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InTRODUCTION 3 MAIN BODY3 PART A3: Costs for Managerial Accounting

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For example, Laundry and dryer costs depend on the amount of production or change in the quantity of laundry sheets as it is always variable in the amount of production or change in the quantity of laundry sheets. In this case, Laundry and dryer costs depend on the amount of production or change in the quantity of laundry sheets as it is always variable in the amount of production or change in the quantity of laundry sheets. Franks has to incur many cost expenses for conducting their child care business successful which includes

InTRODUCTION 3 MAIN BODY3 PART A3: Costs for Managerial Accounting

   Added on 2020-11-12

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Managerial Accounting
InTRODUCTION 3 MAIN BODY3 PART A3: Costs for Managerial Accounting_1
Table of ContentsINTRODUCTION................................................................................................................................3MAIN BODY.......................................................................................................................................3PART A.................................................................................................................................................31. Explaining different types of costs used in case. Also, three types of costs with example.........32. Information containing both relevant and irrelevant facts for decision making related to purchase of appliances.....................................................................................................................43. Calculation for laundering clothes...............................................................................................54. Evaluating cost for Franks related to hiring of the additional employee for taking care of additional children in the child care.................................................................................................55. Letter to the Franks advising on the space options related to continue to operate child care at home or rent space in town? Number of children to be accepted? Employees need to be hire?.....6PART-B.................................................................................................................................................91. Identifying the several elements of the management accounting systems which will help the companies in making suitable decisions..........................................................................................92. Explaining the contribution of the management accounting towards the process of innovation. .......................................................................................................................................................103. Evaluating the four outcomes that are most useful for the management accountant within the Australian companies.....................................................................................................................11CONCLUSION..................................................................................................................................12REFERENCES...................................................................................................................................13
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INTRODUCTIONManagerial accounting refers to the measure that is used for evaluating the failure or thesuccess of business and in meeting the goals of the business. It helps the managers in making theeffective plan for future and also in preparing the reports that results in providing the accurateinformation regarding the finances and the operations of the business. It is known as one of theimportant branch of the accounting which is majorly concerned with measurement, identificationand the interpretation of the accounting information so that the operations of the company can bemanaged smoothly. It helps in evaluating the performance through the appropriate controllingfunction so that goals could be achieved as per the vision set. The present study is based on differentaspects of the managerial accounting that aims for developing an understanding of the conceptrelating to the cost and the systems of the management accounting that provides for taking efficientdecisions which in turn results in achieving the growing success in the long run. Furthermore, thereport includes the critical evaluation of the journal article based on two companies that is Canonand Apple computers. MAIN BODYPART A1. Explaining different types of costs used in case. Also, three types of costs with example.Cost refers to the amount or price which has to be paid or spent for making consumption ofany product or services. Douglas and Pamela Frank is running a child care business named Nanna'sHouse in the small town of Ovilla, Texas. Franks has to incur many cost expenses for conductingtheir child care business successful which includes following: Three types of cost are as follows:1.Fixed cost – It is also known as Non variable cost. Fixed cost are those costs which doesn'tvary or change with the change in the volume or value of output for a definite period. Thetotal amount of fixed cost always remains constant throughout the time period whether thereis any increase or decrease in the level of business activity or output produced (Lipani andet.al., 2016). Example of fixed costs includes rent and tax of building, insurance charges,depreciation of plant, machinery and building, salary of permanent staff etc. For Nanna'house, fixed cost following are the fixed cost - Annual fee charged by the state formaintaining License amounts to $225. Insurance cost $3,840 on annual basis. 2.Variable cost – Are those cost, which always varies or fluctuate with total volume of output.This cost changes in total with the direct change in volume of production or businessactivity. Increase or decrease in the cost depends on the change in level of output
InTRODUCTION 3 MAIN BODY3 PART A3: Costs for Managerial Accounting_3
(Freundlich and Frost, 2019). It depends on production, sales activity or any other measureand change in same proportion. Variable cost changes in total but remain constant per unit ofproduction. For example, direct material, labour, supplies, direct expenses etc. In this case,cost of snack and meals $3.20 per child. Utility cost of daycare $50 each month.3.Semi variable cost – This cost is combination of fixed as well as variable cost as it isneither perfectly variable nor it is absolutely fixed in context of change in volume of output.This cost doesn't change in the same proportion as the volume of output changes. Forexample - power costs, telephone charges, repair and maintenance costs etc. In above case,semi variable cost includes washer & dryer which will increase energy costs by $120 &$145 per year respectively. 2. Information containing both relevant and irrelevant facts for decision making related to purchaseof appliances.For purchasing appliances following information is considered as favourable for Douglasand Pamela Frank. As the old appliances of washer and dryer cost $440 in total which has stoppedworking. Being a child care business, it is very important to have laundry facility at the businesspremises for laundering the soiled clothes of the children, blankets, and sheets. For the purpose oflaundering, Nanna's House has to rely on Red Oak Laundry and Dry Cleaning which charges $52per month including pick-up and delivery. Franks also have the option to take clothes once a weekto Laundromat which is three miles away (for one way) & cost $8 per week. But this alternativeservice will add to cost of detergent by $35 every quarter. So to overcome all this unnecessary costexpenses, it is better for Franks top purchase washer $420 and dryer $380 with the installation, costof $43.72 & life of 8 years. The manufacturer store charge $35 for delivery of the appliances aswell.It is better for Franks to purchase new machine as it will resolve their laundry related problem.The new machine including washer & dryer will increase energy costs by $120 & $145 per yearrespectively as per the manufacturer is a kind of relevant information as it will lead to increase inthe variable cost as well for the child care business. Information irrelevant related to purchasing decision for Douglas and Pamela Frank are asfollows – As Franks are undertaking the business of child care, it is very important for them to havean open space for play, reading, sleeping and other activities. The premise is equipped with a smallkitchen & laundry area, two bathrooms. In case of laundromat, which is three miles away incursmileage rate of $0.56/mile which is irrelevant kind of information as it is not related with thepurchase decision of machine.
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