END OF SEMESTER EXAMINATION MANAGEMENT ACCOUNTING

The central management gives the general bearing and procedure, however, a lot of choice making is designated to the section administration. It is critical to effectively screen their execution, which is measured by management accounting tools, for example, residual income, accounting rate of return, return on investment, and so on. By dissecting these measurements, the concentrated administration chooses whether to put in extra interest in a fragment in light of its fabulous execution or to strip from a section when it is losing cash. These instruments are additionally valuable in looking at execution of changed supervisors and in numerous organizations their compensation is connected to the ROI or leftover wage, they

“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities

Our treatment of job costing and process costing is as brief as we can make it and still get the general points across. Students do need to understand the general idea of these cost accumulation procedures; otherwise they are unable to visualize how costs are actually collected. The details, however, are appropriately left for an advanced course. The principal pedagogical problem here is how to get across the idea of equivalent production in process costing.

| (TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?

Muddled is an ACFI2003 student and as many others has problems with several aspects of the course including a fundamental principle, the differences in the costing systems and cost management systems. The purpose of this essay is help Muddled understand the fundamental costing principle that management systems should reflect the fact that different costs are relevant for different purposes, and how this principle affects the way that job costing and process costing systems are designed. Along the way several costing concepts will be explained and laid out for Muddled to understand in a more simplified method. The axiom will be covered first with particular reference to the costing systems, the differences between the job

3. Measured performance was based on managers ability to control cost above. System gave managers information consistent with objective they were given.

Costing systems are information systems that help companies determine the total production cost of the goods and services they produce over a period of time. There are two commonly used systems of costing companies apply to determine their total cost of production in relation to their revenue for a period. These are; the traditional or conventional system of costing, and activity-based costing (ABC). The method or system of costing to use depends on the needs of a company and its management decisions.

They require some particular information like units produced and direct labor hours to be essential and valued. From the input data, product costs as well as other information is determined in accordance to the particular costing system. The results obtained are dependent on the costing system applied as similar data can be used in various ways. Costing systems provide information to assist in minimizing wastes i.e. the resources required in designing, implementing and maintaining a costing system should not exceed the benefits derived from use of the system. A proper understanding of the working of both systems is necessary when comparing the two systems.

Costing helps an organization to establish the cost of goods with the help of the revenue it generated . the two main types of costing method used by any organizations are traditional costing method and activity based costing method , traditional costing assigns manufacturing overhead based on the quantity of a cost driver such as duration required inorder to produce a product . a cost driver is a aspect that

Cost and management accounting is an integral element in preparation of an entity’s financial reports. Cost accounting consists of various branches, including; job and process costing, absorption costing, traditional costing and activity based costing. An efficient costing system allows managers and other users of financial reports to make decisions to better the company, in reducing and streamlining costs, to improve overall profits. The way in which managers achieve this can be a rigorous and time consuming task, however, if a costing system can be perfected, productivity and general cost reduction can be achieved and an overall more efficient operation of the business will ensue. This essay will critically discuss factors in which a business consider in deciding on a costing system to implement and operate when establishing a costing system. In this article I will describe the different methods of costing, explain why I believe activity based costing is the most efficient method, and provide a real world example to support my claim.

In today’s business world, there is much debate about the future of standard costing and the determination of the system becoming obsolete. With some academicians making it clear that this method is inappropriate in a modern manufacturing environment, many others are still using this system. These systems are designed to properly allocate costs of direct labor, indirect labor, materials, overhead, and selling/ general/administrative accounts on a unit basis for the purpose of accurately costing products and the subsequent control of those costs in managing the production, marketing, purchasing, and administrative functions of the business. Even though these systems are still widely popular and used for many US manufacturing firms there is still much controversy surrounding these systems in deciding if the systems are the most effective or are useless? In fact, since the early 1980s standard cost systems (SCS) have been under attack as not providing the information needed for advanced manufacturers (Hansen and Mowen, 2013). The explanation of this claim is that standard costing does not meet the needs of business because of the introduction of advanced manufacturing technologies, shorter product life cycles, decreasing emphasis of labor cost in the total production costs, and intense global competition. However, with 74 percent of respondents verifying that they were using standard costing systems still and that it is the best method out there as of right now, a

A survey in “Cost and Management Accounting Practices..” in the Management Accounting Research Centre indicate that job order costing is the primary method of costing in the following industries:

The objective of this note is to analyse the costing system used by our company. This article is specified in the following aspects: explaining why direct labour hour is not an appropriate basis for assigning overhead in traditional costing system, identifying the key drivers of manufacturing overhead, discussing pros and cons of using activity-based costing system and giving recommendation on product pricing.

In the world of accounting, cost accounting serves as managers go to system for cost information. As previously mentioned, cost accounting is a specialized subset of accounting that collects, determines, classifies, and interpret the cost of products or services. In addition, the concepts of cost accounting are to account for the incurrence and control of cost and measure the operating efficiency of a company on a periodical basis. “Cost accounting, as defined here, deals with the rest when, and if, such measurement helps management drive the organization to work better and cost less.” (Geiger, 1995, pg. ).

Submitted in fulfillment of the requirements for the 3rd SEM MBA Management Accounting and Control Systems