country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Cost Behave In Management Accounting

tag 0 Download6 Pages / 1,334 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss about the Cost Behave in Management Accounting.
 
 

Answer:

Introduction:

Cost behave in two basic way in cost accounting. With the increase in output, either the cost of products increases or the cost remains indifferent regardless of level of output. Variable cost may be defined as the cost that varies with the level of output produced. For example, labor and raw material requirement in producing the output. Corporate expense is regarded as variable cost and they fluctuate with output level. Depending upon the volume of production of organization, variable costs varies. With the increase in level of output, the variable costs increases and they fall with the fall in level of output.

There is a significant difference between variable cost and fixed cost as the later remains unchanged irrespective of level of output produced. Fixed cost within an organization is rent, office suppliers and insurance. Total costs comprised of fixed as well as variable costs.

A project can be completed and the necessary factors incudes variable costs that may involve direct labor costs or direct material costs. The packaging of the product o company involves the variable costs, as the coast would vary depending upon the number of packages. Cost of packaging of the product would increase if the company increases the volume of products it is producing. On the other hand, there would be a fall in cost of packaging if the fewer products were sold.

Discussion:

Fixed costs are such costs that must be incurred by the company whether the products are produced or not. Over the range of production or specified period, the fixed cost remains fixed. With the increase or decrease for products produces and sold, the fixed costs remains unaffected. It is incurred even if the company is having zero production. Regardless of the business activities of the company, they have to incur and pay fixed costs. Along with the variable costs, fixed costs is also regarded as one of the component of total costs.

Irrespective of level of production, it is not possible for the business to avoid fixed costs, as it is an operating expense. Break even analysis usually make use of fixed costs that is used to determine the production level, pricing and sales (Otley & Emmanuel, 2013). It is regarded as the level of costs under which the company does not make profit nor it incurs loss. The total cost structure of company is decomposed into total fixed costs and total variable costs. An organization is able to ensure its level of profitability with the help of its total cost structure.

The total amount of revenue required by the company so that the total variable and fixed costs expenses are covered is determined by break-even point during specified time. Revenues can be stated in different measurement such as it can be measured by delivering the services in hours or it can be stated in units. The level of output at which the total cost of doing the business or costs involved in producing the output is exactly equal to the total amount of revenue earned by the business is the break-even point (Kaplan & Atkinson, 2015).  An organization can calculate the sales revenue by multiplying the price of the products by the number of level of output produced. Such calculation can be done at any level of output produced. A company uses assumption for calculating the break-even point that change in revenue is associated with the change in level of sales. However, such assumption may not hold true in some of the cases because, it is certainly possible that company will have varying degree of profitability due to the diversion of products. For grabbing the attention of customers and with the variation in demand, the company may diversify the customers. There are many reasons that is attributable to increase in the selling expense and it may increase due to selling the products in diversified market and not due to selling expense arising from the additional unit production. It is the reason that the selling price in two different markets will be different.

 

The market price of security is exactly equal to the costs at the price level that is determined by using the break-even analysis. In the event of trading options, buyers of option is reached at the option providing using the break even analysis and it is the price that must be reached by buyer for buying the options for avoiding loss if the options are exercised by them. Premium paid and the exercise price determines the breakeven point for a byer buying call option. On the other hand, the break-even point for buyer of put position is determined by subtracting the premium paid from the strike price.

For purchasing the right to sell or buy the particular stocks at a specified time, options are exercised by investors. It is required by investor to become aware of the market price and whether they are generating loss or gain. Therefore, break-even is considered important to investors as it helps them with the investment decisions.

Subtracting all the associated variable costs form the price of products gives the contribution margin and for each unit of products sold, the result is incremental profit. The total earning available for generating the profit and paying the fixed expenses is given by the total contribution margin. In situation of special pricing, the decision to allow a lower pricing is determined by contribution margin. It would not be wise for the organization to sell the product at price where the contribution margin is negative or excessively low. The concept of contribution margin is applicable in many areas and it includes profit center, subsidiaries, product line, customer sales and distribution channel.

The contribution margin can be obtained by deducting the total variable costs from the revenue generated by the net revenue. The variable cost of any products involves cost of direct raw material and sales commission for selling the products. The contribution margin ratio is expressed as percentage and it is the difference between sales and variable expense. 

Analysis:

In association with team logos, Kincaid Company sells flags. The company has a variable cost expense of $ 4.20 per flag and the total fixed costs stands at $ 639600. Hence, the price of each flag to be sold is $ 12.00. It is point, which is, pre-determined at which the investor would exit the market if it were in profitable position. KinCaid Company sells flags at the breakeven point of 82000 flags and this is considered as the target of the company products to be sold every year. The target profit is compared with the actual income generated a n depicted in the income statement and it is obtained from the process of budgeting. The formal for calculating the target profit is obtained by deducting the variable as well as fixed costs from the net revenue.

It is required by Kincaid to make sales worth $ 1034000. It is obtained by adding up the target profit with the fixed costs and then dividing into the contribution ratio. The result of unprofitable operation of company is recorded and depicted in the contribution margin of the income statement for the year ending 31st December 2016. The data depicts sales revenue of $ 900000, fixed cost of $ 639600, variable cost of $ 315000, operating loss of $ 54600 and contribution margin of $ 585000. Effect of taxes, interest expenses and interest income is not considered in the operating loss. However, in some cases expenses concerning depreciation might be included. A company would require external financing if it is consistently generating operating losses. Whether the core operations of the company is profitable or not is indicated by the operating loss. It is therefore required to either decrease the costs or increase the revenue. For some startup companies, operating loss is expected as they attempt to grow their business on faster pace.

 

Reference:

Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.

Otley, D., & Emmanuel, K. M. C. (2013). Readings in accounting for management control. Springer.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Cost Behave In Management Accounting. Retrieved from https://myassignmenthelp.com/free-samples/cost-behave-in-management-accounting.

"Cost Behave In Management Accounting." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/cost-behave-in-management-accounting.

My Assignment Help (2018) Cost Behave In Management Accounting [Online]. Available from: https://myassignmenthelp.com/free-samples/cost-behave-in-management-accounting
[Accessed 06 July 2020].

My Assignment Help. 'Cost Behave In Management Accounting' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/cost-behave-in-management-accounting> accessed 06 July 2020.

My Assignment Help. Cost Behave In Management Accounting [Internet]. My Assignment Help. 2018 [cited 06 July 2020]. Available from: https://myassignmenthelp.com/free-samples/cost-behave-in-management-accounting.


For years, MyAssignmenthelp.com has been operating as one of the cheap assignment help providers in the USA. We are one of the best college paper writing services that keep service price minimal. We do not let the affordability of our service to hamper the standard of our work. We have separate teams of experts to provide report writing help . At MyAssigenmnthelp.com, we believe in earning credibility, so students can pay for assignments only after getting satisfied solutions. Tough assignments bother you? Trust us with your project. You will not regret paying us to write assignments for you.

Latest Accounting Samples

ACG315 Accounting And Finance For Fluctuating Revenues And Company Size

Download : 0 | Pages : 3
  • Course Code: ACG315
  • University: University Of Bedfordshire
  • Country: United Kingdom

Answer: Task One The change of taxation rules and regulation of conventional and statute laws have always confused willing, compliant firms. Different stakeholders take part in helping the companies adapt to the new changes. The actualization of this checks and balances lower down to the firm accountant. He, therefore, deals with the confusion at a more significant level.  We, therefore, discuss the confusing issues and the role of the a...

Read More arrow Tags: Australia Homebush Management Java - Car Parking Management System University of New South Wales Humanities 

SBLC4003 Business Accounting

Download : 0 | Pages : 11
  • Course Code: SBLC4003
  • University: University Of Wales Trinity Saint David
  • Country: United Kingdom

Answer: Introduction: Every entity has to prepare the financial statements, on a regular basis, to communicate the financial results of the business operated by it. These financial statements contain the summarised information expressed in financial terms about all the transactions and events that are entered into during the course of business. All the financial information that helps the readers to assess the financial health of business of ...

Read More arrow

ACC510 Financial Statements Analysis For Contingent Assets And Contingent Liabilities

Download : 0 | Pages : 7

Answer: Introduction The issue that is presented is that the accounting statements of Billabong  International Limited should has been asked to be analyzed in order to determine the fact whether the accounting reports are prepared in compliance to the prescribed standards for the purpose of determining the reliability of the accounting statements. The financial report of the company is analyzed to discuss the important points that are me...

Read More arrow Tags: Australia Toowoomba Management Java University of New South Wales 

HA2032 Corporate And Financial Accounting 9

Download : 0 | Pages : 12

Answer: Introduction: The report is prepared to address different requirements by referring to the financial report of selected company listed on ASX. A detailed analysis of the financial statements for two consecutive financial periods have been presented. Amor limited has been chosen to critically evaluate the different aspects of the financial statements. Report demonstrate the understanding of the capital structure and different sources o...

Read More arrow Tags: Australia 5 Corporate and Financial Accounting Holmes Institute 

MAA319 Estate Planning And Insurance

Download : 0 | Pages : 15

Answer: Introduction The role of the adviser has been to provide the client with the financial advice and planning in order to gain their financial goals and objectives and enhance their wealth for the customers by exploiting their strategies that would be out of the scope of the client. The financial plan would be including your details and facts which would be helping me to formulate appropriate advises for the products which is to be sugge...

Read More arrow Tags: Australia 5 Estate Planning and Insurance Deakin university 
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,356,327

Orders

4.9/5

Overall Rating

5,080

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 4/5

2594 Order Completed

95% Response Time

Michael Johnson

Masters of MSc in Economics

Washington, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

285 Order Completed

99% Response Time

Eugene Baranowski

MBA in Supply Chain

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

93 Order Completed

100% Response Time

Jackson Mitchell

MiM (Masters in Management) in Supply Chain Management

New Jersey, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1896 Order Completed

95% Response Time

Herman Berens

MSc in Psychology

London, United Kingdom

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

Thank you for submitting this order in a timely manner, the work was of quality but for the future please do tell your expert to note all the requirements in the order. This is just a minor comment

flag

User Id: 348179 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

I got good feed back from my tutor, will great mark. I will recommend to this service to others

flag

User Id: 370450 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

I would like to know which is my thesis statement and what the argument is on this essay

flag

User Id: 418392 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

Accurate in time, excellent writing, I was stuck on that module and couldn\'t do it. Thankfully, MyAssignmentHelp exists and I gave them the task and completed the assignment on time. Thanks:)

flag

User Id: 417440 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?