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Running head: ACCOUNTING Accounting Name of the Student: Name of the University: Authors Note:
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1ACCOUNTING Table of Contents Answer to Question 1......................................................................................................................2 Answer to Question 2......................................................................................................................2 Answer to Question 3......................................................................................................................4 Answer to Question 4......................................................................................................................6 Answer to Question 5......................................................................................................................8 Reference.......................................................................................................................................11
2ACCOUNTING Answer to Question 1 Statement showing calculation ParticularsDirect MaterialConversion CostTotal Normal Loss000 Abnormal Loss100250350 Output9000900018000 WIP500012506250 Equivalents Units141001050024600 Cost Earliest incurred$2,100.00$485.002585 Current Year Cost$9,000.00$10,045.0019045 Total Cost$11,100.00$10,530.0021630 Cost Per Unit$0.79$1.001.79 Valuation0 Abnormal Loss$78.72$250.71329.43769 Output$7,085.11$9,025.7116110.821 WIP$3,936.17$1,253.575189.7416 Answer to Question 2 a) production BudgetJanuaryFebruary ParticularsAmount ($)Amount ($) Opening stock6900015000 Requirement Current Month sales8400060000 Next month sale @25%1500018000 Production3000063000 Cost Of production WIP1820 Current Month Production2020 Cost Of production WIP1242000300000 Cost Of production current production6000001260000 b)
3ACCOUNTING Material Usage BudgetJanuary ParticularsQTYAmount ($)Total Production30000 Raw material per production22022 Cost Of Production60000600000660000 C) Material Purchase BudgetJanuary ParticularsQtyAmount ($)Total Opening stock3840018691200 Purchase60000201200000 Closing stock67200201344000 Purchase requirement88800201776000 d) The operating system of budget is quite helpful for initiating day planning and the business activities that are conducted daily. Some of the main and benefits for preparation of the operational budget by a business organisation are discussed below : ï‚·The budget that is based on operation is mainly helpful in managing all kind of current expenses that comprises of the salary, fixed overheads, rents and other type of expenses. The expense tracking mechanism helps to existing business to control various aspects and gain more number of profit (Fooladvand et al., 2015). ï‚·The operational budget is a very helpful formula for making projection for the future expenses to be incurred. The tracking of the current expenses helps in the projection of the various kinds of budget free expenses.
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4ACCOUNTING ï‚·The operational budget is also useful in creation of reserves for increasing the profits and at the same time reducing the rate of expenses. ï‚·Operating budget mainly helps the business to be much more accountable. It would furtherprovidetheguidanceformoreexpenditureandasaresult,thebusiness management would not be able to give any kind of negligence (Llach et al., 2017). Answer to Question 3 a) Calculation of flexible budget variance for each cost item. ParticularsProduction standardProduction ActualStandardTotal Per unistotal standardActualTotal Per unistotal standardVarianceCost p/u ParticularsQtyamountamountAmountQTYAmountAmountAmountQtyAmount Direct material150001000045203000004.54.520.2520250011250101251.01 Direct Labor1500010000212.5253750002.51332.532500012500130001.30 b) indirect material price variance ParticularsAmount ($)Opinion Standard price5 Actual price4.5 Standard Quantity15000 Variance-7500Favorable
5ACCOUNTING indirect material efficiency variance ParticularsAmount ($)Opinion Standard4 Actual4.5 Actual Production10000 Variance5000un-Favorable iii.Direct labor price variance ParticularsAmount ($)Opinion Standard12.5 Actual13 Standard Production15000 Variance7500un-Favorable iv.Direct labor efficiency variance ParticularsAmount ($)Opinion Standard2 Actual2.5 Standard Production15000 Variance7500un-Favorable Variable manufacturing overhead spending variance ParticularsAmount ($)Opinion Standard6 Actual10 Actual Production10000 Variance40000un-Favorable vi. Variable manufacturing overhead efficiency variance ParticularsAmount ($)Opinion Standard2 Actual2 Standard Production15000 Variance0nil vii. Fixed manufacturing overhead spending variance ParticularsAmount ($)Opinion Standard10 Actual12.5
6ACCOUNTING Actual Production10000 Variance25000un-Favorable viii. Fixed manufacturing overhead spending variance ParticularsAmount ($)Opinion Standard2 Actual2 Standard Production10000 Variance0nil Answer to Question 4 a) Calculation of cost per unit4000units ParticularsAmount ($)Amount ($)Amount ($)Amount ($) Selling Price5002000000 Variable Cost Direct material100400000 Direct Labor50200000 Manufacturing Support90360000 Marketing Cost35140000 Total Variable Cost27501100000 Fixed Cost manufacturing cost115460000 Marketing Cost40160000 Total Fixed Cost155620000 Total Cost Per Unit4301720000 Profit70280000 b) Customer Offering Calculation of cost per unit4000units
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7ACCOUNTING ParticularsAmount ($)Amount ($)Amount ($)Amount ($) Selling Price3501400000 Variable Cost Direct material100400000 Direct Labor50200000 Manufacturing Support90360000 Marketing Cost35140000 Total Variable Cost27501100000 Fixed Cost manufacturing cost115460000 Marketing Cost40160000 Total Fixed Cost155620000 Total Cost Per Unit4301720000 Profit-80-320000 Reject the Proposal c) Relevant cost Calculation of cost per unit ParticularsAmount ($)Amount ($) Selling Price500 Variable Cost Direct material100 Direct Labor50 Manufacturing Support90 Marketing Cost35 Total Variable Cost275 Fixed Cost manufacturing cost115 Marketing Cost40 Total Fixed Cost155 Total Cost Per Unit430 Profit70 d)
8ACCOUNTING The major two problems that must be avoided by the actual time of conducting and the preforms of cost analysis are as follows: ï‚·The insignificant estimation: The estimations actually plays a crucial role while initiating the conduction of cost analysis. The analyst needs to be careful and need to analyse the cost data in the context of both intentional and unintentional error that causes severe losses in the future projects that are upcoming. ï‚·Risk modification: While the conduction of the cost analysis, the risk amount that is involved in the whole project that should not get modified. The risk is an important factor for creating the scope of the upcoming project as it manages to make out certain kinds of provision (Sewell et al., 2017). However, it is quite important for clarifying all the risk that are involved in the entire project. Answer to Question 5 The prepared balance scorecard can be defined as the valid performance matric that actually helps to indicate the key problems of the business organisation that states some of the probable outcome for solving some of these problems that are quite helpful for the team management of the company. The scorecard consists of the key features that are mandatory to figure out and solve some of the key issues of a particular entity. These features are based on the following classifications: Planning:Planning is quite important for preparation of a balance scorecard of a business entity as it involves certain priorities and company objectives (Bhattacharya et al., 2014). The planning of a particular entity includes an overview that can be taken by an entity and goes for setting
9ACCOUNTING some of the objectives along with some principles that fixes a specific path for operation within the business entity. Performance Targets: The concept of performance targets within an entity determines the outcomes that is expected and must exist after a specific time period.The strategies used are quite flexible in terms of any changes in the behaviour of the company stakeholders. All the strategies must be developed is such critical situations. All the strategies work as particular guidance of the company’s management for carrying out some business in specific line or a specific pathway (Wouters & Kirchberger, 2015). Predictions: The predictions are very important for making an ideal balance scorecard. There are certain kinds of changes that can seriously occur in certain time period of a particular time. The predictions consist of the risk and the changes in the nature of the market. It can be also related to the stakeholders or any such issues regarding operations or profit making. This can also threaten the business properties and thus some of the criterion must be maintained. Predictions also help the company management to prepare certain kinds of provision for securing the entity from the upcoming the upcomingthreatsthat occursin the business operationalperiod. Management can even be prepared for those issues. Motivation:For some of the far-reaching goals and predictions by the company’s management, it is quite important to keep the entire employee base remained motivated for increasing the work productivity as well as the efficiency. The workflow of the business entity can be maintained through this way (van Helden & Uddin, 2016). This is probably the only possible reason why the structure needs to be pre-planned for initiating an operation for employee motivation that is a fundamental condition in balance score card. In this particular section, the sessions, the training, incentives along with some other facilities by whose evaluation an employee can be rewarded or
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10ACCOUNTING awarded can be analysed. Even the system would probably improve the force of motivation; improve upon the employee’s productivity level. The management must also go for improving the company’s employee workforce quality and award the employees according to their ability and performance meter. It is in this section of management, the methods are implemented strategically and the methods are maintained quite periodically for the entity’s easy and smooth flow of operations without any interruption (Ismail et al., 2018). Cybernetic Effects and control:In this section, the several governing processes within the operational system of the entire business project along with its integral associating requirements are clearly stated. The process and mechanisms of governance is essentially important. To be specific enough the elements of cybernation is of significance importance within a balance scorecard that ensures the entire operation that is continued and processed by a business entity within a project by maintaining the proper methodology of ethics so that all the business operation can be done quite fluently (Vesty et al., 2015). On the context of the employee, sales, business production, proper asset utilization and some of the other kind of important and mandatory factors are much involved for the operation that strictly governance the business methodologies alongwith the specific control policies that are almost facilities with pre- determined governance. The entity’s governing body conducts the entire task and focus is put on those areas that makes the business get rid of certain types of issues that can occur in the passage of time in the project discussed herein.
11ACCOUNTING Reference Bhattacharya, A., Mohapatra, P., Kumar, V., Dey, P.K., Brady, M., Tiwari, M.K. & Nudurupati, S.S., (2014). Green supply chain performance measurement using fuzzy ANP-based balanced scorecard: a collaborative decision-making approach.Production Planning & Control,25(8), pp.698-714. Fooladvand, M., Yarmohammadian, M.H. & Shahtalebi, S., (2015). The application strategic planning and balance scorecard modelling in enhance of higher education.Procedia- Social and Behavioral Sciences,186, pp.950-954. Heginbotham, E., Nixon, M., Morgan, F.E., Hagen, J., Heim, J.L., Engstrom, J., Li, S., Shlapak, D.A., DeLuca, P. & Libicki, M.C., (2015).The US-China military scorecard: Forces, geography, and the evolving balance of power, 1996–2017. Rand Corporation. Ismail, K., Isa, C. R., & Mia, L. (2018). Evidence on the usefulness of management accounting systems in integrated manufacturing environment.Pacific Accounting Review,30(1), 2- 19. Llach, J., Bagur, L., Perramon, J. & Marimon, F., (2017). Creating value through the balanced scorecard: how does it work?.Management Decision,55(10), pp.2181-2199. Sewell, W., Mason, R.B. & Venter, P., (2017). Socio-economic developmental strategies as retail performanceindicators:Abalancedscorecardapproach.DevelopmentSouthern Africa,34(3), pp.365-382. vanHelden,J.,&Uddin,S. (2016).Publicsectormanagementaccountinginemerging economies: A literature review.Critical Perspectives on Accounting,41, 34-62.
12ACCOUNTING Vesty, G., Brooks, A., & Oliver, J. (2015). Contemporary capital investment appraisal from a management accounting and integrated thinking perspective: case study evidence. Wouters, M., & Kirchberger, M. A. (2015). Customer value propositions as interorganizational managementaccountingtosupportcustomercollaboration.IndustrialMarketing Management,46, 54-67.