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(Doc) Management Accounting Report

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Added on  2020-01-23

(Doc) Management Accounting Report

   Added on 2020-01-23

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Management accountingYour introduction should be on a separate pageIn task 1.1 you need to explain different classifications under each class:Elements: direct labour, direct material and direct expenses. Each must be explained with examplesNature of costs: Direct and indirect costs. Each must be explained with examples.Functions of costs: Production and Non production costs: Each must be explained with examples andThe behaviour of costs: Fixed, variable, semi variable, stepped fixed costs. Each explained with exampleIn task 1.3 you need to calculate the production cost per unit based on machine hours.In task 1.4 you need to recalculate the production cost per unit based on labours and then compare both. Please both are missing.In task 2.2 you need to elaborate a bit more of the performance indicators with reference to Jeffrey and Sons.In task 2.3 you need to expand a bit more.In task 3.1 you need to explain the purpose and nature of the process with reference to Jeffrey and Sons.In task 3.3 and 3.4 you need to show your workings.In task 4.1 you need to show all your workingsIN TASK 4.3, your report should discuss the possible reasons for the variances
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Table of ContentsIntroduction................................................................................................................................1Task 1.........................................................................................................................................1AC 1.1 Different types of costs.............................................................................................1AC 1.2 Job cost sheet............................................................................................................1AC 1.3 Calculation of cost of Exquisite................................................................................2AC 1.4 Analysis of cost.........................................................................................................3AC 2.1 Preparation of cost sheet for 1900 units for variance analysis..................................4AC 2.2 Identify the potential improvement through various performance indicators...........5AC 2.3 Ways to reduce the cost and to enhance the value and quality.................................5TASK 2......................................................................................................................................6AC 3.1 Purpose and nature of budgeting process..................................................................6AC 3.2 Appropriate budgeting method and its need.............................................................6AC 3.3 Preparation of production and material purchase budget for Jeffrey & Son's..........6AC 3.4 Preparation of cash budget for Jeffrey & Son's.........................................................7Task 3.........................................................................................................................................8AC 4.1 calculation of variances, identify possible causes and recommend correctiveactions....................................................................................................................................8AC 4.2 Operating statements includes both budgeted and actual results............................10AC 4.3 Responsibility centre...............................................................................................10Conclusion ...............................................................................................................................10REFERENCES.........................................................................................................................12
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INTRODUCTIONManagement accounting plays a very important role in the organization. It helps totake different kinds of decisions through implementing distinct management tools. Jeffrey &Sons is a manufacturing company that produces different kinds of products called Exquisite.The report presenting here helps to identify various management tools such as budget andvariance analysis technique for Jeffrey & Son's. Further, the report describes the way bywhich business can increase its value in order to achieve the business goals. On the contrary,different types of costs and cost sheet will also be discussed in this report. 1 | P a g e
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TASK 1AC 1.1 Different types of costsDifferent types of costs are incurred in the manufacturing process. On the basis ofelements, costs can be classified into three elements that are material, labour and overhead.Jeffrey & Son's company need to purchase raw material for production of product Exquisiteknown as material cost. Labour convert raw material into the finished goods known as labourcost such as wages payment. Other direct expenses include royalty that can be charged to theproduct directly. However, on the basis of function, it can be classified into factory cost, administrationcost and selling and distribution cost. Production cost involves the expenses that can becharged to a specific cost object such as productive wages and factory lighting (Cinquini andTenucci, n.d.). However, expenses that cannot be charged to the cost object called nonproductive expenses such as administration cost selling and marketing expenses.Administration cost involves office stationery, staff salary and manager remuneration. On thecontrary, selling and distribution overhead includes advertisement and sales promotion. However, according to the nature, it can be classified into direct as well as indirectexpenses. Direct cost is directly related to a specific element. However, indirect cost cannotbe attributed to a specified element. Material, labour and wages are direct production cost forJeffrey & Son's while indirect cost is office stationery, building rent and staff salary. Further, on the basis of behaviour, it can be distributed to fixed, variable and semivariable cost (Kaplan and Atkinson, 2015). Fixed cost is unrelated to the Jeffrey & Son’sproduction such as building depreciation. However, variable cost is directly related to thebusiness production. Material, labour and overhead are variable in nature. Stepped fixed costgets not changed up to a specified production unit and when it gets reached it tends toincrease such as Supervisor salary. Higher the number of subordinates tends to increase theirsupervisor salary. Semi variable cost remains unchanged up to a certain level after that it getchanged accordingly the production such as telephone bill. AC 1.2 Job cost sheetTotal cost and cost per unit for Jeffrey & Son's is prepared as under: Particulars Total costDirect Material 40000Direct Labour54000Fixed production overhead24000variable production overhead360002 | P a g e
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