HA2011 Report on Activity based Costing and Budgeting
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Holmes Institute Sydney
Management Accounting (HA2011)
Added on 2020-05-28
HA2011 Report on Activity based Costing and Budgeting
Holmes Institute Sydney
Management Accounting (HA2011)
Added on 2020-05-28
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Running Head: Management AccountingManagement Accounting
Management Accounting2Executive Summary:This report consists of 2 cases on is based on activity based Costing and another on Budgeting. The case of Activity based costing is about the US Bright Product Company which produces cakes and pastries. This case is about the allocation of cost on the basis of activity driver and total product cost of the company and per unit cost. The cost is calculated by using Activity based costing. In first part per unit cost is calculated by using the activity drivers allocated for each cot. In the second part the billing amount and the cost per unit has been calculated of Lamington division and in the last part the additional cost required to calculate the product cost is mentioned as without that the calculation of the total cost will be incomplete.The case of budgeting is about Hawthorn Leisure Works which offers tennis courts and other physical fitness facilities to its members. They want to implement a new plan regarding the membership fee of HLWs as under old plan the revenue is generated from membership fee and court fee and in the new plan the revenue only comprise of membership fee. The company wants to plan revenue according to the new plan as they think that as per the new plan their revenues will increase. They want a complete analysis as the revenue comparison in between the old plan and the new plan.
Management Accounting3Table of ContentsTask A...................................................................................................................................................4Introduction:......................................................................................................................................4Part (a)...............................................................................................................................................4Part (b)...............................................................................................................................................5Part (c)...............................................................................................................................................5Conclusion:........................................................................................................................................6Task B...................................................................................................................................................7Introduction:......................................................................................................................................7Part (a)...............................................................................................................................................9Part (b)...............................................................................................................................................9Part (c)...............................................................................................................................................9Conclusion:........................................................................................................................................9References:..........................................................................................................................................10
Management Accounting4Task AIntroduction:Activity Based Costing is the method of costing in which the indirect cost are allocated on thebasis of cost drivers. The total cost is estimated and then it is divided with the annual production to arrive at cost per unit. The activities are differentiated on the basis of the natureof the cost and then allocation of indirect cost is made on the basis of the activity drivers.This case is about the costing system of US Bright Product Company which is producer of cakes and pastries. The cost per unit and the total cost of manufacturing are calculated using ABC costing techniques (Wiese, 2009). In first part cost per unit is calculated by allocating cost as per the cost drivers and the total cost for producing one unit iscalculated by summing up all the allocated cost . In second part the bill of activities of Lamington has been prepared and then the cost per unit of producing cakes and pastries is calculated and in the last part additional cost required to calculate the product cost estimated is mentioned as without adding that cost the cost of product cannot have a true value.Part (a)The cost per unit is calculated by allocating the cost to the cost drivers. Through this the cost of producing one unit is also calculated by adding all the cost (Potts, Keith and Ankrah, 2014). The cost drivers are as per the nature of the cost all the costs have their cost drivers based on the nature and type of cost. The allocation is done by dividing the cost with its cost drivers.Calculation of Cost per UnitActivityActivity CostActivity Quantity of Activity DriverRate per unitPrepare annual Accounts 5,000.00Process Receivables 15,000.0050003.00Process payables 25,000.00250010.00Program production 28,000.00100028.00Process Sales Order 40,000.00400010.00Dispatch sales Order 30,000.00250012.00Develop and test products 60,000.00Load Mixers 14,050.00100014.05Operate Mixers 45,900.002000000.23Clean mixers 6,900.0010006.90Move mixture to filling 3,450.002000000.02Clean Trays 20,000.00160001.25Fill trays 16,000.008000000.02Move to Baking 8,000.00160000.50Set up ovens 50,000.00100050.00
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