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

Management Accounting: Manufacture Of The Goods

tag 1 Download6 Pages / 1,407 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 Management Accounting for Manufacture of the Goods.

 

Answer:

Main use of the Product Costing System

Product costing system can be described as the system utilized by the management of various organizations to have a hold on the cost of product of the manufactured goods or done with an aim for resale purpose. The cost of goods done before the sale is known as product costs. When it comes to the manufacture of the goods, it is the expense done during the process of manufacture. Moreover, there might be a case when the goods are purchased then the product cost can be said to be the expenses done to purchase the inventory and other expenses incurred such as a carriage, freight, etc for the inventory purchase (Drury, 2013). Once the assessment of the manufactured products is done, the further costs needed to seal the products are added to the manufactured cost of products and the product cost in total ascertain the cost of sales. The overall process is defined as the product costing system (Lacoma, 2016). The main aim of the product costing system is to evaluate the above-discussed costs in a chronological manner so that it becomes easy to compute the total cost of sales and final profit can be computed with ease. Further benefits that are derived from the product costing system is that it enables smooth computation of the manufactured cost of goods manufactured per product, ascertainment of the cost that pertains to various level of production, differentiation of the cost incurred on the product with the budgeted cost and the deviation can be traced with ease (Horngren, 2011). Moreover, it supports the management in policies formulation, selling price fixation, shedding light on the profitability in a product wise manner.

The under and over application of overhead is properly traced with the help of this system. Product costing system is the need of the hour because the costs are left unchanged to the service or product as per the scenario. Such a scenario can be witnessed in the case of job costing or service sector costing (Lister, 2016).  When the product costing system is deficient in an organization then there might be an issue of unrecorded expenses or income that are overstated that projects a bad impression for the financial condition of the company as it will influence the profit either an understatement or overstatement will happen. Further, under pricing of the product might happen or inflation of the profits (Lacoma, 2016). The product can be either under or over priced that will affect the company’s goodwill.

Product pricing is mainly concerned with the manufacturing business, however, the application can be witnessed in non-manufacturing industries. When it comes to merchandising companies, it contains buying, as well as transportation of merchandise in the product cost (Vanderbeck, 2013). For example, the producers of inventorial goods, agricultural products, and mining products consider the cost of producing the goods.  The product cost role in such companies is same as that of the manufacturing firms.

When the process of product costing happens, the management considers the overhead that needs to be incurred. During the process of manufacture, there might a difference in terms of the actual cost being incurred with that of the estimated costs. These estimated costs are applicable to various processes of manufacturing by utilizing an overhead rate that is pre-determined. The differences are spotted by the accounts team when the production process ends (Horngren, 2011). The differences lead to under or over application of overheads. Over application of the overhead is a scenario when the applied overheads surpass the overhead that is actual. On the other hand, when the actual overhead exceeds then it is said it be a case of under application of overheads.

 

It needs to be noted that the concept of over or under application creates a variation in the profitability that the organization estimates at the start of the season and is followed by the maximum of organization (Lanen et. al, 2008). To minimize the difference, the management requires time, as well as efforts so that the rate of overhead can be ascertained with an enhanced level of accuracy as the pre-determined rate is the chief ingredient in the application of overhead. If over or under application happens then the organization have to deal with certain scenarios.

  • The difference is written to Profit and loss account

When this method is put into implementation then the over or under application is moved to the profit and loss account so that the treatment is done in the same accounting year. The major loophole of this method is that the inventory figures gets inflated or understated because the under or over application needs to be distributed between finished goods work in progress and cost of sales (Lanen et. al, 2008).

  • Treatment in Reserve accounts

When this method is used, the over or under applied costs are tuned to the reserve account and projected in the balance sheet. However, this method should not be used as the adjustment for over or under applied overhead must be done in the same accounting year and not be carried forward (Needles, 2011).

  • Inventories adjustment

Work in progress, as well as finished goods and cost of sales is done so that the accounts is brought into connection with the actual cost. The overheads that are applied in excess or low must be distributed to the supplementary rate in work in progress, the cost of sales and the finished goods.

  • Adjustment of over or under application in the cost of sales

The cost of sales is determined by the accumulation of all the expenses that pertains to selling and distribution and then the addition is done to the cost of goods sold. In the case of an under application or over application, the same gets shifted to the cost of sales account. It can be done in a monthly manner or annually.

ABC even known as activity-based costing is a mechanism that is used to assign products, tasks, or acquisition that is based on activities that flow into them and resources consumed by such activities. ABC can be contrasted with the traditional mechanism of costing that sometimes assigns cost by utilization of the hypothetical allocation percentage for overhead that is termed as indirect costs. Therefore, ABC estimates the cost of goods sold and gross margin in a different manner for different products.  ABC should be introduced into the organization (Charles, 2012). The cost accountants have a clear understanding that the traditional system of cost conceals information when it comes to an individual product and services. Hence, a shift to ABC will lead to understating the real cost of the products, as well as services in an accurate manner. The implementation of ABC is done by the companies by identification of the products on an individual basis that is not profitable, ascertainment of the true costs so that pricing policy can be supported and revealing costs that are unnecessary so that it can be eliminated with ease. Firms that use ABC attain the objectives in an effective manner (Shim & Siegel, 2009). The main benefit of ABC lies in the fact that the same accounts are influenced however different perspective is used.  ABC helps in bringing enhancement in the margin hat is reported and even the profitability. Such an outcome is possible when ABC projects where to adjust the models of pricing.  The areas where ABC can show vast improvements and benefits are cost accounting, budgeting, financial accounting, etc (Venanci, 2012). ABC scores over traditional method but needs to be noted that ABC is not free from deficiencies. 

 

References

Charles, T.S 2012, Cost Accounting: A Managerial Emphasis, Pearson Education

Drury, C. M 2013, Management and cost accounting, Springer.

Horngren, C 2011, Cost accounting, Frenchs Forest, N.S.W.: Pearson Australia.

Lanen, W. N, Anderson, S & Maher, M. W 2008,  Fundamentals of cost accounting, NY: Hang Loose press

Lacoma, T 2016, The Advantages Product Costing Offers in Financial Accounting, viewed 20 May 2017 https://smallbusiness.chron.com/advantages-product-costing-offers-financial-accounting-24883.html 

Lister, J 2016, Product Costing vs. Cost Accounting, viewed 20 May 2017 https://smallbusiness.chron.com/product-costing-vs-cost-accounting-37642.html

Needles, S. C 2011, Managerial Accounting,  Nason , USA: South-Western Cengage

Shim, J. K & Siegel, J G 2009, Modern Cost Management and Analysis, Barron's Education Series

Vanderbeck, E J 2013, Principles of Cost Accounting, Oxford university press

Venanci, D 2012, Financial Performance Measures and Value Creation , State of art . New York: 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). Management Accounting: Manufacture Of The Goods. Retrieved from https://myassignmenthelp.com/free-samples/management-accounting-manufacture-of-the-goods.

"Management Accounting: Manufacture Of The Goods." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/management-accounting-manufacture-of-the-goods.

My Assignment Help (2018) Management Accounting: Manufacture Of The Goods [Online]. Available from: https://myassignmenthelp.com/free-samples/management-accounting-manufacture-of-the-goods
[Accessed 11 July 2020].

My Assignment Help. 'Management Accounting: Manufacture Of The Goods' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/management-accounting-manufacture-of-the-goods> accessed 11 July 2020.

My Assignment Help. Management Accounting: Manufacture Of The Goods [Internet]. My Assignment Help. 2018 [cited 11 July 2020]. Available from: https://myassignmenthelp.com/free-samples/management-accounting-manufacture-of-the-goods.


MyAssignmenthelp.com delivers assignment help to millions of students of USA. We have in-house teams of assignment writers who are experts on wide ranges of subjects. We have appointed teams of native writers who provide assignment help to students in New York City and all over the USA. They are skilled assignment writers who successfully cater to search terms like do my assignment in the USA

Latest Accounting Samples

ACCT20074 Contemporary Accounting Theory

Download : 0 | Pages : 12

Answer: Introduction The primary focus of the assessment is to formulate a detailed study regarding concepts of measurement and the relevance of the same in the process of accounting. The accountants consider measurement of financial information to be an integral part of the accounting system. The assessment would be looking into the IASB framework for the purpose of reporting and measuring financial aspects of the business (Reports. 202...

Read More arrow Tags: Australia 5 Contemporary accounting theory Central Queensland University 

MA501 Foundation Of Accounting

Download : 0 | Page : 1

Answer:

Accounting Practice Set [now finished]



You have now finished the practice set. Your result is recorded in our database.
Click Home to be returned to your home page.

 

Read More arrow Tags: Australia 5 MA501 Melbourne Institute of Technology 

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 
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

1,359,640

Orders

4.9/5

Overall Rating

5,081

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 5/5

1592 Order Completed

96% Response Time

Jane Sima

Ph.D in Psychology with Specialization in Industrial-Organizational Psychology

Singapore, Singapore

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

184 Order Completed

96% Response Time

Arapera Billing

Masters in Management, MMgt

Wellington, New Zealand

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

154 Order Completed

97% Response Time

Harold Alderete

PhD in Economics

London, United Kingdom

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

134 Order Completed

95% Response Time

Thomas Nelson

MS in Information Systems Technology with Specialization in Database Administration

New Jersey, United States

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

This is one class that I absolutely hate to do the discussion questions and assignments so this service has been the best thing every and my grades are always an A

flag

User Id: 451554 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

This has been such a great service and I wish I had used them last year and before this session. Makes my life much easier.

flag

User Id: 451554 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

Always fast turn around time and quality work. Wish I had used them the last two years.

flag

User Id: 451554 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

I am writing to inform you that I have received my grades for Human Growth & Development. They are as follows: Assignments 8 & 4 = 100%. Thank you for such professional services rendered! I am looking forward to a continued relationship in the futu...

flag

User Id: 452606 - 11 Jul 2020

Australia

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