...defects. The engineering and design team uses computerised drafting and testing of new products. The following managers work in the tennis rackets division: Jason Dennis, Sales Manager (supervises all sales representatives) Dave Marley, Cost Accounting Manager (supervises cost accountants) Kevin Carson, Production Supervisor (supervises all manufacturing employees) Sally Renner, Engineer (supervises all new-product design teams) REQUIRED a) What are the primary information needed by each manager? Give examples. (5 Marks) b) Which, if any, financial accounting report(s) is likely to be used by each manager? Explain. (3 Marks) c) Name one special purpose management accounting report that could be designed for each manager. Include the name of the report, the information it would contain, and how frequently it should be issued. (7 Marks) [TOTAL 15 MARKS] Grading Rubrics for Assignment Question 1: (5) (4) a) primary Clear and Clear and information detailed adequate needed by explanation of explanation of each the primary the primary manager information information needed by needed by weightage: 1 each manager each manager with some with some examples. examples. b) financial Clear and Clear and accounting detailed adequate report(s) explanation of explanation of the...
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...Accounting is the disciplinary technology which enables the prioritising of the financial above all other considerations (Loft 1991). As the focus of a business is on profit, prominence must be placed on the circumstances in which the finances exist. However, as this literature review will highlight, there is more to operating and maintaining a business than money – the human aspect should never be underestimated and can never be eliminated. The emphasis of this literature review examines, quite fittingly, some of the works written on management accounting, a topic which gives credence to both the financial and the behavioural aspects of an organisation. It hones in on monetary costs and the need for control on and from management to ensure the longevity of the organisation. Management accounting defined The inherent difference between the two main types of accounting is in the usage of information. Ultimately, the different uses and users of the information mean that each type incorporates different techniques, which also set the two apart. However, Kieso, Weygandt, & Warfield (2011) capture the essence of the separateness in their definitions of the terms: Financial accounting is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties. (p. 5) whereas Managerial accounting is the process of identifying, measuring, analysing, and communicating financial information needed by management to plan...
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...system has two direct cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the Machining Department, allocated using machine hours and the Assembly Department, allocated using direct manufacturing labour costs). The 2010 budget for the plant is as follows: Machining Dept. Assembly Dept. Manufacturing Overhead Direct manufacturing labour cost Direct manufacturing labour hours Machine hours $1,800,000 $1,400,000 100,000 50,000 $3,600,000 $2,000,000 200,000 200,000 a) Calculate an overhead rate for each department. (3½ marks) b) During the month of August, the cost record for Job #400 shows the following: Machining Dept. Assembly Dept. Direct material used Direct manufacturing labour costs Direct manufacturing labour hours Machine hours $45,000 $14,000 1,000 2,000 $63,000 $15,000 1,500 1,000 What is the total manufacturing overhead allocated to Job #400? (3½ marks) c) Given that selling, distribution and administrative costs are absorbed in each job cost at 20% of prime cost & that Job #400 required special design costs of $7,000; calculate the total cost and quotation price of Job #400, where a profit margin of 25 % is applied to the selling price of all jobs. (8 marks) d) At the end of 2010, the company had actually incurred the following: Machining Dept. Assembly Dept. Manufacturing overhead incurred Direct manufacturing labour costs Machine hours $2...
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...contact aravind.banakar@gmail.com www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224 COST ACCOUNTING MANAGEMENT CASE STUDY : 1 Materials X and Y are used as follows : Minimum usage — 50 units each per week Minimum usage — 150 units each per week Normal usage — 100 units each per week Ordering quantities x = 600 units Y = 1000 units Delivery period x = 4 to 6 weeks Y = 2 to 4 weeks Calculate for each material a) Minimum level b) Maximum level c) Order level d) Explain importance of inventory controls? CASE STUDY : 2 A company presently sells an equipment for Rs 35,000. Increase in prices of labour and material cost are anticipated to the extent of 15% and 10% respectively, in the coming year. Material cost represents 40% of cost of sales and labour cost 30% of cost sales. The remaining relate to overheads. If the existing selling price is retained despite the increase in labour and material prices. The company would face a 20% decrease in the existing amount of profit on the equipment. Question : 1) You are required to arrive at a selling price so as to give the same percentage of profit on increased cost of sales, as before. 2) Prepare a statement of profit / loss per unit, showing the new selling price and cost per unit in support of your answer. 3) What is the anticipated amount of increased material and labour cost. 4) What policy changes should the company make for maintaining the profits. CASE STUDY : 3 A product...
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...Theory of Constraints 4 IMA Guidelines for Ethical Behavior 4 Competence 4 Confidentiality 5 Integrity 5 Credibility 5 Corporate Social Responsibility 5 Manufacturing Costs: 6 Non-Manufacturing Costs 6 Product Costs vs. Period Costs 6 Prime Costs vs. Conversion Cost 7 The Activity Base (Cost Driver) 7 Fixed Cost and Variable Costs 7 Cost Classifications for Predicting Cost Behavior 7 Mixed Costs 8 The High-Low Method 9 Cost Classification for Decision Making 10 Opportunity Cost 10 Sunk Costs 10 Types of Product Casting Systems 10 Why use an allocation base? 11 Manufacturing Overhead Application 11 Decision Making Decision making involves making a selection among competing alternatives. * What should we be selling? * Who should we be serving? * How should we execute? Strategy Strategy is a game plan that enables a company to attract customers by distinguishing itself from competitors. Focal point of a company’s strategy should be its target customers. Customer Intimacy Strategy – Understand and respond to individual customer needs. Operational Excellence Strategy – Deliver products and services faster, more conveniently and at lower prices. Product Leadership Strategy - Offer higher quality products. Enterprise Risk Management A process used by a company to proactively identify and manage risk. Lean Production – Just-in-time (JIT) production Customer orders – create order – generate component requirements...
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...Cost, Budgets and Strategic Decision Making in Management Accounting Answer (a) Budgets can be characterized as a quantitative explanation, for a certain time period, which may incorporate arranged incomes, cash flow, costs, resources, and liabilities. Budgeting alludes to the procedure of outlining, actualizing, and working budgets. Budgeting, as a control device, gives an activity plan to guarantee that the association's real exercises are slightest digressed from the planned exercises. Budgets are utilized to give an outline of the organization and procedures performed in it. They are helpful in asset allocation where assets are distributed in such a route, to the point that the techniques, which are relied upon to give the most astounding returns, receive top priority (Libby and Murray, 2010). Budgets are additionally forecast instruments and bring about a significant improvement readied to adjust to changes in business atmosphere. They ought to be produced in such a route, to the point that they consider the key necessities of each of the functions. Budget detailing comprises of an arrangement of exercises: a budget department is created in which a budget controller is appointed, strategies are developed for budget readiness, budget recommendations are created at the department level, the budget is developed for the whole company, financial backing period and key budget elements are decided, the budget is evaluated and approved, growth is observed, and the budget...
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...In management accounting literature, there is no research, to the best of the author's knowledge, investigates the relationship between quality costs and revenue sharing in supply chains. However, the relevant literature is examined as follows: 2.1 Quality Cost in Supply Chain Many firms are now increasingly adopting inter-firm contractual arrangements to achieve competitive advantage. Firms gain many benefits from such arrangements because of the changing of relationships from short-term to long-term, such benefits as increasing market share, cost reduction, improve performance, as well as gain more skills and knowledge [Dacin et al., 2007; Fayard et al., 2012; Ireland et al., 2002; Mamat, 2012; Langfield-Smith & smith, 2005]. Supply chain...
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...The need for Environmental Accounting has become the concern and focus of nations and responsible corporate managements. It became one of the foremost issues on the agenda of nations and businesses earlier in the 1990s and the reasons for this were varied emanating from both within and outside of the firm and particularly at the global level (Okoye and Ngwakwe:2004:220-235). A lot of government enactments, laws and regulations on environmental protection have been made in several nations of the world. In the light of the awakening to environment protection, various laws and regulations such as the Environmental Impact Assessment Act, 1992 have been enacted. These require corporate managements to consider the environmental implications of all internal decisions of their managements. Also, all organizations monitored by environmental policy agencies in Kenya are expected to demonstrate much consideration in decision making. Environmentalists agree that it could be more cost effective and beneficial for companies to acquire pollution prevention or clean technology than those of pollution clean-up. It is also observed that in environmental regulations, there is a shift from the ‘command and control’ approach to market-driven forms in which pollution prevention alternatives are replacing pollution cleaning approach. It follows therefore, that determining the appropriate pollution prevention approach may lead to additional decisions to be taken by management. Such decisions may include...
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...Management Accounting-- Wilkerson Company Case - Essays - Rain820420 RESEARCH PAPERS AND ESSAYS FOR ALL Search 350,000 Essays Question? 888-442-7499 SEARCH Join Login Writing Service Help Contact Us Saved Papers Get Better Grades Today By Joining OPPapers.com and Accessing Over 350,000 Articles and Essays! GET BETTER GRADES Save papers so you can find them more easily! Join Now Get instant access to over 350,000 papers. JOIN NOW Management Accounting-- Wilkerson Company Case Home Page » Science » Engineering Management Accounting-- Wilkerson Company Case The purpose of this report is discussing the case of Wilkerson Company that confronting tough competition in price cutting in pumps which caused to a big drop of pre-tax operating income from 10% to 3%. After observing the existing costing allocation, we found out there is an issue on the existing costing report that the manager could not be able to see the real situation. In light of this, there will be brought to the discussion on the feasibility of using an alternative costing method – Activity based costing (ABC) in the latter paragraphs. The issue of misallocation cost With the use of Traditional Absorption Costing (TAC) which means Wilkerson Company is now only put the costing of direct labor and material in place. As we can see the table 1 below, the percentage of total direct cost allocation in Valves, Pumps and Flow Controllers are 46%, 46% and 52% respectively, and so for...
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...the traditional cost accounting system is closely linked to its general ledger system. This in particular has to do with cost allocation. Mostly, costs are accounted either for valuation (i.e., financial statements analysis) or decision-making activities (i.e., internal purpose) or both. Meanwhile, sometimes the costs are accounted for reimbursement purposes (e.g., corporate health insurance, corporate travel). The traditional approach to cost-allocation manages three sequence of actions: a) Accumulate and account costs within a production or nonproduction business area, b) Allocate nonproduction business area costs to production business area, and c) Allocate the resulting (revised) production costs to various products, services, or customers. Costs hence derived using traditional allocation approach suffers from some defects that can result in incorrect costs for decision-making purposes. For example, the traditional approach attributes the cost of idle position to systems. Accordingly, such costs are recharged to entities that did not use it. In order to find solution to such anomalies, many organisations have adopted a separate cost-allocation methodology called Activity Based Costing (ABC). WHAT IS ACTIVITY BASED COSTING? In contrast to traditional cost-accounting framework, ABC framework first accumulate overhead costs for each organizational activity, and then assign the costs of the activities to the products, services, or customers (cost objects) causing...
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...Paper 1: Accounting (100 marks) Paper 2: Law, Ethics and Communication Part I: Law (60 marks) Business Laws (30 marks) Company Law (30 marks) Part II: Business Ethics (20 marks) Part III: Business Communication (20 marks) Paper 3: Cost Accounting and Financial Management Part I: Cost Accounting (50 marks) Part II: Financial Management (50 marks) Paper 4: Taxation Part I: Income-tax (50 marks) Part II: Service Tax (25 marks) and VAT (25 marks) Group II Paper 5: Advanced Accounting (100 marks) Paper 6: Auditing and Assurance (100 marks) Paper 7: Information Technology and Strategic Management Section A: Information Technology (50 marks) Section B: Strategic Management (50 marks) The level of knowledge expected of students in the above subjects is ‘working knowledge’. INTEGRATED PROFESSIONAL COMPETENCE COURSE (IPCC) Syllabus GROUP I OF IPCC/ ACCOUNTING TECHNICIAN COURSE (ATC) Paper 1: Accounting (One paper – three hours – 100 marks) Level of Knowledge: Working Knowledge Objectives: (a) (b) (c) (d) To lay a foundation for the preparation and presentation of financial statements; To gain working knowledge of the principles and procedures of accounting and their application to different practical situations; To gain the ability to solve simple problems and cases relating to sole proprietorship, partnership and companies; and To familiarize students with the fundamentals of computerized system of accounting. Contents 1. 2. A General Knowledge of the framing of the accounting standards...
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...Source: http://www.allbusiness.com/accounting-reporting/methods-standards-cost-accounting/498244-1.html#ixzz1nMWBS5qI By Juras, Paul E. ABSTRACT Descriptions of activity-based-costing (ABC) systems have become a standard part of managerial accounting texts. While ABC implementation issues are the focus of a number of articles, these issues are often not addressed in a typical textbook. This case is designed to familiarize you with the behavioral and technical variables that can aid or impede successful ABC implementation. Anderson's (1995) factor-stage model provides a template to organize the discussion of ABC success factors. In this case, you will be cast in the role of a business consultant. You are asked to synthesize the case study's key "change management" insights into a report that could be shared with co-workers in an intranet-based knowledge management system. In addition, you may be expected to prepare a formal presentation of the report for your peers. Implementing change in an organization is about ninety percent cultural and ten percent technical. This is because the organization dynamics, politics, and search for a champion that go on are the real issues that make or break the project. One of the reasons we were able to implement ABC successfully was because the right people became champions. Chris Richards, Director of MIS, Global Electronics, Inc. BACKGROUND Global Electronics, Inc. (GEI), headquartered in Sarasota, Florida, designs, manufactures...
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...University Managerial Accounting for Decision Making (MBAA 517) Dr. Mark Bellnap December 1, 2011 TABLE OF CONTENTS Abstract 3 Raytheon: An International Firm 4 Section I 4 Goods and Services, Market Share, Geographic Locations, and Major Competitors 4 Section II 5 Activity Based Costing at Raytheon 5 Section III 8 Standard Costs at Raytheon 8 Section IV 14 Relevant Costs at Raytheon 14 Section V 16 Summary, Conclusion, and Recommendations 16 References 18 Appendix 19 Abstract In today’s hectic economic environment, a company’s financial performance is becoming a highly focused upon part of successfully running a company in America and throughout the World. Equally important, is the ability to address accounting matters in this environment. At Raytheon, it is the task of each function within the company to consider each and every accounting aspect, because their customers are all over the world and each one of those customers approaches financial matters in unique ways. For Raytheon to maintain its success, it is imperative for each employee to understand how to manage these accounting aspects. The lack of accounting knowledge and specifically, each unique accounting approach, and how to execute each approach is why there is a huge problem with finances in corporate America today. Many organizations have altered their approach to this issue, but Raytheon has stood the test of difficult economic times because of ethical accounting practices and principles...
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...Indirect Cost Allocation Method Institution Name The cost allocation method is a process whereby an organization assigns a common cost to several cost objects (Diamond, 2003, pp. 1-28). Indirect costs refer to the overhead costs associated with providing an indirect service that are not readily attributable to a direct service (Mathieu, 2001, pp. 451-475.). The indirect cost allocation method is used as management accounting tools with an aim of helping an organization get an accurate idea of the costs associated with various departments in that particular organization. Different companies normally choose to implement indirect cost allocation methods to be part of its cost accounting system for a number of reasons (Datar, 2013). One of the reasons an organization implements this concept is to achieve the goal of assigning the cost based on the root causes of the common cost instead of merely spreading the costs. Proper cost allocation is an important element in making sure that an organization runs efficiently and cost effectively. Controlling limited resources is the other reason organizations implements indirect cost allocation method (Flamholtz, 2012). It is through knowing how to use company resources and making it known that there are costs associated with those resources an organization limits the demand for the limited resources. Allocating the costs associated with various service departments within an organization enables management to create a clear idea of the...
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...Cost Accounting Systems A cost accounting system (also called product costing system or costing system) is a framework used by firms to estimate the cost of their products for profitability analysis, inventory valuation and cost control. There are two main cost accounting systems: the job order costing and the process costing. Traditional costing system calculates a single overhead rate and applies it to each job or in each department. Activity-based costing on the other hand, involves calculation of activity rate and application of overhead costs to products based on their respective activity usage. Companies may be moved to adopt ABC by a need to improve costing accuracy, that is, understand better the true costs and profitability of individual products, services, or initiatives. ABC gets closer to true costs in these areas by turning many costs that standard cost accounting views as indirect costs essentially into direct costs. By contrast, standard cost accounting typically determines so-called indirect and overhead costs simply as a percentage of certain direct costs, which may or may not reflect actual resource usage for individual items. Under ABC, accountants assign 100% of each employee's time to the different activities performed inside a company (many will use surveys to have the workers themselves assign their time to the different activities). The accountant then can determine the total cost spent on each activity by summing up the percentage of each worker's...
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