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

Directly Incurred In Manufacturing Product

tag 0 Download6 Pages / 1,412 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT


Discuss About The Directly Incurred In Manufacturing Product?




a) Flexible budget is a budget where the budgeted costs differ for different levels of activity. The expenses of a business are classified into variable, semi variable and fixed costs with utmost accuracy as the importance of the budget depends upon the accuracy to which the costs have been properly classified. Flexible budget helps in identifying the deviation of the actual costs of the actual quantity from the budgeted costs of the actual quantity(Hilton & Paltt, 2016) .This is very important for cost control as the reason of the deviation of actual performance from the planned performance can be known. For example, management has prepared a budget for production of 2000 units of product A as follows:


Standard Budget

Flexible budget






Variable costs ($10 per unit)




Fixed cost




From the above we see that the actual deviation of variable costs has been an excess of $2000 over budgeted. If we were to go by standard budget, the deviation would be favourable $3,000 which is unrealistic.

Flexible budgets overcome the shortcoming of the static budgets in performance evaluation. Under static budget, the actual results are compared to the budgeted ones irrespective of the level of sales. So if the sales volume increase, the corresponding variable costs are bound to increase, however, static budget does not consider this. Flexible budgets increase the budgeted costs with an increase in the volume of sales and thus provide for a more realistic performance evaluation thus eliminating the scope of volume variances.

b) Before a cash budget is prepared, the budgets that need to be prepared include Sales budget, Materials budget, and Selling and expenses budget. The likely timing of the cash flows and their impact on the cash budget is discussed below:

i) Sales budget – this is the first budget and depending on the sales forecasted, other budgets follow. The sales budget will increase the cash flows as the revenues will result in receipts. The timings of the cash flow depend on the collection policy of the company. If sales are made for cash, the cash flow will increase in the month of sale. For credit sales, the cash flow will increase in the month the cash is collected for the credit sales.

ii) Materials budget – depending on the production budget, the materials required to produce the required quantity is determined by the materials budget. The materials are purchased to be used in production and hence will result in outflow/disbursements in the cash budget. The cash outflow depends on the credit the company gets from its suppliers. For cash purchases, the month in which the material is purchased is effected and for credit purchases, the month in which the payment is being made is affected.

iii) Selling expenses budget – this budget results in cash outflow and hence will increase the cash disbursements in cash budget. The cash is normally paid when such expenses are incurred.

c) Operating cycle is the time required to acquire the inventory, sell it and receive cash from the customers for the inventory sold. A cash cycle is the time taken to release cash tied up in production and sales processes. Operating cycle and cash cycle can be used interchangeably however; operating cycle measures the operating efficiencies whereas cash cycle measures the effectiveness of cash flow management. Operating cycle is a sum of the day’s inventory outstanding and day’s sales outstanding whereas the cash cycle is the sum of day’s inventory outstanding and day’s sales outstanding less the days payables outstanding. A shorter operating and cash cycle means effective working capital management as the inventory is converted into sales and the sales are paid for in a shorter time period. Also the time taken to pay the suppliers is more than the time taken to receive payment. The various ratios that can be used in measuring the working capital efficiency include inventory turnover, receivables turnover and payables turnover. Inventory turnover is the number of times the company is able to turn its inventory into sales in a year. Higher the ratio, the better it is. Receivables turnover is the number of times a company can convert its receivables into cash during the year. A higher ratio means the receivables are fast moving and debtors are paying on time. Higher the ratio, the better it is. Payables turnover is the number of times the company is paying its average accounts payables in a year. Higher the ratio the better it is because this means the company is able to pay its bills on time and the ratio can be used to negotiate favourable credit terms for the company.

d) No, we do not agree that government organisations do not need accounting; rather it is important for these organisations to have transparency and uniformity in the financial data being reported. Accounting refers to recording all financial transactions and thereby interpreting, reporting and summarizing this data. The source of funding for these organisations is grants or taxes both of which are public money. The government uses this money to provide valuable goods and services to the public like roads, infrastructure, and other public amenities. The source and use of such funds should be properly recorded in the books of accounts to be reported to the public as the public would want to know where their money is being spent. The financial data can also be used by the government agencies for preparing annual budgets. Accounting helps to keep a check on the expenditures so that the expenditures remain within the limit of the budget as approved by the government also to ensure that the expenditures are made as per the rules, regulations and the legal provisions of the government. The accounting data can be used to prepare financial statements and various reports of use to the government and the public. The government organisations should use Generally Accepted Accounting Principles for accounting purposes.

e) A costing system is used by a company to accurately estimate the costs of the products in order to determine the selling price of the products. The system uses various cost control measures, reports, processes and forms to report on the revenues and a cost incurred for the product and therefore measures the profitability of the product. A costing system also helps in multiple product profitability analysis, comparison of budgeted and actual results, and accurate estimation of futura) Manufacturing overheads allocation rate for Wonder Products on the basis of machine hours.


Manufacturing overhead rate = total manufacturing overheads / total machine hours

= 598080 / 7000

= $85.44

b) Administrative overheads allocation rate for Wonder Products on the basis of direct labour hours.

Administrative overhead rate = total administrative overheads / total direct labour hours

= 695520 / 14000

= $49.68

c) Price to be quoted to Bushy for the wonderful creation is calculated below:



Direct material


Manufacturing overhead (400*85.44)


Administrative overhead (750*49.68)


Total costs


Mark up of 40% on total costs


Price of Wonderful Creation


d) It is important to carefully allocate overhead expenses to products for accurate pricing. The prices are determined on the basis of costs for products. Overhead expenses are not directly incurred in manufacturing the product rather these may relate to support services costs. Since the product is indirectly using such services, it is necessary to include these costs in the total product cost as it also helps in decision making.

The most common and old method of overhead allocation is traditional costing where the overheads are allocated to the products on the basis of a predetermined rate irrespective of the complexity of the activities undertaken to incur the cost. Hence, this method does not accurately allocate the overhead costs. Another costing method Activity Based Costing solves the problem by allocating overhead costs by dividing overheads into various activities and identifying cost drivers. On the basis of the usage of the various activities, the costs are allocated.

e) The companies use a predetermined rate rather than actual overhead costs in allocating overheads because these overheads are not directly incurred in manufacturing the product. Administrative and manufacturing overheads like salaries, rent, electricity, insurance are not incurred for production but are rather support services. Hence, these costs need to be allocated on a predetermined basis.



Hilton, R., & Paltt, D. (2016). Managerial Accounting: Creating Value In a Dynamic Business Environment. Australia.

Weygandt, J., Kimmel, P., & Kieso, D. (n.d.). Managerial Accounting: Tools for Business Decision Making, 7th Edition. Australia: Wiley.


Cite This Work

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

My Assignment Help. (2018). Directly Incurred In Manufacturing Product. Retrieved from

"Directly Incurred In Manufacturing Product." My Assignment Help, 2018,

My Assignment Help (2018) Directly Incurred In Manufacturing Product [Online]. Available from:
[Accessed 03 June 2020].

My Assignment Help. 'Directly Incurred In Manufacturing Product' (My Assignment Help, 2018) <> accessed 03 June 2020.

My Assignment Help. Directly Incurred In Manufacturing Product [Internet]. My Assignment Help. 2018 [cited 03 June 2020]. Available from: is an Australia-based assignment help services that aims to fulfill students' requests 'can someone do my assignment online'. We have hired best-qualified and experienced assignment helper to assist students in crafting premier quality academic papers. Students are guaranteed to receive high-quality assignment writing assistance at an affordable price. This is why, we are considered as the best assignment solver.

Latest Accounting Samples

HA3011 Advanced Financial Accounting 6

Download : 0 | Pages : 10

Answer: Part A Based on the application of the conceptual framework usefulness of the financial information is considered with the application of factors such as “comparable, verifiable, timely and understandable” nature of the financial reporting. The relevance factor is associated to the making a difference in the decisions which relate to the economic theories. It has been further seen that the financial information is needs to...

Read More arrow

HI5020 Corporate Accounting And Annual Reports

Download : 0 | Pages : 8

Answer: Introduction: Evaluation of financial figures, expenses, liabilities and assets of an organization is mandatory to evaluate the position of the company and the rules and regulations which have been followed by the company while preparing the financial reports of the company. In this report, annual report of The Citadel Group Limited has been evaluated and the tax expenses, current tax assets and tax payable amount of the company has b...

Read More arrow

ACC305 Assurance And Attestation System

Download : 0 | Pages : 5
  • Course Code: ACC305
  • University: Elite Education
  • Country: Australia

Answer: Introduction: In the provided situation, it can be seen that Mortdate Accounting firm has provided all the papers related to the audit of many public companies to Penshurts Accountants.  APES 110, Confidentiality, 140 states that it is the obligation on the auditors that they cannot disclose the confidential information of the audit clients acquired at the time of providing professional services. For this reason, by providin...

Read More arrow

BUS103 Accounting For Managers : Team Assignment

Download : 0 | Pages : 4

Answer: Introduction: Different stores of JB Hi-Fi offer various types of electronic products; like leading brands of computers, TVs, Tablets, Speakers, Cameras, HI FI, Car Sound System, Home Theatre Sound System, Portable Audio systems and others. In addition, the company also offers various ranges of DVDs, games, Blu Rays, TV shows and others at cheap prices ( 2018). JB Hi-Fi measures their revenue based on fair value of the r...

Read More arrow Tags: Australia Robertson Management Dispute Management  University of New South Wales 

HA 3011 Advanced Financial Accounting Statements

Download : 0 | Pages : 10
  • Course Code: HA 3011
  • University: Holmes Institute
  • Country: Australia

Answer: Introduction: Bell Financial Group Limited Company has been given to make the analysis of the annual report of the company. The company is Australia based and listed on the stock exchange of Australia. The company is in into the business of broking, financial and advisory related services. For the purpose of the analysis of the impairment testing the company’s annual report of the company for the financial year ending 2016 has b...

Read More arrow

Save Time & improve Grade

Just share Requriment and get customize Solution.

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




Overall Rating



Our Amazing Features


On Time Delivery

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


Plagiarism Free Work

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


24 X 7 Live Help

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


Services For All Subjects

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


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 5/5

1758 Order Completed

99% Response Time

William Martinez

MS in Biology

Washington, United States

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

440 Order Completed

99% Response Time

Jack Arens


London, United Kingdom

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

2279 Order Completed

97% Response Time

Zachary Perez

PhD in Computer Science and Information System

Washington, United States

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

755 Order Completed

95% Response Time

Douglas Cowley

Masters in Finance with Specialization in Audit

Wellington, New Zealand

Hire Me

FREE Tools


Plagiarism Checker

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


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

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


Chemical Equation Balancer

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


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




Your Approx Earning

Live Review

Our Mission Client Satisfaction

Great work given the time that the assignment was required. Premium is the way to go.


User Id: 434326 - 02 Jun 2020


student rating student rating student rating student rating student rating

Not much of an issue because the tutor\'s expectation was not very high in the end.


User Id: 321826 - 02 Jun 2020


student rating student rating student rating student rating student rating

Markers noted some spelling errors and actually weak comparison in the report, it somehow scored a nice grade and I\'m fine with it.


User Id: 321826 - 02 Jun 2020


student rating student rating student rating student rating student rating

I extremely thank you for completing my work in limited time frame. I thought I can\'t complete my work on time and I was depressed too until I get my final work. I can\'t express my happiness.


User Id: 389686 - 02 Jun 2020


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