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MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION

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Added on  2019-12-03

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MANAGEMENT ACCOUNTING TABLE OF CONTENTS 770 4 TASK 14 1.1 Classification of costs on the basis of element, function, nature and behavior 4 1.2 Calculation of job cost and unit cost 5 1.3 Calculation of the cost by using absorption technique5 1.4 Calculation of overhead absorption rate using direct labour hours 7 TASK 28 2.1 Preparation of cost sheet and variance analysis 8 2.2 various performance indicators used to identify areas of potential improvements 9 2.3 Ways to reduce cost, enhance value and quality10 3.1 Nature and purpose

MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION

   Added on 2019-12-03

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MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4TASK 1............................................................................................................................................41.1 Classification of costs on the basis of element, function, nature and behavior...............41.2 Calculation of job cost and unit cost................................................................................51.3 Calculation of the cost by using absorption costing technique........................................51.4 Calculation of overhead absorption rate using direct labour hours..................................7TASK 2............................................................................................................................................82.1 Preparation of cost sheet and variance analysis..............................................................82.2 various performance indicators used to identify areas of potential improvements.........92.3 Ways to reduce cost, enhance value and quality...........................................................103.1 Nature and purpose of budgeting process......................................................................103.2 Appropriate budgeting method for the organization and its need..................................113.3 Material purchase budget and production requirement budget......................................123.4 preparation of cash budget.............................................................................................12TASK 4..........................................................................................................................................134.1, 4.2 Variance analysis and recommendation corrective actions....................................134.3 Identifications of responsibility centers.........................................................................14CONCLCUSION...........................................................................................................................14REFERENCES..............................................................................................................................15INDEX OF TABLESTable 1: Calculation of total cost and per unit cost for a job...........................................................5Table 2: Calculation of overhead absorption rate using direct labour hours...................................7Table 3: Preparation of budgeted and actual cost ( In £).................................................................7Table 4: Variance analysis...............................................................................................................8Table 5: Production budget for july, august and september ( In Units).........................................12Table 6: Material purchase budget ( In Kg)...................................................................................12Table 7: preparation of Cash budget..............................................................................................12Table 8: Calculation of budgeted cost for 4000 units....................................................................13Table 9: operating statement reconciling both budgeted and actual results..................................13
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Table 10: Calculation of per unit variances...................................................................................13
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INTRODUCTIONThis report is prepared on management accounting concepts. In this report costs arediscussed and classified in to various categories like function, nature and behavior. In the reportbudget is also prepared and their results are also interpreted. By doing this an attempt is made toidentify possible reason for positive and negative variance in the budget. In the middle part of thereport cash budget is also prepared and under this cash inflow and outflow items are taken in thebudget. Trends in the cash inflows and outflows are analyzed and comments are made in respectto these trends. At the ends of the report variance analysis is done in terms of sales, material andlabors. Along with this, responsibility centers are also discussed in detail at the end of the report.TASK 1 1.1 Classification of costs on the basis of element, function, nature and behaviorCost refers to the money that is incurred in producing goods and services. In businessdifferent sort of costs are incurred. These costs are different from each other and due this reasonthese costs are divided in to several parts.Elements of cost- Cost have three elements like material, labor and overhead cost.Material cost refers to the cost that is related to material purchase. Whereas, labor cost isrelated to the employees that are involved in the production process. On other hand,overhead refers to the other indirect production cost like logistic expenses. By adding allthese costs unit cost of the product is calculated by the cost accountant. Function- In an organization expenses are incurred by the all departments whether theyare finance, marketing or HR department (Münch, et.al., 2014). On the basis of thesedepartments costs are classified in to various departments.The main examples offunction cost are interest expenses, sales and employee hiring expenses.Nature- On the basis of nature costs are classified in to two categories namely direct andindirect cost. Direct cost refers to the cost that are related to the production process egraw material purchase Whereas, indirect cost is related to the expenses that are notdirectly related to the production eg, transportation expanse. By using all these cost entirecost of product is computed.Behavior- On the basis of behavior costs are divided in to three categories namelyfixed,variable and semi variable cost (Busse, Schreyögg and Smith, 2008). Fixed cost are
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