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Managerial Accounting Assignment | Management Accounting

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Added on  2020-05-16

Managerial Accounting Assignment | Management Accounting

   Added on 2020-05-16

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Running head: MANAGERIAL ACCOUNTINGManagerial AccountingName of the StudentName of the UniversityAuthor Note
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1MANAGERIAL ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................2Description of client........................................................................................................................2Time Driven Activity Based Costing (TDABC).............................................................................3Description...................................................................................................................................3Features........................................................................................................................................4Differences.......................................................................................................................................5ABC vs. TDABC system.............................................................................................................5TDABC vs. Traditional Costing Approach.................................................................................6Suitability of TDABC......................................................................................................................7Conclusion.......................................................................................................................................8Reference List................................................................................................................................10
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2MANAGERIAL ACCOUNTINGIntroductionCost accounting plays an important part in the organizations that are mainly in tomanufacturing businesses. The process of cost accounting is where the recording, classification,summarization, allocation and evaluation of the various alternative courses so that it can help theorganization in controlling the cost. This helps in decreasing the cost of the organization, whichwill help in increasing the level of profit (Weygandt, Kimmel & Kieso, 2015). Most of thecompanies prefer to implement the various type of costing system like the Activity BasedCosting (ABC), the costing system that is traditional in nature and others as well. In the currentyears, there has been an emergence of other system of costing such as the Time Driven ActivityBased Costing, which is also known as TDABC. The traditional system of costing is used verycommonly in most of the companies (Edmonds et al., 2016). However, in the current years, itcan be seen that most of the organizations are facing serious issues in using the costing systemthat is traditional in nature. This has helped Robert Kaplan and Steven Anderson in developingthe TDABC in 2004 so that it can help the companies in overcoming the barriers that are presentin the costing that are traditional in nature and in ABC (Garrison et al., 2015). The primary aimof this report is that it will help in the analysis and the evaluation of the different aspects ofTDABC and its suitability for its implementation. The report also details the features,description, and comparison with ABC along with TDABC. Description of clientThe consultancy firm has a client that manufactures ships for the defense and specializesin construction and designing the ships. The name of the company is Austal Ltd. who alsospecializes in high-speed passenger ferries and offshore wind farms as well. Within the operation
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3MANAGERIAL ACCOUNTINGof Austal Ltd., it can be seen that variance is present in the manufacturing process. The CEO ofthe company has considered adopting and implementing TDABC in the process ofmanufacturing so that the variances that are having negative effects within the organization canbe identified. Time Driven Activity Based Costing (TDABC)DescriptionThe concept regarding TDABC has been developed so that it can help in overcoming thedifficulties that are present in ABC and the approach of costing that is traditional in nature.Under this process, the cost of the resources shows that it is assigned directly with the object ofthe cost by taking in to consideration two estimates, which are 1) the per time unit cost for thesupply of the resources capacity and activities of cost, and 2) the estimate regarding the unites oftime that is required, which will help in the performance of the activity. The calculation of theactivities regarding cost with respect to TDABC can be done through six steps that are asfollows:1.This helps in the identification of the activities or the services2.Then the total costs need to be estimated for the resource groups3.Following which the capacity of the practical time can be estimated for the resourcegroups4.The calculation has to be done for the resource groups5.Time has to be determined for each of the activities6.Lastly, the cost of the unit of the resource groups has to be multiplied by the time that hasbeen estimated for the activities (Kaplan, 2014).
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