Costing Methods and Budgeting Analysis: Finance Assignment, 2024

This finance assignment analyzes various costing methods and budgeting techniques. It begins with a revenue budget for Resort Island University, considering student enrollment and fee structures. The assignment then delves into the number of staff needed to cover classes, proposing actions to address potential shortages. Further, it explores flexible budgets and their relevance to overhead costs. The assignment also covers standard costing, its advantages, and its application in manufacturing. The analysis extends to activity-based costing (ABC) and its role in accurate cost allocation. The assignment then examines the decision of whether to sell a product at the split-off point or continue processing, considering relevant costs. Finally, it compares variable and absorption costing methods, including their impact on profit determination, and recommends the appropriate costing strategy for a company based on GAAP compliance. The assignment references various academic sources to support its findings.

Running Head: COSTING METHOD 1
COSTING METHODS

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
Currently the Resort Island is facing a situation where the number of the academic staff
needs to be increased and in order to do so the Resort Island must keep in mind the following
actions, majorly required to solve the problem.
 In order to curb the additional costs the part time teachers shall be hired so that the
company can manage the load of the work and the costs as well.
 For instance the company also have the option to keep the shift timings of the teacher on
the alternative basis and this would not only save the time and energy but cost too.
 The teachers can also increase the productive hours to accommodate the increasing
number of the students.
 The sections of the classes shall be combined in order to reduce the class size.
 The graduate or the substitute teachers can also be appointed in order to have the extra
comfort (Zee & Koomen, 2016).
Part 4
The DVC is in a frame of mind that the academic staff runs the operations of the
management and hence he links the concept of the linkages to the budgetary decisions, keeping
in mind the following idea. However, in reality DVC is not doing right and he is not aware of the
concept clearly as the number of the students is the movers and the real cause of the operations
rather than the academic staff.
Question 2
Part 2
The flexible budgets are those budgets which tend to settle and mold according to the
volume or the activity. These types of budget are more useful than the static budget. The role of
the flexible budget with respect to the various kind of the number of the applications is in
alignment rather than the clerical hours. Therefore it can be stated to the Good Health Insurance

Running Head: COSTING METHOD
company that the, Overhead costs can be recorded in the correct manner in case of the flexible
budget (Ren, et al 2016).
Part 4
MEMORANDUM
TO: GOOD HEALTH MANAGEMENT
FROM: Chief Accountant
DATE: 17th May 2019
PURPOSE: Nature of the standard costing technique and its advantages.
This memorandum is for the Good Health Company in order to make them aware of the
nature of the standard costing technique and its few benefits underlying.
Standard costing framework is the framework which is utilized for the most part by the firms
that are dealing with the manufacturing of the product. Standard expenses are utilized as the
objective expenses and are created structure whose information is dependent on the history.
There is an abnormal state of the variety as the components are of exceptional nature that will in
general make the overhead costs reduce.
 The standard costs, whenever actualized in the best possible way, will disclose inefficient
angles in exercises, which can be evaluated easily and the important and the quick moves
can be made.
 Standard costs are more useful than normal costs so as to set up the excessive limits as on
the relevant standard costs at different age scenarios and with different segments this
technique is immediately fused up with the complete expenses as it is required by the
financial limit (He, Sethuraman, Wang & Zhang, 2017).
 The standard costing likewise reduces the expenses for the organization on a general
premise. It sets up the arrangement amongst all dimensions of the administration and
every one of the capacities utilized in making the item.
 It can likewise help in decrease of the work and the administrative costs by keeping away
from the way toward chronicle the exchanges in detail.

Running Head: COSTING METHOD
Question 3
PART 5
The expenses are of the costly nature and hence the major attention of the development
focus is on machine hours and the other activity drivers in arriving at the final calculation. The
issue is underlying when the manufacturing costs are overvalued or underpriced and the accurate
results are not produced. There is always the fluctuation of the prices and the fundamental
methods are erased against the ABC costing which is also the recommendation to the members
of the Pix Photographic Supply Limited (Guenther, Rieckhof, Walz & Schrack, 2017).
Question 4
Part 1
LETTER
TO: Managing Director
FROM: Consultancy Firm
SUBJECT: Selling the product at the split off or continuing the process.
Subsequent to computation of the costs it can be very well expressed that the organization
will not proceed with the item and its procedures as it would give the organization a chance to
confront lost the $11200. This misfortune can be stayed away from if the item is not continued
and released at the stage of split off, a phase where the assembling of the generation is isolated.
As it very well may be seen from the computations the point is helpful for the cool pool the
executives hence the Banolide must be sold at the stage of separation. There are a few ideas that
must be implied when the choice is required to be re-appropriated which begins from the
innovation utilized, the market value, the brand reliability and the ecological factors also.
Yours Sincerely
Chief Accountant

Running Head: COSTING METHOD
Question 5
Part 2
The costing method that is seeming higher profit is the variable costing as it sees all the
variable expenses as expenses; however the fixed expenses are grasped as the period things. The
absorption costing method actuality thinks about, both the variable similarly as the fixed costs.
Part 4
After the entire analysis and the preparation of the income statement under both the
scenarios it can be seen there is a difference in the cost recording in both the methodologies. It is
informed to the administration concerning the Slumber world's company that it must go along
with the absorption methods or costing strategy as it will create the exact outcome subsequent to
thinking about the idea of both the static and the non-static expenses. The best possible allotment
is vital generally the additional benefit can be reserved and consequently so as to get the
straightforward outcomes the retention costing is the response to every one of the issues. This
technique is likewise required to be trailed by the GAAP and subsequently the organization will
consent to the strategy for Absorption costing method (Ganesan, 2015).

Running Head: COSTING METHOD
References
Ganesan, R. (2015). Managerial Cost Accounting. In The Profitable Supply Chain Apress,
Berkeley, CA.
Guenther, E., Rieckhof, R., Walz, M. & Schrack, D., 2017. Material flow cost accounting in the
light of the traditional cost accounting. uwf UmweltWirtschaftsForum, 25(1-2), 5-14.
He, S., Sethuraman, J., Wang, X., & Zhang, J. (2017). A noncooperative approach to cost
allocation in joint replenishment. Operations Research, 65(6), 1562-1573.
Ren, J., Boyle, B. D., Ku, G., Weber, S., & Walsh, J. M. (2016). Overhead performance tradeoffs
—a resource allocation perspective. IEEE Transactions on Information Theory, 62(6),
3243-3269.
Zee, M., & Koomen, H. M. (2016). Teacher self-efficacy and its effects on classroom processes,
student academic adjustment, and teacher well-being: A synthesis of 40 years of
research. Review of Educational research, 86(4), 981-1015.