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Management Accounting has become an integral part of any business organisation. Management Accounting helps in determining the overall cost of production accurately so that pricing strategies can be prepared for a particular product. One of the most important factors that should be considered while assigning a price to particular product service is apportionment of overhead cost. Overhead cost are the costs that are not ...
Importance of the accurate product costing
While the finance of the company is calculated, the accuracy plays major role in filing the tax as well as for financial statements. each component from the financial statement will have impact on the overall financial position of the company. Inaccurate reports or incorrect computations will lead to legal problems regarding the filling of tax and significant concerns of the audito...
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The management of an organisation is entrusted with the one of the most important parts of decision making which is product costing. Determining the cost of a product is one of the most complicated tasks. It is important that decision be taken taking into considerations all the factors. Taking a wrong step might end up affecting the financial viability of the whole organisation. (Atkinson, 2012)
The company, Beztec ...
Traditional system of costing and its disadvantages
In the traditional costing method, there is a pre determined rate that is calculated based on a particular factor such as machine hours or labour hours. This rate is charged among all the products that are produced by the company (Boyd, 2013). However, if there is existence of any kind of joint costs then such costs is allocated to all the products so that unit cost of each product i...
This section deals with understanding the concept of Business Intelligence. As a management accountant, it is needed to recommend about implementation of business intelligence software for the given business organization (Wu, Chen & Olson, 2014). The boss and the Finance Director had asked the Management accountant to conduct some research on the potential impact of Business Intelligence on the accounting functi...
Costing system based on job order is mainly used by manufacturing business for evaluating total number of products produces in a single batch and it is used extensively. Allocation of costs becomes difficult for companies, job for different products and orders needs to be determined. Computation of expenses per unit is done by cost that is allocated to any particular job divided by number of unit produced in the job (Christ and Burritt...
Statement of Cost- Traditional Approach
Units produced and sold
Direct Material cost per unit
Importance of accurate product costing:
Product costing is an integral function of system of costing. It involves determining of all the expenses of the business incurred during the production and sales process. Determination of cost of a particular product is an important function which is usually performed by the management accountant of the company (Pennanen, Ballard & Haahtela, 2010). To calculate the overall cost ...
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