CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-1The budgeting cycle includes the following elements: a.Planning the performance of the company as a whole as well as planning the performance of its subunits. Management agrees on what is expected. b.Providing a frame of reference, a set of specific expectations against which actual results can be compared. c.Investigating variations from plans. If necessary, corrective action follows investigation. d.Planning again, in light of
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Nicholas Kirkman W915684 Cost Accounting Ethics Project Behaving ethically is an important part of management, at any level, and four major factors are key to ethical management. The first factor, competence, requires management to maintain an appropriate level of professional competence by ongoing development of their knowledge and skills. This ensures that management is skilled at what they do, and will continue to develop their skills as they progress along the company ladder. Confidentiality
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Limitations of historical cost accounting Financial statements prepared on the historical cost basis do not necessarily lead to a true and fair presentation of an entity’s performance or future potential if capital is not being maintained. Furthermore, actual assessment of performance through ratios such as return on capital are meaningless if profit are overstated, capital undervalued, and assets are valued under a mixture of conventions. Limitations of historical cost accounting include : • Depreciation
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Objective 1: Describe the building-block concepts of costing systems. 1. LO 4-1 overview: The building-block concepts of a costing system are cost object, direct costs of a cost object, indirect costs of a cost object, cost pool, and cost allocation base. Costing systems should report cost numbers that reflect the way chosen cost objects, such as products or services, use the resources of the organization. 2. Study pages 98-100. 3. LO 4-1 lecture slides
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➢ Process Costing – the method of assigning total cost to many identical or similar units. Each unit receives the same or similar amounts of direct material costs, direct labor costs, and indirect manufacturing costs. Unit costs are computed by dividing total costs incurred by the number of units of output from the production process. The main difference between process costing and job costing is the extend of averaging used to compute unit costs of products or services. o Focus on
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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
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Chapter three discusses Job-Order Cost System. According to Dr. Zaidi provided PowerPoint slides, Job-Order System Costing is used to produce large, unique, high cost items and are made to order. Particular cost order system is not used for mass production and most of the costs could be allocated to each job order. Using this cost system, costs are accumulated for each job order, so each job order has separate record that gets produced in the same factory; however, this cost system is not limited to be
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Historical Cost accounting Historical cost accounting has been a controversial method that experienced many criticisms over a period of time, especially since it considers the acquisition cost of an asset and does not recognize the current market value. Merits and demerits of this method are as follows. The most obvious advantage of HC accounting is objectivity. It is a predominantly objective system, which records the original cost of an item when it was purchased. Under historical cost accounting
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present as your own. This is only meant as a solutions guide for you to answer the problem on your own. I recommend doing this with any content you buy online whether from me or from someone else. PROBLEM 2–21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [ LO2 , LO3 , LO4 , LO5 , LO6 ] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries 110,000 Purchases of raw materials 290,000 Direct
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Need Answer Sheet of this Question paper, 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
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