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Role of Management Accounting

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Added on  2020-01-28

Role of Management Accounting

   Added on 2020-01-28

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MANAGEMENT ACCOUNTING
Role of Management Accounting_1
TABLE OF CONTENTSIntroduction..........................................................................................................................................1TASK 1.................................................................................................................................................1AC 1.1 Cost classification on the basis of element, nature, function and behaviour..................1AC 1.2 Computation of unit cost for Job no. 444 using job costing method..............................2AC 1.3 Cost determination of Exquisite product on the basis of absorption costing method.....3AC 1.4 Analysis of cost data of Exquisite through using appropriate technique........................6TASK 2.................................................................................................................................................7AC 2.1 Preparation of cost report for September with comment on the computed variances.....7AC 2.2 Indicators for identifying areas for potential improvement............................................8AC 2.3 Ways to reduce cost, improving quality and enhance value...........................................8Task 3...................................................................................................................................................93.1 Nature and Purpose of Budgeting process.............................................................................93.2 Appropriate budgetary method and its need........................................................................103.3 Production and Material purchase budget...........................................................................103.4 Preparing Jeffrey & Son's cash budget................................................................................11Working note:..........................................................................................................................12Task 4.................................................................................................................................................134.1 Computing variances, identify possible causes and recommend corrective actions...........134.2 Operating Statement............................................................................................................144.3 Responsibility centers..........................................................................................................15Conclusion..........................................................................................................................................15References..........................................................................................................................................16
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List of tablesTable 1: Fixed/variable expenditures...............................................................................................3Table 2: Working Note....................................................................................................................4Table 3: Allocation of costs.............................................................................................................5Table 4: Re-appointment of cost......................................................................................................6Table 5: Total product cost..............................................................................................................6Table 6: Cost report.........................................................................................................................8Table 7: Cost elements.....................................................................................................................8Table 8: Production budget............................................................................................................12Table 9: Material purchase budget................................................................................................12Table 10: Cash budget...................................................................................................................13Table 11: Variances.......................................................................................................................15Table 12: Operating statement.......................................................................................................161
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INTRODUCTIONLooking at the present condition of corporate market, there are several firms which arecompeting with each other on the basis of price irrespective of their sectors. But maintaining theposition within the sector, it makes inevitable for the companies to reduce their costs of differentdepartments. In this, management accounting plays a significant role because it helps incontrolling the expenditures of the organization .Herein, researcher focuses on evaluating theclassification of different costs on various bases. Thereafter, various performance indicators havebeen identified for measuring actual position of the company. Further, researcher focuses onanalysing those measures which can reduce the costs of businesses. Lastly, it also emphasizes onbudgeting techniques and its importance for the management of income and expenditure of thecompany.TASK 1AC 1.1 Cost classification on the basis of element, nature, function and behaviourCost is the amount of total expenses which have been incurred in Jeffrey & Son'sproduction process. Different cost classifications have been described here under:Cost classification on the basis of element: Jeffrey & Son's produce product calledExquisite contains three elements that are material, labour and overheads. Material cost isthe total expenses that have been incurred for purchasing raw material. This is the basicelement and without this the production cannot be carried out. However, Jeffrey & Son'spay wages to their labour is known as labour cost (Rajan, Datar and Horngren, 2015).Labour are the persons who put necessary efforts and convert raw material into thefinished product. All the other expenditures are termed as overheads such as stationery,rent, postage and others. Cost classification on the basis of nature: There are two types of cost nature which aredirect and indirect. Direct manufacturing cost involves all the expenses that can bedirectly traced to a specific cost object (Greenberg and Wilner, 2015). For example, costof material and labour’s wages are the type of direct cost. On contrary to it, indirect costsare the total of expenses which cannot be directly charged and traced to a specific object.For instance, payment which has been incurred by Jeffrey & Son's for rent and rates,building insurance and machinery depreciation are the type of indirect cost. 2
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