Managerial Accounting Assignment | Cost Accounting
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Added on 2020-05-16
Managerial Accounting Assignment | Cost Accounting
Added on 2020-05-16
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Running head: MANAGERIAL ACCOUNTINGManagerial AccountingName of the StudentName of the UniversityAuthor’s Note
1MANAGERIAL ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................2Client Firm’s Description................................................................................................................2Time Driven Activity Based Costing (TDABC).............................................................................3Description...................................................................................................................................3Features........................................................................................................................................3Differences.......................................................................................................................................4Differences between TDABC and ABC......................................................................................5Differences between TDABC and Traditional Costing Approach..............................................6Analysis of the Suitability of TDABC in Client Firm.....................................................................7Conclusion.......................................................................................................................................8References......................................................................................................................................10
2MANAGERIAL ACCOUNTINGIntroductionThe concept of Cost Accounting is considered as a major aspect for the manufacturingbusiness organizations. In the process of cost accounting, accounts use to record, classify,analyze, summarize, allocate and evaluate all possible courses of actions for controllingproduction costs that contributes to higher profitability (Drury 2013). Over the years, two majorcosting system used by the companies are Activity based Costing (ABC) and Traditional costing.However, in the recent years, companies have become more interest in the adoption of a newcosting system that is Time Driven Activity Based Costing (TDABC). In the recent years,companies are facing various difficulties while using the most popular costing system, traditioncosting. Thus, for avoiding the setbacks of traditional costing and ABC, Robert S. Kaplan andSteven R. Anderson introduces the process of TDABC in the year 2004. This report aims toanalyze and evaluate different aspects of TDABC in order to establish its suitability in one anAustralian manufacturing organization (Christ and Burritt 2015). For this reason, AustralianPaper Pty Ltd is selected. Different parts of this report analyze the importance aspects ofTDABC like its decryption, features, its differences with traditional costing and ABC and itssuitability in the selected organization.Client Firm’s DescriptionAustralian Paper Pty Ltd make commenced their business organization in year of 1938.Australian Paper Pty Ltd is a vertically integrated manufacturing organization. The mainoperation of the company is the production of pulp, paper, envelope and stationary products. Inaddition, Australian Paper Pty Ltd also involves in the manufacture of office and printing papers,sack, bag, lightweight packaging and industry paper, Kraft linerboard and cardboard cartoon. As
3MANAGERIAL ACCOUNTINGper the providing situation, the CEO of Australian Paper Pty Ltd wants to know the suitability ofTDABC in their manufacturing operation (australianpaper.com.au 2018).Time Driven Activity Based Costing (TDABC)DescriptionAs per the earlier discussion, the development of TDABC has been done for overcomingthe difficulties of traditional costing and ABC. In the operation process of TDABC,organizational managers use to directly assign the cost of resources with the cost objects and it isdone with the help of two sets of estimates; they are cost per time unit for the resource supplycapacity to the activities of cost and required time unit estimation for performing the productionactivities. After that, organizational managers are required to follow six specific steps for thecomputation of various cost activities under TDABC (Christ and Burritt 2015). In the first step,the identification of the services and the activities is done. In the second step, managers arerequired to do the estimation of total cost of each resource group. The third step involves in theestimation of practical time capacity for each group of resource. In the fourth step, thecalculation of unit cost is done for each resource group. The fifth step is to determine theestimated time for each activity. The last step managers need to multiply the unit cost of eachresource group by the estimated time of the activities (Porter and Lee 2013).FeaturesTDABC has some major features in the cost accounting and all they are discussed below:i.The process of TDABC makes it easier in assigning the cost of different manufacturingactivities of the organizational accountants. It is because TDABC takes less time inworking than other costing approaches.
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