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The Roles and Responsibilities of Management Accounting

   

Added on  2020-01-23

17 Pages5403 Words31 Views
MANAGEMENTACCOUNTING

Table of ContentsINTRODUCTION......................................................................................................................1TASK 1......................................................................................................................................1AC 1.1 Different types of cost classification.........................................................................1AC 1.2 calculation of job cost for 200 units using job costing method................................2AC 1.3 Determination of Exquisite cost using absorption costing technique.......................3AC 1.4 Analyse cost data using appropriate techniques.......................................................5TASK 2......................................................................................................................................6AC 2.1 Preparation and analysis of cost report and determine variances.............................6AC 2.2 Performance indicator that helps to find the areas for potential improvements.......7AC 2.3 Ways that helps to reduce cost, improve quality and enhance value to the business...............................................................................................................................................7TASK 3......................................................................................................................................8AC 3.1 Budgeting process: Nature and Purpose to the budget holders of Jeffery & Son's...8AC 3.2 Appropriate budgeting methods for Jeffrey & Son's and its need............................8AC 3.3 Preparation of production and Material purchase budget.........................................9AC 3.4 Preparation of cash budget......................................................................................11TASK 4....................................................................................................................................12AC 4.1 Identify variances, its causes and taking corrective actions....................................12AC 4.2 Preparation of operating statement through combining budgeted and actual results.............................................................................................................................................12AC 4.3 Report the findings to the management along in accordance with the responsibility.............................................................................................................................................13Centres.................................................................................................................................13CONCLUSION........................................................................................................................13

INTRODUCTIONManagement accounting is one of the special branches of accounting. In the presentcompetitive and dynamic business environment, every organization needs to make effectivedecision making. Strategic and qualified managerial decisions help organizations to ensurelong term survival. Analysis, interpretation and evaluation of financial information help tobuild strategic management process in an effective manner. Financial and managementaccounting are distinct from each other. Financial accounting refers to the consolidation offinancial data and information of an organization. However, under management accounting,managers use information from the financial statements so as to reduce uncertainty and risk. Jeffrey and Sons is a manufacturing company that produces variety of products suchas Exquisite. The present report mainly aims at identifying the role of managerial decisions inthe organization success. The report will discuss various management accounting practicesand techniques for achieving the organizational goals. The present report discusses the natureof cost related information and decisions in order to reduce product cost. Moreover, theimportance of budgeting process techniques will be discussed that controls businessexpenditures and maximize its revenues. TASK 1AC 1.1 Different types of cost classificationBasis ofclassificationType of costMeaningElementsMaterial, Labourand overheadMaterial is one of the most important elements thatinclude expenditures to purchase raw material forproducing the goods. However, workers are theperson who produces the goods. Therefore, thepayments made to them for their efforts are known aslabour cost (Datar and et. al., 2013). Apart from thematerial and labour cost, all the other expenses areknown as overhead cost. For example, factory rentinsurance, salary and so on.FunctionsProduction,administration,All the production expenses that have been incurredfor converting raw material into finished goods are1 | P a g e

selling anddistribution.called production cost (Shepherd, 2015). However, allthe office expenses that are required for controllingthe business operations are termed as administrationcost which includes office rent and stationery. Sellingand distribution cost includes the expenditures forpromoting business sales. For instance, marketingcost. Nature Direct and indirectcost. Expenditures that can be charged to the product andservices are known as direct cost (Fillat, Garetto andOldenski, 2015). For instance, material and labourcost. However, all the other business expenses that arenot directly related to the production expenses whichcannot be charged from the cost of product andservices are termed as indirect cost. For instance,supervision, rent and rates, insurances etc. BehaviourFixed, semi variableand variable Expenditures that are not affected with increase ordecrease of production volume are called fixed costwhich includes foreman salary and building rent.Semi variable cost changes after a specifiedproduction volume (Fisher and Krumwiede, 2015). Itincludes; electricity and telephone bill. However,variable cost directly changes according to change inproduction volume. For instance, material costincreases with the rise in production and vice versa. AC 1.2 calculation of job cost for 200 units using job costing methodJob costing method: Job record mentions all the elements of cost that can be assignedto each and every job. The elements include all the material, labour and manufacturingoverhead expenses for a given job (Mohapatra, 2015). As per the stated scenario, cost datahave been provided for job no. 444 that produces 200 units. Under the job sheet, the material,labour and variable as well as fixed production overheads are required for manufacturing 200units of products are ascertained below: Name of Item AmountDirect material £400002 | P a g e

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