There are several functions and purposes of cost accounting. Although the income statement and the statement of cost of goods manufactured are valuable in guiding business decisions, they do not supply enough information to achieve the greatest efficiency and profit under competitive conditions. The figures represent total costs, or as my lecturer likes to call it, “too broad” to permit more than general conclusions. Alert management, interested in showing a larger profit, will ask itself vital questions that these totals cannot answer. The answers to such questions require detailed data based on computations that will pinpoint unit costs of products and processes. This is one of the major functions of cost accounting. [Cecily A. Raiborn, 2013] Suggests that through modern systems of cost accounting, …show more content…
Once operations begin, cost accounting reveals how efficiently the work is being done, where the strong and weak spots are, and how to improve performance. The cost of making a product or providing a service is one of the most critical in a firm’s ability to meet the competition. With cost information to support the decisions, management can issue directives, perform follow up activities, and obtain the operating results that ensure prosperity and growth of the enterprise which I will elaborate more on the second question.
In the first question, I may or may not have directly or indirectly answered the second question but I will try my best to elaborate on a few key points as to how cost accounting can help organizations develop innovative new products and achieve continuous improvement. Cost accounting can be viewed as the intersection between financial and management accounting. [Wikipedia, accessed 8th August, 2015] states that “Cost accounting addresses the informational demands of both financial and management accounting by
Being reasonable and taking all parts of representative costs into thought is a piece of how to figure the rate of compensations in your business spending plan. A business by and large
Amerah alhajri 120016323 Q1 1-clear up assignment reason. on the off chance that the intention is to rouse the utilization of the administrations of a recently framed division, maybe no expenses ought to be dispensed in the event that the reason for existing is to dishearten working division directors from over-utilization of the administrations of bolster offices, then a rate for every unit of administration may be substantial and not in light of genuine expenses on the off chance that the reason for existing is to decide the full cost of items or administrations for long haul estimating choices, then all bolster expenses ought to be assigned 2-recognize cost pools. the reason will figure out if both settled and variable bolster division expenses ought to be dispensed the reason will figure out which expenses ought to be designated Q2 1-physical output. >> 2- market based.>> a-
These costs come in the form of lower prices of products as well as shipping, sourcing of supplies and manufacture remain with the vendor (Smith, Palazzo, & Bhattacharya,
What’s the difference between the Office of Management and Budget and the Congressional Budget Office? They sound the same to me. That couldn’t be farther from the truth. One is part of the Federal Beauracracy and answers directly to the President of the United States. The other is a non-partison “think tank” that compiles data, creates reports and produces products at the request of Congress.
Wilkerson is currently using the traditional costing system. “Companies that use the traditional costing method assume that the volume metric is the underlying driver of manufacturing overhead cost.” Traditional product costing was established when direct material costs and direct labor costs accounted for the bulk of product costs incurred inside a firm. In the Wilkerson company, materials and labor costs are centered around the prices of materials and labor rates.
What do pro forma financial statements show? There are various things Pro forma financial statement shows but first, let’s understand the word pro forma which means a financial statement based on projection and assumption of what the business future would be to determine what should be happening now. Pro forma financial statement can be thought of as a “Projected results for financial statements in the future, given assumptions about what will happen in the meantime” (Siegel & Yacht, 2009, p. 81).
ACC 201 Final Project Part I Accounting Cycle Report Vanessa Ann Williams Southern New Hampshire University The accountant cycle has really impacted me to gain insight on the financial side of Peyton Company. In the accountant cycle, there are many particular directions involve determining the growth of the company such as steps, role, omission and financial statements. It’s important to apply every step from the accountant cycle to make a financial critical decision in the long run. This report will have a breakdown of how to apply the accountant cycle for Peyton Company to be aware of future financial decisions to keep the company holding strong.
Edmonds, T. P., Tsay, B., & Olds, P. R. (2011). Fundamental managerial accounting concepts (6th ed.). New York, NY: McGraw-Hill
Abstract Charlene Battle, controller for Castle Corporation is preparing the company’s financial statements at year-end. She notes that the company lost a considerable amount on the sale of some equipment it had decided to replace. Since the company has sold equipment routinely in the past, Battle knows the losses cannot be reported as an unusual item. She also does not want to highlight it as a material loss since she feels that will reflect poorly on her and the company. She reasons that if the company had recorded more depreciation during the assets’ lives when they were in use, the losses would not be so great.
An accounting memo should be a one-stop shop when it comes to forming a conclusion on an accounting issue. A company would reference an accounting memo to gather information regarding the transaction, accounting evaluation, and reason the position was taken on a problem or issue. The five critical components are listed below as a guide to prepare a professional accounting memo. I. Facts & Background • This section of a research memo is used to describe all the relevant background information to fully comprehend the needs of the transaction and the accounting behind it. •
Abby prefers to allocate indirect cost using activity-based costing for these orders, but recognizes that not all costs are driven by volume of output. Abby prepares a
Chapter Problems Kia Kelly BA510 Accounting November 24, 2015 Curtis Crocker Chapter Problems Problem 5-17 Fixed cost =$480,000 Contribution margin= $8.00 Break even unit sales= Fixed expenses/ Unite Contribution Margin $480,000÷$8.00=$60,000 units 2(a) Year 1 Year 2 Year 3 Direct Material 25 25 25 Direct Labor 16 16 16 Variable Manufacturing overhead 5 5 5 Variable costing unit product cost 46 46 46 2 (b) Year 1 Year 2 Year 3 Sales $3,360,000 $2,800,000 $3,640,000 Variable Expenses Variable cost of goods sold ($46 per unit) 2,760,000 2,300,000 2,990,000 Variable selling and Administrative ($2 per unit) 120,000 100,000 130,000 Total Variable expenses 2,880,000 2,400,000 3,120,000 Contribution Margin 480,000 400,000 520,000
Also, various methods of controlling costs such as standard costing system and flexible budgets have close relation with the variable costing system, in turn making it easy to use those methods. 3. Companies using variable costing system are able to prepare income statement in contribution margin format that provides necessary information for cost volume profit (CVP) analysis. On the flip side, this data cannot be directly obtained from a traditional income statement prepared under absorption costing
In terms of controlling, the management of Marks and Spencer has frequent reporting of expenditures with costs to provide a form of feedback. The reactions of managers to such type of data rely on the expectations or the formal budget or planned targets. The management believes in collecting and assigning cost data that is being shifted away from control. There is a recognition related to the repetitive exercise of planning and re-planning for creating a full time job for accountants. The assessment and evaluation of cost data in the aspects of launching new product by Marks and Spencer is about gaining insights and learning ways for achieving the goals of organisation in most effective manner.
My interest in Accounting stemmed from my optimistic expectation about career development in this field. Accounting is so important in the business world that only on the basis of accounting information, management is able to make investment decisions, and optimize internal operation. Thus, it is widely applied to every business sector. However, due to a strange combination of circumstances, I was matriculated by Biology and Medical Engineering College, instead of the Economic and Management College, in which I could accumulate the knowledge that would allow me to realize my career ambition. Changing major was not easy to operate in our university.