...Accounting for Business Decision Making Assignment Ali Nafiz S1409011055 Submitted on 9th November, 2014 Table of Contents Task 1 Task 2 Task 3 2-4 5-7 8-10 1 Ali Nafiz S1409011055 TASK 1 a) Anhad Sdn. Bhd. Budgeted statement of profit for the year ending 31 October 2014 RM (000s) Revenue (120000 × 8)1 Less Variable overheads Direct Materials (1200 × 2) × 95%2 Direct Labour (1200 × 1.32)3 Production overheads Selling overheads Distribution overheads Contribution Less Fixed overheads7 Indirect labour Production overheads Selling overheads Distribution overheads Administration overheads Budgeted Net profit 350 800 450 150 750 2500 1576 2280 1584 6004 6405 4206 5524 4076 RM (000s) 9600 1 2 Sales volume increase by 50%, which is equal to 800000 × 150% = 1200000. And the new selling price is RM 8. Material cost per unit is RM2, which remains unchanged, and 5% discount is given on the total. 5% discount would mean the budgeted cost for 2014 would be 95% of the cost of 2013. 3 Assuming that production of one unit takes 1 hour, for 800,000 units it takes 800,000 hours, which means labour 960,000 cost per hour is = 1.2, The new cost/hr for 2014 is 1.2 × 110% = 1.32. 800000 4 5 6 Production overheads increase in proportion with the 50% increase in sales volume; 480,000 280,000 400,000 800,000 × 1200,000 = 600,000 Variable selling overheads increase in line with the sales revenue; 7200,000 × 9600,000 = 640,000. Distribution overheads increase in...
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...Accounting: Tools for Business Decision Making 5th Edition Chapter 1 1. Forms of Business Organizations * Sole proprietorship: owned by one person * Easy to set up * Gives you control * Examples: barber shops, law offices, auto repair shops * Partnership: business owned by two or more people * More economic resources * Unique skills and resources * Important to have written partnership agreement forms * Examples: retail and service-type businesses, professional practices * Corporation: business owned by stockholders * Easy to sell (transfer ownership) * Consists of stockholders and investors * Easier to raise funds * Examples: Coca-Cola, General Motors, ExxonMobil * Hybrid Business: tax advantages of partnerships and limited liability of corporations * Taxes and legal liability are important * Sole proprietorship have more favorable tax treatments but personally liable for debts and legal obligations 2. Users and Uses of Financial Information * Accounting: information system that identifies, records, and communicates the economic events of an organization to interested users * Users: internal users and external users * Internal Users: managers who plan, organize, and run a business * Examples: marketing managers, production supervisors, finance directors, and company officers * Accounting provides internal reports (financial...
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...1.0 Managerial Accounting Managerial accounting is a field of accounting that provides economic and financial information for managers and other internal users (Weygandt, Kimmel & Kieso, 2012). Managerial accounting is an important internal business function. Many companies use managerial accounting to record and report their internal financial information. There are differences between financial accounting and managerial accounting. Financial accounting focuses on preparing financial reports and releasing information to the public while managerial accounting focuses on preparing financial information for internal review and decision making. Managerial accounting offers several important tools for measuring the company operational performance. Common types of managerial accounting include job costing, process costing, activity-based costing and also budgeting. 2.0 Benefits of Managerial Accounting Practices Towards Business Organization Create Competitive Advantage Management accounting can help businesses create a competitive advantage. Many business owners focus on creating consumer goods with lowest-priced and highest-quality product in the market. The ability to review financial information through managerial accounting is important in creating a financial competitive advantage. In 2010, Maxis Berhad wins excellence award in management accounting from the national award for management accounting (NAfMA). One of the winning criteria is the company ability to create...
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...Introduction Accounting is the core of a business or organization as it helps to provide the necessary information which is required to make important economic decisions to ensure the organization or business is moving forward. In the business world, companies are now looking for something to be understood mainly to contribute on its effective business and management progress. The advanced pace in technology and the increasing level of competition among organization structure drastically impacts the position of an accountant. The information required by a company to make decision to make sure it is moving forward is provided by accounting. Both managerial and financial accounting plays a big role by working along to ensure the growth of the organization is in the right path. However, both managerial and financial accounting has its own purpose of improving an organization or a business. “Earlier financial accounting experiments typically sought to determine whether specific accounting policy choices would affect investors’ decisions.” (Pg778-experimental research) (122words) Role of Financial Accounting Every organization or business should be able to know their monetary progress or else they would never be able to evaluate if the business is profitable or the other way around. “The purpose of financial accounting is to provide users of financial statements with information that is useful for efficient decision making.”(accounting for intangible-pg102).It prepares the...
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...Managerial Accounting is tools for business decision making. The use of management accounting information is a key for organizational success. This essay will explain on the importance of managerial accounting process in organization to successfully carrying out the day to day as well as long term activities and goals. First, it describes how the evolution and change in managerial accounting. Second, the essay looks at the role of managerial accountants. Third, it explains several function of managerial accounting that tend to contribute the adds value to organization. 2.0 INTRODUCTION According to the Chartered Institute of Management Accountants ( CIMA ), Management Accounting is defined as the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information for both financial and operating used by management to plan, evaluate and control within an organization and to assure use of and accountability for its resources. The Institute of Management Accountants ( IMA ) defined Management Accounting is a profession that involves partnering in management decision making, devising planning and performance management system and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy. Managerial accounting applies to all types of business such as service, merchandise and manufacturing. It also applies to all forms of business organizations...
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...Sherryl Burris Unit 2 DB Accounting data helps owners and managers make business decisions. Cash bonuses depend on accounting numbers. Nearly all businesses use the amounts reported in their financial statements as a basis for rewarding management. Because managers act to achieve these accounting measures, selecting measures that are not easily manipulated is important. Equally important is maintain a balance of measures that reflect the goals of profitability and liquidity. Profitability and liquidity are the two major goals of all businesses. Profitability is the ability to earn enough income to attract and hold investment capital. Liquidity is the ability to have enough cash to pay debts when they are due. For example, Honda may meet the goal of profitability by selling many cars at a price that earns a profit, but if its customers do not pay for their cars quickly enough to enable Honda to pay its suppliers and employees, the company may fail to meet the goal of liquidity. If a company is to survive and be successful, it must meet both goals. All businesses pursue their goals by engaging in operating, investing and financing activities. Operating activities include selling goods and services to customers, employing managers and workers, buying and producing goods and services, and paying taxes. Investing activities involve spending the capital a company receives in productive ways that will help it achieve its objectives. These activities include...
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...Managerial Accounting 12/3/15 Managerial Accounting Accounting is a crucial part in running a business. There are various forms of accounting that can be used, it is very important to know which technique is best to use for what companies. Once you figure out a particular technique to use, it is important to keep an open mind if there are any changes that need to take place in the business. By keeping an open mind helps the business adjust and be able to make the right decisions. Every business wants to make a profit; accounting is an important part in helping understand how profits and expense amounts are derived. One form of accounting I will focus on is managerial accounting or also known as management accounting. Managerial accounting is the process of identifying, analyzing, recording and presenting financial information that is used for internally by the management for planning, decision making, and control. Managerial accounting provides economic and financial information for managers and other internal users (Managerial, 2005). When you tell people about managerial accounting, the first thing they ask is “What’s the difference between managerial and financial accounting?” There are both similarities and differences between managerial and financial accounting. The major similarity each field shares, is that they both deal with the economic events of a business. As an example, determining the unit cost of manufacturing a product is part of managerial accounting. Reporting...
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...13311293 The Rule Accounting information in decision making Introduction In this day organization on business activity always face the problem including internal and external problem. Decision making be required for face the problem and make the organization get higher profit than before. One of the factors to support the decision making is the need for an adequate information system so that if there occurs an error in the company's policy, managers can make decisions quickly to address these issues. to obtain adequate information we need accounting information. Accounting information is a systematic connective issue in the presentation of useful information and can power to help leaders companies in an effort to achieve organizational goals that have been set previously. If accounting information connected with object information like product and companies activity it will generate accurate accounting information, It will help manager make right decision and useful for organizational behavior and human behavior in organization. Decision making divided into two, long-term decision and short-term decision. Long-term decision was made by manager can useful for one year or more. Example for long term decision are buy or rent a machine, buy machine with cash or credit, etc. short-term decision was made by manager, when that decision was made will directly affect for organizational or employees. Examples of short term decision are what products should the business make this year...
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...(finance and accounting) as both have very wide meanings and applications in the business world. Most business has an aim to make profit and to remain solvent and the above two concepts play an important role in achieving this objective. This paper aims to answer the above questions and further goes on to say why both should and are considered a vital part of business and their importance in the whole business set up. Literature Review Accounting has been defined as the soul of the business (Collin P, 2004). Accounting is described as the means by which information is communicated in a firm, and is thus known as the language of business. Accounting is described as a vital function in preventing fraud and corporate corruptions in organisations (Glautier, M.W.E. and B. Underdown, Accounting theory and practice). Accounting is important as it provides information to external parties (stakeholders) by providing a true picture on the business financial position. Finance is described as an administrative function aimed at raising funds for the business (B.B Howard. Introduction to Business Finance). Finance is aimed to maximise the value of the firm and attain the main objectives of the firm; I. Shareholders wealth maximisation II. Profit maximisation This is achieved by determining the optimum capital structure and the efficient utilisation of resources by analysing risk and return (B. B Howard. Introduction to Business Finance). Findings and analysis Accounting Accounting may be...
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...Accounting Information for Managers To Make Better Decisions 1 Abstract This paper analysis how the accounting information would support the decision making process. The main goal of an accounting system is to provide financial information about the organization including financial situation and the performance of the organization. The decision makers should know the situation of the organization either by comparing competitors or previous periods’ performance in order to achieve the objectives of the company and this being possible by using accounting information. In addition, this thesis studies the importance of having effective and efficient accounting system to make better decision as it relates to increase the profitability target of an organization. Organizations should replace their weak accounting system in order to ensure that each team member in the Accounts Department is conscious of their role to produce good accounting information (1, Okoli Margaret). The result of this paper describes that providing right information to the right people in time via management reporting to maximize the use of reports in decision-making. 2 Introduction Any organization should survive and excel in the fast paced and ever changing market. We are living in the digital era so information can be found everywhere via websites, databases documents, reports, and emails. However, it’s important to read the historical data-set during decision making process but providing report in quick...
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...THE USE OF ACCOUNTING INFORMATION AND DECISION-MAKING IN ORGANISATION (A CASE STUDY OF MUXOL PAINT DEPORT, BENIN CITY) BY DAVID UYIGUE UNAD/ACC5/2007/371 A PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCE, UNIVERSITY OF ADO-EKITI, NIGERIA. IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF SCIENCE (B.sc) DEGREE (HONS.) IN ACCOUNTING FEBRUARY, 2014 CERTIFICATION This is to certify that this project work was written by DAVID UYIGUE of Department of Accounting, Faculty of Management Sciences, University of Ado – Ekiti State, under my supervision. ------------------------------ ------------------------------ DR KEMI OGUNDANA DATE (Project Supervisor) ----------------------------- ------------------------------ DR. OGUNDELE J.F. DATE (Degree Coordinator) DEDICATION This project work is dedicated to God Almighty, through His only begotten son, Jesus Christ for His Faithfulness and mercy. This project is also dedicated to the family of Mrs. Veronica Uyigue for their financial support. ACKNOWLEDGEMENTS First and foremost, I will like to acknowledge and appreciate Almighty God who saw me through my course of study and granted me the grace to complete this project work. through His only begotten son, Jesus Christ and His Faithfulness and mercy. My profound gratitude goes to my able project supervisor Dr...
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...CHAPTER 1 DECISION MAKING AND THE ROLE OF ACCOUNTING TEXT REFERENCE: Hoggett, J.R., Edwards, L., & Medlin, J., Accounting in Australia, Fifth Edition, Chapter 1. OBJECTIVES: When you have studied this chapter, you should be able to: 1. understand the nature of decisions and the decision-making process. 2. appreciate the wide range of economic decisions made in the marketplace. 3. explain the nature of accounting and its main functions. 4. identify the potential users of accounting information. 5. use information to make simple economic decisions. 6. understand the role of accounting information in the decision-making process. 7. understand the differences between accounting for management and accounting for external users. 8. understand how the accounting profession is organised in Australia. 9. identify the different areas of the economy in which accountants work. 10. understand the importance of ethics in business and accounting and how to recognise and handle ethical dilemmas as part of the decision-making process. 1 Chapter 1 STUDY TIPS FOR CHAPTER 1 1. This is an important chapter because it lays the foundation for all topics that will follow. 2. Make sure that you understand each new term as it is introduced. 3. Pay particular attention to the significance of accounting information for decisionmaking processes. 4. Identify the types of activities that are carried out...
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...Definition of 'Accounting Information System - AIS'The collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities. | Answer:There are various importance of accounting information to a business entity. Getting to know what an accounting information is and the importance (need) of it is a great step to improving one's capital base, both from the finance aspect to the resources (raw materials) an organisation uses in carrying out its objectives. An accounting information is simply the data which an organisation/business entity is able to make known to its users. It should be taken note that these users of accounting are of various sections - to which a business entity is one of. A business entity will require an accounting information so as to enable it manage and control its finances and resources. It also needs it for it to be able to improve on its level of profit earning, should it realises it is declining in its profitability level. It also needs to for it know the differences between its marginal liability and its marginal assets. There are so many importance of a business information to a business enterprise, but the...
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...anaCHAPTER 1 DECISION MAKING AND THE ROLE OF ACCOUNTING TEXT REFERENCE: Hoggett, J.R., Edwards, L., & Medlin, J., Accounting in Australia, Fifth Edition, Chapter 1. OBJECTIVES: When you have studied this chapter, you should be able to: 1. understand the nature of decisions and the decision-making process. 2. appreciate the wide range of economic decisions made in the marketplace. 3. explain the nature of accounting and its main functions. 4. identify the potential users of accounting information. 5. use information to make simple economic decisions. 6. understand the role of accounting information in the decision-making process. 7. understand the differences between accounting for management and accounting for external users. 8. understand how the accounting profession is organised in Australia. 9. identify the different areas of the economy in which accountants work. 10. understand the importance of ethics in business and accounting and how to recognise and handle ethical dilemmas as part of the decision-making process. 1 Chapter 1 STUDY TIPS FOR CHAPTER 1 1. This is an important chapter because it lays the foundation for all topics that will follow. 2. Make sure that you understand each new term as it is introduced. 3. Pay particular attention to the significance of accounting information for decisionmaking processes. 4. Identify the types of activities that are carried...
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...Importance of Managerial Accounting ACC206: Principles of Accounting II May 16, 2012 The Importance of Managerial Accounting Every business whether large or small has a need for an accountant. Accountants are expected to know about the business from top to bottom and are responsible for reporting numbers and figures on financial statements for outside as well as inside decision-makers. The type of accounting that reports to inside decision-makers is managerial accounting. Without this vital information reported by managerial accounting, the business will not be able to operate in a profitable manner. This will be a brief discussion about managerial accounting by answering a few questions such as; what is management accounting, what are the sources of data, and how are the data used to make management decisions, all reflecting in the importance of managerial accounting to any business. Managerial accounting provides vital pieces of financial information about a business’s operations to inside decision-makers allowing them to analyze the business in a more profitable manner. “Managerial accounting provides information to help managers plan and control operations as they lead the business” (Horngren, et al., 2012, p.775). Not only does managerial accounting provide the financial information, but it also “includes managing the company’s plant, equipment, and human resources” (Horngren, et al., 2012, p.775). All of these different departments of a business offer valuable insight...
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