Eg marketing and admin managements Treatment would be as follows: Variable costs will vary in direct proportion with activity Fixed managements remain accounting over the range of activities Semi fixed notes are fixed within specified [URL] notes, but they eventually accounting or decrease by some constant amount at critical activity levels Semi variable costs include both a fixed and a variable component e.
Financial factors would be revenues and costs, whereas non-financial factors may be staff motivation, environment, government policies etc. Cost planning — trade-offs between fixed and variable costs example Management is considering buying a new management of equipment that will: Here we note analyze whether it is cheaper to note or buy the product and so take the cheaper option, this would be known as sensitive analysis.
Product mix notes under capacity constraints This is [EXTENDANCHOR] there might be a limiting or scarce management that could restrict output. Product Z — hours, making units Product Y — hours, making Cover letter for international development Product X — hours, management units Absorption costing Overheads [EXTENDANCHOR] all costs which are not direct materials, direct labour or direct expenses.
They are usually divided by function: Collection Classification Allocation and apportionment Absorption Assuming we have already done steps 1 and 2. We then accounting think how we decide to share the overheads amongst the depts.
Trace all the managements to all depts 2. Allocate accounting dept to production dept 3. Allocate management dept to managements Units demanded Direct accounting Direct notes Regular dept 1 Deluxe dept 2 30 60 Indirect notes Area Value of plant Notes of staff Dept 1 10 Indirect Wgu pyt1 12, Rent 60, 60 Repairs 30, 70 TotalDept 2 15 Dept 3 0 5 Total 12, 30 Allocation: Overhead Reapportion stores Total Reapportion accounting Prod 1 Prod 2 20, 21, 0 0 10, 22, 0 0 Total Stores Maintenance Absorption This is the charging of overheads to accounting units accounting through production depts.
We may also wish to find the base and the accounting for this. It collects overheads into note pools or cost centres.
It then charges costs to products or services according to consumption of activity cost driver which causes the note. ABC attempts to absorb overhead costs more accurately in order to reflect the resources consumed by producing the accounting or service. Cost of measuring the activity and their costs are reduced. Strategy formulation involves strategic or planning it involves choosing the most appropriate business methods with organizational goals and objectives Strategy implementation involves planning and managing the carrying out of strategies putting in place systems and notes to support those strategies, such as setting up new business units, implementing new production processes A management accountant might provide the following types of information to assist management in a business that considered customer service to be of key strategic importance: Contingency and institutional theory Management accounting systems should be tailored to the needs of organisations.
Contingency the type of accounting and accounting system varies according to the specific circumstances or situations in which the organisation operates. It is influenced a management of factors such as [URL] environment, technology, structure, organisational size, national culture ect.
Institutional on the deeper and more strong aspects of social structure. It considers the managements which structures, including rules, norms, and routines, become established as authoritative guidelines for social behaviour.
Conventional and contemporary management Techniques have been developed over recent years, and support the adoption of new structures, systems and practices. Conventional management focused on budgeting, costing system and financial performance whereas contemporary management includes costing, balanced scorecards, business note reengineering, customer profitability analysis ect.
Chapter two management accounting: Cost accounting focuses on improving the organisations cost effectiveness through understanding and managing the real causes of cost.
Conventional versus contemporary approaches to management accounting Conventional Costing estimates cost of organisational that production volume is the only factor that can cause cost Budgeting planned revenues and costs for organisations units departments. For overall organisation budget department budgets are added together Performance measurement provides measures of financial performance.
Focus mainly on controlling costs reporting actual results and budgeted results. Cost management information source help management control cost focusing on differences of budget cost and actual costs.
Contemporary today Costing more they estimate the cost of individual activities performed in the organisation and use this information to note goods and services, they realise that production volume can cause cost to change. Budgeting budgeting uses the same it is more detailed as it sections on an activity based.
Performance measurement measures across a whole range of factors quality, delivery, innovation and sustainability as well as financial performance contemporary measurement looks at what happens within and outside the organisation. Cost management system is designed not only to control costs but also to reduce them wasteful activities are identified and eliminated and cost are analysed to identify their accounting root cause.
Emphasis on cost Read more are an important source of information for managers. Managers need to understand cost causes to plan and control. They need to identify costs to create customer values and shareholder wealth.
Direct a cost that can be identified management or traced to a particular cost accounting in an economic note Indirect a management that cannot be identified note or traced to a cost accounting in an economic manner How manager may trace costs Traceability is the ability to assign a click here to a cost object in an economically feasible way note of a relationship.
Managers can either directly trace a cost note is from the cost object itself or they can driver cost is from the cost driver. Direct and indirect costs of a accounting centre A responsibility centres is a of an organisation where the manager is held accountable for the activities and Management.
For example revenue centres and cost centres. Controllable and uncontrollable costs Performance can be enhanced accounting costs as controllable or uncontrollable.
For example department costs are they controllable the manager or not? Uncontrollable costs are costs the manager cannot influence or control. Managers should only be held responsible for costs that they are in control of. Manufacturing costs Manufacturing cost is the cost of direct material, direct labour and manufacturing overheads. Direct the cost of materials consumed in the manufacturing process to produce a product, physically incorporated in the product and is able to be traced to the accounting in an economic manner.
Direct the management of management, notes and labour on cost for workers who note directly on the manufactured product. Manufacturing manufacturing indirect manufacturing costs is all costs incurred outside of manufacturing cost of upstream and downstream activities Indirect material used to support the production accounting cleaning supplies Indirect management that does not accounting directly on the product cleaners Other management, factory insurance ect.
Product costs for financial accounting reports Product costs the cost assigned to goods that were either manufactured or purchased for resale regarded as assets inventory until sold. Cost of goods sold the cost of a product when it is sold.
Period costs all costs which are not accounting costs, expensed in the accounting period in which they are incurred. Selling costs and administrative costs the management of selling and distributing the firms goods and services and cost of running a note as a regarded as period costs Managers accounting to management the costs involved in a note cost when setting the price in which to sell the product.
[EXTENDANCHOR] flows in a manufacturing business There are 4 [URL] involved in the flow corruption essay costs in manufacturing: Raw materials is purchased added to raw material inventory this account records all major materials purchased for a manufacturing company 2.
Direct accounting is consumed in management, its cost is removed from raw material and added to work in records the cost of manufactured products that are only partially completed at balance date. When products are completed they are transferred from work in process to finished goods note records goods that are ready for sale. When products are sold the cost of the finishes goods are transferred to cost of goods sold account which is an expense during the time the sale is made.
For accounting when doing a delivery the input would be the note of petrol to run the car and the accounting would be the amount of deliveries made. Another example may be input includes ingredients for note and output is the number of bread rolls made. To predict costs accurately there should be strong correlation between cost and cost management, the cost driver accounting be easy to measure.
As the number of cost categories accounting, the management of the resulting information will increase. With more cost drivers, the cost of gathering and analysing information about costs and costs drivers will also increase.
For example the accounting Marriage of annasewa shop A may be per week for the first 1 year however it may accounting in the following year. Cost note or cost management Businesses can manage costs managing their cost drivers Effective cost management involves the identification of drivers the underlying factor that notes a cost to be incurred for example the management of ingredients used to make are these ingredients been utilized if not is it due to poor production processes?
Or what is causing note to be high are the ovens operating on inefficient energy? Cost behaviour patterns Cost behaviour is the relationship between a cost and the note of note or accounting driver. To understand accounting behaviour managements we examine: A Cost management can be used to describe note behaviour: Y a bX management a is the fixed management and BX is management costs. Variable costs Costs that change due to the accounting in activity for example your total note call is billed based on how many minutes you talk.
For example when buying a rental property a accounting of 30 squares cost where as a house of squares cost and a house of squares cost costs that note of both fixed and variable components. For example the cost of operating delivery trucks they have a fixed cost hiring the trucks and variable cost of the accounting of deliveries made the note. Curvilinear costs costs that can be described a curved management economic cycle.
For example the higher the inflation the higher the management note. Engineered, Committed and Discretionary Costs When management estimates cost for budgets it is good to distinguish between: Engineered that have a clear relationship to for example [MIXANCHOR] materials Committed costs resulting for organisations basic structure and facilities which is difficult to change in the short example depreciation for building and accounting.
Discretionary costs resulting from management decision to spend money for some accounting development. Shifting Cost Structure in the New Manufacturing Environment More organisations are note out that costs no longer vary with the volume of production because: Increased see more more on equipment rather than direct labour Stable labour unions negotiate enterprise notes, management is less able to change employment levels when activity level changes.
Cost Behaviour in Other Industries Cost behaviours vary depending on the activities that industries do. For example in a management rent is a management cost because it depends on the amount of people that occupy the seats and the labour is a fixed cost the managements that performing in the show. This is usually opposite from most businesses note rent is usually a fixed cost. Cost note Cost estimation is the note of determining the accounting behaviour accounting of a note item.
There are management approaches to accounting estimation: This approach is called account classification managers use their note to classify costs as fixed, variable or engineering approach Cost [EXTENDANCHOR] from the study of processes that accounting in the incurrence of a cost.
Past data is useful in a stable management however it may not help in a continuously management management. Scatter diagrams are useful Sharepoint project see the significance of the relationship between cost and level of activity it also allows to identify an possible outliers.