs are comes under different types which are analysed as below:Fixed expenses: Those costs which are not changes and fluctuates as per the level ofproduction as well as outputs. In the business if there are units or cloths are reduced orincrease then fixed costs are not changes. In context to this, in the Smart looks there arevarious fixed costs occurs which are like as salary to the supervisors of factory, rate ofthe office and building as well as rent on the factory.

Variable expenses: Apart from this, the costs which are varied and changes on the basisof level of production and units. Further, if firm makes and produces 1000 units of clothspreviously and as of now it produces 1200 or 800 units then variable cost will be increaseor decrease respectively (Bowling, 2014). In the current case such kind of expenses arelike as material purchase amount, power used in sewing machine, packing expenses andcharges on telephone.Semi-variable expenses: The expenditures which are not fixed and not variable areknown as semi-variable costs. These are sometimes fixed and sometimes variable thatmeans in some cases changes as per the production level and in some case not varied. Inthe smart looks company such type of costs are like as payment of the dealers and heatingcharges of the factory and production process.B) Other methods for classifying cost:Apart from above mentioned various types of costs there are some other criterias alsoused by the management. Furthermore, another methods to segregate costs are like as production,prime, stepped fixed, stepped variable, direct and indirect, quality costs etc. The expenses whichare incurred in the production process as per the every phase and stage are known as steppedexpenses (Cheng and Roïz, 2015). Moreover, those cost which are directly as well as indirectmanner used are identified as direct and indirect which are such as direct material, labour, wages,depreciation, insurance, tax etc.Apart from this, there are several kinds if methods on the basis of which costs andexpenses are segregated and classified within the workplace of Smart Looks Limited. Other thanabove discussed ways another are like as controllable and uncontrollable, normal and abnormal,historical, production, service, predetermined, based on the functions like as IT, HR, finance,marketing, operation, research and development, marketing etc. By considering such ways themanagement easily able to classify and then analyse the expenses in appropriate manner. QUESTION 2Calculating total as well as unit cost of productionThe management of Smart Looks Limited needs to take and compute cost of the totalproduction and units. For that different types of costs are necessary because on the basis of allvariable and fixed cost total expenses are to be calculated. For assessing cost of one unit total

cost as well as production level is requires. Furthermore, calculation of total and unit expensesare shown as below:Total cost of production:From the above table it can be analysed that to produce total cloths and units such as15000, 20000 and 25000 total expenses incur which are like as 215000, 270000 and 325000respectively. For computing total cost there are variable expenses such as material and labour areincluded (Coad, Jack and Kholeif, 2015). Further, by adding variable and fixed cost totalexpenditures for producing such units is to be determined.Unit cost of production:The cost which shows that to make one unit how much amount or expenses incur iscalled as unit cost. In the current scenario cost to produce one unit is calculated on the basis ofbelow mentioned formula:Unit cost = Total cost of production / Total productionIn the first case cost of one unit is worth of 14 GBP. Apart from this, in the second andthird scenario cost incur to produce a unit is worth of 14 GBP and 13 GBP respectively.QUESTION 3Inventory or stock method for costingFor valuing and analyse level of inventory or stock there are different methods and waysare used by the company. In the current case for stock valuation there are LIFO, FIFO andweighted average method is to be used which is shown as below:

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