Finance: Costing Techniques & Budgeting Assignment Solution

This assignment solution covers various costing techniques and budgeting concepts. It addresses questions related to budget preparation, flexible budgets, standard costing systems, product costing, and the choice between variable and absorption costing. Specific topics include actions to accommodate student growth in a university setting, the advantages of standard costing, differences between traditional and modern costing methods, split-off point decisions, and the implications of variable versus absorption costing on profit. The solution provides detailed explanations and recommendations for each question, referencing relevant academic sources.

Running Head: COSTING METHOD 1
COSTING TECHNIQUES

Running Head: COSTING METHOD
Table of Contents
Question 1........................................................................................................................................3
Part 3............................................................................................................................................3
Part 4............................................................................................................................................3
Question 2........................................................................................................................................3
Part 2............................................................................................................................................3
Part 4............................................................................................................................................3
Question 3........................................................................................................................................4
PART 5........................................................................................................................................4
Question 4........................................................................................................................................5
Part 1............................................................................................................................................5
Question 5........................................................................................................................................5
Part 2............................................................................................................................................5
Part 4............................................................................................................................................5
References........................................................................................................................................6

Running Head: COSTING METHOD
Question 1
Part 3
In the above case as determined there is a shortage of the academic staff and hence the five
actions are to be taken to accommodate the growing number of students. Those five actions are
as follows.
 The movements of the instructors can be put in interchange days of the week.
 Make utilization of the low maintenance educators to stay away from the extra expenses.
 The class size will be diminished and the sections will be joined to utilize the restricted
hours.
 The long periods of instructing can also be considered as one of the substitutes to
 The substitute educators can likewise be appointed for accommodating the additional
students.
Part 4
The DVC is really not aware of the fact about the budgetary linkages. The real key
drivers are the students that are going to pay the fees which will be considered as the tuition
income. The higher the students the more will be the income (Daskalakis, Devanur & Weinberg,
2018).
Question 2
Part 2
Since the needs of the department are not static in nature, hence the flexible budget is
adopted by the organization to calculate the number of the clerical hours. As the number of
application will ultimately be based on the time taken and it would cover the overhead costs
easily. This budget is in alignment with the Good Health Insurance Company as for instance the
setting up the life insurance policies will demand more overhead cost than setting up the policies
for the vehicle or any other insurance (Maher, Fakhar & Karimi, 2018).

Running Head: COSTING METHOD
Part 4
MEMORANDUM
TO: GOOD HEALTH MANAGEMENT
FROM: Chief Accountant
DATE: 15th May 2019
PURPOSE: Perks of using the standard costing system
The memorandum is provided to the directors of the management to make sure they are
aware of the certain advantages that are associated with the standard costing system. Standard
costing system is mainly adopted by the corporates engaged into the process of manufacturing.
Few of the benefits are listed below.
 It increases the efficiency of the organization and proves to be the less resource intensive
 The higher the complexity, the more expensive the system will be to deploy into
manufacturing environment. The systems designed along with the standard costing are
less expensive (Cooper, 2017).
 The technique of the standard costing demand the variance analyses as well.
Question 3
PART 5
The two product costing results in the different costs as in calculation of the overhead
costs, the costs are not calculated on the basis of the activity drivers and the entire costs are
assigned to the management, in the fundamental methods, whereas in case of the modern costing
the costs are assigned on the basis of their respective key drivers. Hence there is a difference of
cost allocation. In my opinion the modern costing is recommended to ensure the transparency
among the costs to the Pix Photographic Supply Limited (Bayati, et al 2015).

Running Head: COSTING METHOD
Question 4
Part 1
LETTER
TO: Managing Director
FROM: Consultancy Firm
SUBJECT: Selling the product at the split off or continuing the process.
This is to inform the management of the Cool Pool Limited that there are two stages,
namely the continuation of the production process stage and the split of stage. After analyzing
the scenario it can be concluded that the product shall not be continued as it would give a loss of
11200, whereas if the product is sold at the split off point the loss can be avoided. If the company
is in view to outsource the decision the factors such as pricing, branding, technological area,
quality as well as the accuracy of the decision, shall be kept in mind (The law Dictionary, 2016).
Question 5
Part 2
The profit will always be higher in case of the variable costing as it does not include the
apportionment of the fixed costs in calculation of the direct costs, unlike done by the absorption
costing.
Part 4
In my opinion, the Slumberworld Pty shall approach for the absorption costing as it will
reflect the true picture in the books of accounts. The higher profit may secure a position but the
treatment of recording will not disclose the profits correctly. The proper allocation is necessary
and hence the absorption costing shall be acquired. Not only this, the method is also required by
the GAAP guidelines and this would give a competitive advantage to the company (Ascione, et
al 2015).

Running Head: COSTING METHOD
References
Ascione, F., Bianco, N., De Stasio, C., Mauro, G. M., & Vanoli, G. P. (2015). A new
methodology for cost-optimal analysis by means of the multi-objective optimization of
building energy performance. Energy and Buildings, 88, 78-90.
Bayati, M., Ahari, A. M., Badakhshan, A., Gholipour, M., & Joulaei, H. (2015). Cost Analysis of
MRI Services in Iran: An Application of Activity Based Costing Technique. Iranian
Journal of Radiology, 12(4).
Cooper, R. (2017). Target costing and value engineering. Routledge.
Daskalakis, C., Devanur, N. R., & Weinberg, S. M. (2018). Revenue maximization and ex-post
budget constraints. ACM Transactions on Economics and Computation (TEAC), 6(3-4),
20.
Maher, M. H., Fakhar, M. S., & Karimi, Z. (2018). The relationship between budget emphasis,
budget planning models and performance. Journal of Health Management and
Informatics, 5(1), 16-20.
The law Dictionary, (2016). What is SPLIT OFF POINT?. Retrieved from
https://thelawdictionary.org/split-off-point/