Management Cost and Control | Assignment
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Added on 2020-12-31
Management Cost and Control | Assignment
Added on 2020-12-31
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MANAGEMENT COST ANDCONTROL
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Q1................................................................................................................................................1Q2................................................................................................................................................2Q3................................................................................................................................................33.B Journal entries.......................................................................................................................43.D Presenting major cost for giving special focus ....................................................................4Q4 Determination of allocation of service department...............................................................54.a Direct method for allocation..................................................................................................54.b Step down method for cost allocation...................................................................................54.c Reciprocal method for cost allocation...................................................................................64.d Reason for preferring budgeted instead of actual costs allocation ......................................7Q5 Activity based costing...........................................................................................................75.a Determining total cost of manufacturing of per unit and along with this per unit................7Deluxe.........................................................................................................................................85.b Reason for high manufacturing overhead cost as 120 for standard door as compared todeluxe as 80.................................................................................................................................85.c Cost driver.............................................................................................................................85.d Computation of manufacturing overhead per unit ...............................................................95.e Extraction of profitable segment...........................................................................................9CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONManagement and financial accounting is referred as a very important concept for everyorganization. The present report is giving brief overview with preparation of income statementand COGS statement. In the same series, it is justifying job order and allocation for servicedepartment. It had also articulated about activity based costing.Q11.a). Description and explanation of differences between Financial and management accountingFinancial and management accounting are different types of methods of recording andinterpreting business transactions of an organisation. Their differences are as follows:FINANCIAL ACCOUNTINGMANAGEMENT ACCOUNTINGIt is a system of accounting that analyses the preparation of financial statements of a company in order to determine information for parties that are interested. It is an accounting process that providesmanagers of an organisation with relevantinformation that is required in order to createplans and strategies (Szychta and Dobroszek,2016).The main objective is to provide financialinformation to 3rd parties. Its objective is to assist management withdecision making and planning.It is a compulsory process of accounting andhas a specified format.It is not compulsory and does not have aspecific format.This consists of information that is in monetaryterms.It consists of both monetary and non-monetaryinformation.Assets and liabilities are accurately valued.Productivity analysis of the assets andliabilities are done.2.b). Description and explanation of major functions of management accountingManagement accounting has 4 major functions which are as follows:Planning: This involves planning of short and long term strategies that have to be putinto action and accomplished by an organisation. It helps managers by providing reportsthat estimates various actions that will lead to achievement of desired goals. 1
Organising: It is a process that organises a framework and assigns responsibilities toemployees of an organisation (Hiebl, 2014). This helps in providing required reports andinformation that will regulate operations and adjust in case changes are required.Controlling: It is the monitoring, measuring, evaluating and correcting of actual results inorder to make sure that organisation's plans and objectives are being achieved. It helpsanalysing and controlling expected and actual results. Decision making: This is a process which involves choosing from various alternatives,regarding problems that have to be fixed and goals that have to be achieved (Shan, 2015).3.c). Panopticism, control and discipline concept's relevance to management accountingPanopticism is an experiment of power that deals with behaviour modification.Management accounting uses it as a way of determining effects of decisions and evaluates themeven after discontinuation (Berry, Broadbent and Otley, 2016). This helps in finding newmethods to adopt. Control concept is helpful for maintaining performances of an organisation,making management accounting easy. Discipline concept is required as proper principles can beapplied while assessing company's management.Q2Statement of cost of goods manufacturedDetailsAmountDirect materials usedRaw Material Inventory (1st July, 2016)183000Purchase of Raw Material1200360Less: Raw Material Inventory (30th June, 2017)186000Raw material used1197360less: Indirect material52500Used Direct material1144860Direct Labour1284000Manufacturing overheadIndirect Labour75000Factory Rent152820Freight In90000Depreciation Expense - Factory Equipment90000Total manufacturing OH407820Cost of manufacturing2836680Add Work in Process (1st July, 2016)60600Less Work in Process (30th June, 2017)57330Manufactured cost of goods28399502
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