Paper Management Accounting

Added on - 20 Sep 2019

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Management Accounting
Introduction
In this present paper, we will discuss the monthly profit, factors which are considered at the time
of accepting the order, long term government contract offer, foreign market offer, outside
suppliers offer, and another outside offer from suppliers.
a.Monthly profit
The monthly profit is calculated by deducting the total cost from the total revenue of the
company within the particular period of time. The monthly profit determines the total
profitability of the company by deducting the total expense of the company with the total sales of
the company. The manufacturing costs include direct material, direct labor, variable overhead,
and fixed overhead (Harvey et al., 2013). The marketing costs include variable and fixed costs.
In which the fixed costs does not change by variation in the units produced within the particular
period of time. The total pen and pencil set produced in a month are 10,000, and all the units are
sold in the same month. The total profit percentage of the company is 6.67% of the total sales of
the company which shows that the company is not able to meet the breakeven point. The
monthly profit of the company is covering the total cost of the company which includes total
variable and total fixed cost within the particular time period.
Below table shows the calculations:
ParticularCostsUnitAmoun
t
Sales7.51000075000
Additional sales5.5200011000
Manufacturing
costs

Direct material11200012000
Direct labour1.21200014400
Variable
overhead
0.8120009600
Fixed overhead--10,000
Marketing costs
Variable costs1.51200018000
Fixed costs--15000
Additional costs0.620001200
Total cost80200
Total
sales
86000
Total
profit
5800

Profit
percentag
e
7.73%
b.Factors to be considered at the time of accepting the order
The profit of the company after producing the additional units at 5.50 per unit is $5,800 which
shows that the company should accept the request offer because the company is able to meet the
total expense of the company by producing additional units of 2000 at 5.50 per unit. So the
company should accept the off request based on the profit. Yes, the off request should be
accepted based on the profit because the company firstly considers the profit is generating from
accepting the off request.
Other factors are also considered at the time of accepting the projects. Below are the factors:
1.Value of the offer
It is one of the most important factors which is considered after the profit of the company.
The value added by accepting the project is taken into account.
2.Benefits associated with offer
The benefits are considered at the time of accepting the project such as synergy, competitive
advantage and others which helps to build the brand image in the eyes of the customers (Mir
et al., 2014).
3.Brand value
It is considered at the time of accepting the project which improves the brand recognition and
identity. For example, the government contracts are generally accepted at lower profits
because the company considered the brand value improvement by accepting the project.
4.Long term profit
It is one of the most important factors which is considered at the time of accepting the project
because long term sustainability is impacted by acquiring the project.
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