Management Accounting Paper

Added on - Sep 2019

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Management Accounting
IntroductionIn this present paper, we will discuss the monthly profit, factors which are considered at the timeof accepting the order, long term government contract offer, foreign market offer, outsidesuppliers offer, and another outside offer from suppliers.a.Monthly profitThe monthly profit is calculated by deducting the total cost from the total revenue of thecompany within the particular period of time. The monthly profit determines the totalprofitability of the company by deducting the total expense of the company with the total sales ofthe company. The manufacturing costs include direct material, direct labor, variable overhead,and fixed overhead (Harvey et al., 2013). The marketing costs include variable and fixed costs.In which the fixed costs does not change by variation in the units produced within the particularperiod of time. The total pen and pencil set produced in a month are 10,000, and all the units aresold in the same month. The total profit percentage of the company is 6.67% of the total sales ofthe company which shows that the company is not able to meet the breakeven point. Themonthly profit of the company is covering the total cost of the company which includes totalvariable and total fixed cost within the particular time period.Below table shows the calculations:XParticularCostsUnitAmount
Sales7.51000075000ManufacturingcostsDirect material11000010000Direct labour1.21000012000Variable overhead0.8100008000Fixed overhead--10,000Marketing costsVariable costs1.51000015000Fixed costs--15000Total cost70000Totalprofit(Monthly)5000Profitpercentage6.67%b.Factors to be considered at the time of accepting the orderThe profit of the company after producing the additional units at 5.50 per unit is $5,800 whichshows that the company should accept the request offer because the company is able to meet thetotal expense of the company by producing additional units of 2000 at 5.50 per unit. So thecompany should accept the off request based on the profit. Yes, the off request should beaccepted based on the profit because the company firstly considers the profit is generating fromaccepting the off request.
Other factors are also considered at the time of accepting the projects. Below are the factors:1.Value of the offerIt is one of the most important factors which is considered after the profit of the company.The value added by accepting the project is taken into account.2.Benefits associated with offerThe benefits are considered at the time of accepting the project such as synergy, competitiveadvantage and others which helps to build the brand image in the eyes of the customers (Miret al., 2014).3.Brand valueIt is considered at the time of accepting the project which improves the brand recognition andidentity. For example, the government contracts are generally accepted at lower profitsbecause the company considered the brand value improvement by accepting the project.4.Long term profitIt is one of the most important factors which is considered at the time of accepting the projectbecause long term sustainability is impacted by acquiring the project.5.Termination of projectThe duration of the project is another factor which is impacted by accepting the projectbecause the short term projects are not deeply analyzed whereas the long-term projects areanalyzed in order to determine the impact of accepting the project.Below table shows the calculations:XParticularCostsUnitAmountSales7.51000075000
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