Costing Systems Essay: Job And Process Costing, Joint Costing, Variance Analysis, And Budgeting.

Task

Your assignment consists of different question styles including discussion questions, reports, exercises, problem questions and spreadsheet questions. It assesses learning outcomes as listed in the assignment rationale below.

The purpose of this assignment is to continue to develop skills in costing systems with an emphasis on the role of control in managing the production of goods and services efficiently in the workplace. Each question builds on the knowledge gained through the first assignment to develop the concepts of management accounting control through costing. Each question uses realistic data and professional practices similar to that found in workplaces.

A. Create a handwritten/manual solution AND a spreadsheet solution to the following problem. Follow the template provided.
Play the Job cost podcasts and work through the example problem in those podcasts. Create a spreadsheet solution showing the row and column headings and the formula view. Your report section should be completely formula driven. Scan or use your phone to copy and paste an image of your handwritten attempt into your assignment. If using a smart phone, consider using a free scanning app such as Camscanner, Office Lens or Google Drive or search for an app. Let us know which app you chose.

Design your spreadsheet to meet the assignment requirements set out above.

B. Management accounting and history:

Taking the Great Pyramid of Giza as an example, describe how modern cost management accounting could be applied to a current attempt to recreate this structure. Be creative in your discussion

Create a handwritten/manual solution AND a spreadsheet solution to the following problem. Scan or use your phone to capture an image and paste a copy of your manual solution in your assignment submission. Consider using a smart phone scanning app. Also paste a spreadsheet solution showing the row and column headings and the formula view. Your report should be completely formula driven.

Design your spreadsheet to meet the assignment requirements set out above.

Review the four process costing videos provided in Interact Resources. Note that in the situation below there are two production departments.

Create a handwritten/manual solution AND a spreadsheet solution to the following problem. Scan or use your phone to capture an image and paste a copy of your manual solution in your assignment submission. Also paste a spreadsheet solution showing the row and column headings and the formula view. Your report should be completely formula driven.

Design your spreadsheet to meet the assignment requirements set out above.

Joint cost allocation: additional processing beyond split-off point
In a certain production process 100 000 kg of a single raw material were processed at a cost of $250 000. At split-off two intermediate products, A and B emerged, weighed as 60 000 kg of A and 40 000 kg of B. A was processed further at a cost of $45 000 to produce C, and B was processed further at a cost of $25 000 to produce D. C sold for $4.50 per kg.

(a) If A was allocated $187 500 of the joint production costs under the net realisable value method, what was the selling price of D?
(B) Suppose the firm receives an offer to buy all of product A for $2 per kg at the split-off point. Would the firm be better off selling A or processing further to produce C? By how much?

Create a handwritten/manual solution AND a spreadsheet solution to the following problem. Scan or use your phone to capture an image and paste a copy of your manual solution in your assignment submission. Also paste a spreadsheet solution showing the row and column headings and the formula view. Your report should be completely formula driven.

Design your spreadsheet to meet the assignment requirements set out above.

1. a) Calculate the materials price variance (on purchase) and materials usage variance.
   b) If the total direct labour variance was $1,950 unfavourable, what was the actual direct labour rate per hour?
   c) Journal entries to record materials and labour transactions for the period.
   Answer the requirements using both a manual and spreadsheet solution. In your spreadsheet, include the IF function to determine Favourable and Unfavourable variances.

B. Prepare a Business Report as if for senior management critically evaluating the purpose of variance analysis and other areas in an organisation where variance analysis would be useful and the practical relevance of detailed overhead variance analysis.

Create a handwritten/manual solution AND a spreadsheet solution to the following problem. Scan or use your phone to capture an image and paste a copy of your manual solution in your assignment submission. Also paste a spreadsheet solution showing the row and column headings and the formula view. Your report should be completely formula driven.

Design your spreadsheet to meet the assignment requirements set out above.

A. Financial model to forecast Income Statements for 5 years.

From the following information prepare a financial model that would produce budgeted income statements and statements of retained earnings for the 5 years 20X2 to 20X6 for Unique Traders Ltd. All necessary calculations should be performed by the computer.

Unique trades in one product only. In 20X1 sales were 30 000 units and volume is expected to increase by 8% each year (compound) to a maximum of 40 000 units per year.

Unit selling price in the years 20X2, 20X3, 20X4 is expected to equal the unit cost of purchases made in the year, marked up by 30% whilst in 20X5 and 20X6 the mark-up is expected to be 35% on purchase cost.

Unit purchase costs for the 5 years are estimated at 20X2 $5.10, 20X3 $5.36, 20X4 $5.68, 20X5 $6.02, 20X6 $6.50.

Closing inventory is to be 15% of estimated sales units for the following year. Closing inventory for 20X1, however, was only 3600 units valued at $17 640. Assume a FIFO cost flow.

General and administrative expenses are expected to equal 14% of sales revenue in each year.

The tax rate is expected to be 40%.
Provide for dividends equal to 65% of after tax profit.
Retained earnings at the end of 20X1 amounted to $3500.

B. How can budgeting be viewed as a political process? (5 marks)

Find a cartoon/comic strip image on the Internet to illustrate your discussion. Explain the relevance of this image to your answer.

A: 

There exists a huge difference in the construction of the great Pyramid of Giza during its establishment 4500 years ago. The establishment of the pyramid involved the use of conventional approaches that included various stages like the planning, execution, initiation, designing and closing. During the construction of the great pyramid, certain limitations were there that included cost, mechanisms and the resources (Tucker, & Schaltegger 2016). The implementation of the new cost management accounting process would lead to a variation in the difference within the techniques used for the purpose of construction along with the termination of limitations discussed earlier.

In this respect, which is in relation to the construction of the great pyramid, the implementation of the process costing would be ideal. It would be helpful for the segregation of cost that would assist in handling the cost of construction. The cost per unit of the products has been estimated to be the cost that is similar to the cost found to be in processed costing. The processed costing is dependent on the standard cost that is helpful when a wide range of products is manufactured (Voußem et al., 2017). The construction of the pyramid would become very complicated without explaining the real cost that is associated. Nevertheless, the introduction of the processed costing would be helpful in allocating the real cost of the product.           

 Computation of Equivalent Units:

Cost per Equivalent Units:

Cost of Finished Goods and Closing Stock:

The net profit, earned in general circumstances, are computed below:

However, if the company sells product A for $2 per kg at the spilt-off point, the the outcomes of the business operation would be as follows:

As the company would incur huge loss in this new scenario, it should process product A further instead of selling it outside.

The process of variance analysis refers to identifying and recognising the case of variance in the expenditure and income of the values that are budgeted from the values of the present year. The factors that have led to the arrival of the fluctuations in the budgeted amount is recognised with the help of the variance analysis. Furthermore, it aids to effective budgeting operations eventually. The potency of the control mechanism is analysed by undertaking such assessments that aids the management in coming up with ideas that would assist in restricting such divergences (Alawattage et al., 2017). It aids in assisting during the allocation of the responsibilities, which makes the departments occupied with the control methods.    

The evaluation of the variance is regarded a vital equipment in business management and is pertinent in the management accounting method. It aids in evaluating the reason for deviation among the anticipated and the real values that aids in enhancing the efficiency and in that manner assists in maintaining the command over the expenditure of the project by efficient supervising of the planned versus and the real expenditure. The various issues, opportunities and the patterns with respect to the short-term and the long-term accomplishment for any venture of the company are discovered with the help of efficient variance evaluation. It aids in determining the variances of cost and revenue.   

1 Job costing

The quantitative examination has been significant in several other locations like the assessment of the performance, human resource department and organizational behaviour. It aids in giving out open communication regarding the feedback expectation and the performance of various other departments. The financial end result of the company is associated directly with the performance of the human resource and the variance assessment aids in creating the relationship between the changes in numerous departments (Van der Stede, 2015). The implementation of the variance analysis aids in evaluating the responses of the employees in several aspects that will assist in achieving the feedback. The managers at several levels functioning in various departments utilise the variance evaluation that aids them in introducing the efficient mechanisms and equipments of managing the costs. They look to obtain the maximum level of benefit from the variance of material usage.

A:

Workings:

B: 

The construction of the budget in the company requires to be undertaken in order to make sure that it inserts into the regulations and the policies of the government. It is essential to choose the cost efficient variants during the construction of the budget. There are four crucial proportions are associated in the method of formulation of the budget (Klychova et al., 2015). The budget integrates assigning the resources in a strategic manner and manages the expenses aggregately. The means of political demands requires to be persistently applied for enhancing the revenue estimations that aids in toughening the connection among the budgetary policies and the expenses. During the time of carrying out the budget, it is essential to consider certain political factors and the required information that is lacking (McLaren et al., 2016). The preparation of the budget on the core ventures is associated and is dependent on the enhanced political assistance of the company. A company is always financially and politically answerable as both of them are interconnected with each other. The flaws in the preparation of the budget depend on several political factors and with respect to government, the preparation of the budget is considered as the political method. The budgetary evaluation by the government is constructed while looking at the fiscal and the monetary policies (Grunewald et al., 2014).  

The budget proposal is a communalist program as explained in the figure above. As various departments of a company are associated with the construction of the budget, it is definitely possible that there can be changes in the anticipated figures that might be for their own interest and not providing the purpose of the organization (Bouten, L., & Hoozée 2013). The significant ingredients associated in the construction of the budget are significantly related with the decision making power of the company.

References

Alawattage, C., Wickramasinghe, D., & Uddin, S. (2017). Theorising management accounting practices in Less Developed Countries. The Routledge Companion to Performance Management and Control.

Bouten, L., & Hoozée, S. (2013). On the interplay between environmental reporting and management accounting change. Management Accounting Research, 24(4), 333-348.

Grunewald, K., Syrbe, R. U., & Bastian, O. (2014). Landscape management accounting as a tool for indicating the need of action for ecosystem maintenance and restoration–Exemplified for Saxony. Ecological Indicators, 37, 241-251.

Klychova, G. S., Zakirova, A. R., Zakirov, Z. R., & Valieva, G. R. (2015). Management aspects of production cost accounting in horse breeding. Asian Social Science, 11(11), 308.

McLaren, J., Appleyard, T., & Mitchell, F. (2016). The rise and fall of management accounting systems: A case study investigation of EVA™. The British Accounting Review, 48(3), 341-358.

Tucker, B. P., & Schaltegger, S. (2016). Comparing the research-practice gap in management accounting: A view from professional accounting bodies in Australia and Germany. Accounting, Auditing & Accountability Journal, 29(3), 362-400.

Van der Stede, W. A. (2015). Management accounting: Where from, where now, where to?. Journal of Management Accounting Research, 27(1), 171-176.

Voußem, L., Kramer, S., & Schäffer, U. (2017). ANNOUNCEMENT DAVID SOLOMONS PRIZE Sponsored by CIMA.