Management Accounting : Sample Assignment

Added on - 21 Feb 2021

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1a) Value Chain Concept and benefit of value chain in organisation...........................................1b) Evaluation of organisation with the help of value chain........................................................3QUESTION 2...................................................................................................................................7a) Calculation of allocation rates for fixed & variable overheads...............................................7b) Total Overhead Cost allocated to Job 20 in October..............................................................8c) Total Cost for Job 20...............................................................................................................8d) Fixed And Variable overheads allocated to all jobs in October.............................................9e) Efficiency of selection of two cost pools................................................................................9QUESTION 3...................................................................................................................................9a. Identifying the cost pool by considering the three objects....................................................10b. Identifying the cost driver in relation to each cost and suggesting the best option..............11c. Calculation of rates of allocation for each of the cost driver................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONManagement Accounting is an activity which enables Internal Management of a companyin making important decisions and formulating various strategies so that business can achievemore profits and achieve sustainable growth in long run.Evaluation Mining Limitedis an Australian Company operating business of mining infive locations in the country.Company does business of mining of gold & exploration, mining ofcommodity, Copper and Iron Silver.The below report explain concept of supply chain and advantage of value chain in anorganisation. Further, Mission, objectives, strategies and value chain model of EvaluationMining Limited are elaborated in this report. Moreover, this report calculates estimatedallocation rate, total overhead cost and total cost incurred in job 20. Furthermore, this reportevaluates different types of cost pools and analyse drivers of cost for each cost pool.QUESTION 1a) Value Chain Concept and benefit of value chain in organisationValue ChainValue Chain includes different activities such as Inbound logistics, operations, marketing& distribution, services and outbound logistics all these activities add on value to products &services offered by a business organisation. So, that company can provide better services thanother companies operating under same industry.Value Chain AnalysisValue Chain Concept is an approach through which various strategies formed bymanagers of company are evaluated with an objective of analysing behaviour of cost. Thus, withthis analysis managers are able to eliminate unnecessary cost involved in manufacturing andproduction of goods and services. Further, this concept helps company in operating its businessbetter than its competitors by offering innovative and effective services. Various activities areincluded in value chain system which are directly related to operations of company so thatorganisation can gain competitive advantage.A company can manage cost of each of the activities operating under an organisationwhich in turn maximises profitability, market share and brand image of company. Thus, it isessential for a firm to manage its value chain as without it a company cannot offer its services.1
According to (Wu and et.al., 2016), all the primary activities included in value chainsystem such as logistic, operation and marketing are arranged by formulating different strategiesand making a systematic plan then a business is enable to produce services according to demandreceived from customers and at an affordable price. Further, Research & Development, HumanResource Management, Infrastructure and Procurement are support activities which helpsmanagers in improving effectiveness of services provided at primary stage.As company is offering different types of services it is essential for company to manageits valuechain so that its profits can get maximised and it can set high profit margin for itsproducts and services. For managing its value chain Evaluation Mining Limited divided itsoperations according as per key activities than these activities are analysed and activities whichare providing disadvantages are improved by making decisions by managers of company.Further, managers of company focuses on activities which are more profitable and adding valueto the services included in the portfolio of company.Further, value chain concept is advantageous for Evaluation Mining Limited in followingways discussed below-Cost AdvantageCost is an essential element as it optimises prices and helps company in setting its profitmargin. Higher the cost lower will be the profit and vice versa. Thus, finance and productionmanagers of Evaluation Mining Limited is required to manage cost of its products so that morecustomers get attracted with offerings of company. Thus, managing value chain leads toreduction in cost and which is an advantage for organisation.For Example- Evaluation Mining Limited can reduce cost of mining by developingeffective techniques and by introducing different machines which reduces time involved inmining process and enhances production which in turn effective for company as profits getsmaximised. Further, company can reduce cost of marketing by promoting its services throughsocial media sites as so many customers are active on these sites and it requires less cost whichin turn reduces overall cost (Van Hoang, 2015).Whole operation of a company is depended on cost and if cost is managed than companycan enhance its brand image and volume of sales. Thus, it is a most important advantage of valuechain analysis as cost of primary & secondary activities are monitored and controlled throughvalue chain analysis by managers of Evaluation Mining Limited.2
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