Questions On Direct Costs And Cost Objects Essay

Questions On Direct Costs And Cost Objects Essay
Task 1: –
1. Direct costs: – Direct costs which can be defined as the ability to accurately track the cost of a few efforts to cost objects. Cost object may be a
product, classification of any fee, a division of the direct costs of a project, such as usual benefit of a single cost object either directly or indirectly as a
cost object by Perspective. A specific cost may be directcosts of a cost object, but the indirect costs of other cost objects.
The most immediate cost is variable, but this may not always be the case. For example, supervisors who only supervise a single month 's salary is
directly fixed construction costs incurred in the building.
For example:– The occurrence in the production of concrete gravel, sand, cement and wage costs.
2. Indirect costs:– The cost cannot be attributed precisely to specific cost objects called indirect costs. This is usually beneficial things multiple costs, it
is not possible to accurately track their unique products, activities or departments.
Example: depreciation, insurance, electricity, supervisors pay costs incurred in concrete factory.
3. Fixed costs:– Fixed costs that do not vary depending on production or sales. They include salaries, rent, insurance, accounting costs
4. Overhead costs:– Just for the cost of maintaining the presence of resources for an organization 's business costs for –Overhead. Overhead cost
usually is measured in terms of currency, but the non–monetary cost of time as possible to complete the work.
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Strategic Management Accounting
Tables of contentPage No Introduction03 Models and concepts affecting the pricing decision03 Approaches to pricing04 i. Cost–volume–profit
analysis05 ii. Cost plus mark–up pricing07 iii. Target rate of return pricing07 Standard costing and Variance analysis08 The role of standard costing
and variance analysis12 Limitations of Standard Costing and variance analysis12 Evaluation of Activity Based Costing system13 Advantages of ABC
system17 Limitations of ABC system17 References18
Introduction
This report is mainly focusing to understand and analyse the issues involved in Manac plc where by the company is not meeting target budgeted profit.
This is a ... Show more content on Helpwriting.net ...
Now let us look at some of the decision making models which affect the pricing decisions regarding our electrical goods made by us. At last, we
should understand the mechanics of making pricing calculations of our standard electrical goods based on an appropriate model.
Approaches to pricing
There are many approaches to pricing and accounting information can be used for these approaches. They are; i. Cost–volume–profit analysis, ii.
Cost–plus pricing, iii. Target rate of return pricing. i. Cost–volume–profit analysis
This method known as CVP analysis is used to develop and understand the relationship between revenue, cost and sales volume. Thus, CVP is
concerned with understanding of the relationship between changes in the number of units sold and changes in selling prices and costs. Typical issues
that CVP answers are: * Effect on profits of changes in selling price or the volume of sales, * If we incur additional costs, changes that we should make
to our selling price or to the volume that we need to sell (P.M. Collier 2003).
CVP can be used as a sensitivity analysis which is an approach to understand as to how changes in one variable (e.g. selling price) affect to other
variables (e.g. Sales Volume). Using this analysis which is illustrated bellow, we can have a better understanding of product's selling price of Manac plc.
Illustration 1
Target Budgeted profit of Manac plc is ВЈ100,000 on sales of 20,000 units of

Kaizen Costing Case Study
5.0 How does the improvement of the system affect management accounting system?
Businesses who carry out management accounting system in the workplace definitely have advantages in overall performance. For instance, through
cut costs and building capital to afford on future expansion. However, according to Kaizen Costing theory, nothing is ever perfect. Therefore,
improvements are always possible. It relates directly to a continuous improvement to reduce those variable costs by removing waste without any
compromise quality of the product. By understanding the reason of the problems incurred, the company can control costs more effectively. Therefore,
improvement of the system is a must to create better management accounting.
First of all, human resource is one of the major assets for an organization. Thus, employee attitude must be recognized as this may create a major issue
and directly affect the atmosphere and productivity within an organization, no matter which system is used. Kaizen Costing techniques are ... Show
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Kaizen is adaptable that it can be applied to any type of the industry which are including healthcare, retail, banking and transportation. Kaizen costing is
a concept that many people and organizations know to be successful. Toyota is one of the well–known organization for using kaizen to achieve much
better production results.
The ideology of kaizen is an essential part of the Toyota andToyota Production system since kaizen means there is no process is perfect and
understands that there is always room for improvement, a thought that resonates within Toyota. The team members of the organization are aware of
their roles within the kaizen guidelines and the responsibility each one of them has discovering new ways of improving the operation

Cost Systems
Costing Systems Costing systems are part of the overall accounting system used by companies to measure sustainability performance and identify and
account for expenditures accurately (Tatum, 2011). Three cost methods used as part of the decision–making process are Activity–based costing (ABC),
Life–cycle costing (LCC), and Full cost accounting (FCA). The benefits and limitations of each in relation to sustainability efforts are examined.
Analysis
Comparison Traditional cost accounting methods were based on labor intensive industries consisting of no automation and minor product specialization
or diversification (Emblemsvag, 2010). Cost was driven by product development and services (Epstein, 2008). However, activity–based ... Show more
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Thus, while ABC focuses on cause and effect related to activities, LCC measures present and futurecosts of a business activity, product, or service
(Dorf & Kusiak, 1994). Full Cost Accounting (FCA) is the third account system. FCA determines the price of products and services by assessing their
true cost including social and environmental costs (Conway–Schempf, 2011). FCA incorporates the bottom line costs of a company's activities with the
impact of these activities on the full social costs to society (Conway–Schempf, 2011). For example, societal costs from business activities include
external costs such as health issues from car emissions. Inasmuch as many externalities are intangibles such as preserving ecosystems, factoring them
into a company's cost structure is problematic. However, according to Conway–Schempf (2011), "recognizing these externalities makes long–term
sense for corporations and governments – today's external costs become tomorrow's internal costs as a result of regulation and legislation" (p. 19).
Thus, FSA allows companies to place a dollar value on costs connected with present and future environmental changes (IISD, 2011). Consequently,
FSA relates LCC's financial impact of the stages of a product, service, or activity by accounting for the full societal

Introduction to Activity Based Costing
Cost Accounting CA 2011
Topic:Activity Based Costing
Submission Date:16 march 2011
Word Count:1770
Name:Mary Moss
Student No:L00084540
Class:Buss Yr 2
Contents
Page 2 ............................................Introduction to Activity Based Costing
Page 2............................................Benefits of ABC
Page 3............................................Traditional Cost Accounting (TCA)
Page 4............................................Difference between ABC and TCA
Page 5............................................Numerical example using ABC and TCA
Page 8............................................Bibliography

Introduction to Activity Based Costing
Activity Based Costing (ABC) emerged in the 1980s from the rising lack of relevance of traditional cost accounting methods. It took just a short time
for ABC to be accepted as an original and potentially ... Show more content on Helpwriting.net ...
The functional costs of marketing, financing, and administration are gathered in cost pools, and they are used in the time that they are incurred, these
costs are not considered as product costs and they are unrelated to precise products in product profitability comparisons
Full costing regards all costs to be product costs. Therefore, all overhead costs are assigned to costs of production for specific products. Traditional
costing contains only the costs for those elements that change with the production of an added unit of good or service.
Difference between ABC and TCA
Both traditional costing and activity based costing methods estimate overhead costs connected to production and allocate these costs to products
based on a cost driver rate. The differences are in the precision and density of the two methods. Traditional costing is more basic and less accurate
than ABC, and typically gives overhead costs to products based on a subjective average rate. ABC is more complicated and more accurate than
traditional costing. This technique gives indirect costs to activities and then gives the costs to products based on the products' practice of the activities.
It is widely known that the traditional costing system uses a single, volume based cost driver. This is why the traditional product costing system alters
the cost of products. In most cases this type of costing system gives the overhead costs to products on

Office Dakota Products Case Analysis
Office Dakota Products Case Analysis Course: BUSA 5061 Managerial Accounting Students Name: Teresa Willette Professors Name: Dr. Conner/Dr.
Pollard Date 3/20/2011 Executive Summary The following analysis is written for Dakota Office Products to evaluate current business operations and
recommend future actions necessary to ensure company success. In the analysis of the company we will identify inefficient business practices that
have led to the companies first profit loss in its history. We will evaluate the companys current pricing structure, ordering methods, shipping and
delivery process, and deficiencies in cash flows. For Dakota Office Products (DOP), its existing costing system was inadequate because it is incapable
of accounting for... Show more content on Helpwriting.net ...
The key issue presented in front of the management is the possible steps to be taken by the management in order to avoid such losses. Critical
Thought The issue addressed by the accounting system of Dakota office products invites our attention to the premise of Activity Based costing
methodology. We are certain about the fact that the accounting and reporting system at Dakota Office Product is inappropriate and is leading to the
company making wrong decision ultimately leading to losses. This was apparent from the record where the company was able to increase its sales
without a corresponding increase in the profits for that particular year. Activity based costing system is an approach which seeks to allocate the overhead
cost to the products on a scientific and realistic basis. The existing system of allocating cost at Dakota Office products were inadequate in so much
so that it was following an unreasonable basis for allocating the cost, which were known and visible, such as the desktop delivery cost. The existing
system was suffering from oversight of some of the expenses. ABC costing system seeks to overcome the problem of oversight and make a more
reasonable allocation of the costs. The distinctive feature of this method is the fact that the method can provide useful insights to the management as to
the activities which are leading to the cost by

Managerial Accounting Analysis of Concepts and Techniques
Managerial Accounting Analysis of Concepts and Techniques Managerial Accounting BUS 630 Managerial Accounting Analysis of Concepts and
Techniques Introduction/Thesis Statement Managerial accounting is a concept used in businesses to manage internal systems. Understanding the
importance of effective decision making, planning and control creates a foundation for value within the company on a more in depth level. Planning
and controlling is measured by performance based on budgeting accounts. Understanding the concepts and techniques used in managerial accounting
helps to insure functioning operations within each department and has the ability to create a completive edge. Competitively speaking, managerial
accounting gives... Show more content on Helpwriting.net ...
Therefore, management decides it would be much more beneficial to be a citywide organization instead. Role of Managerial Accounting The role of
managerial accounting serves many purposes such as financial reporting, budgets, forecasting, internal controls and management support. The
accounting department also supports management in different business operations, providing analysis and support for different decisions and
investments (Vitez, 2013). Management accountants work at the beginning of the accounting cycle, recording the financial transactions of a company
as they occur (2013). This business role ensures that companies have a good understanding of their financial health, giving executive management the
ability to make informed decisions. Companies use budgets to ensure that they do not spend more money on business operations than is necessary to
generate profits (2013). Management accountants will prepare budgets for each department and then add them together to create one companywide
budget. Tracking expenses that over exceeds the budgeted amount is an important step in the managerial process to insure the company is within the
profit and loss guidelines. Capital improvements are also included in the budgeting process so businesses can plan on improving current facilities
(2013). Forecasting is based on past information and is used to remove random variations within each

Activity-Based Costing: a Case Study on a Taiwanese
Activity–Based Costing: a Case Study on a Taiwanese
Hot Spring Country Inn's Cost Calculations
Wen–Hsien Tsai
Department of Business Administration National Central University, Chung–Li, Taiwan, ROC
Jui–Ling Hsu
Department of Business Administration National Central University, Chung–Li, Taiwan, ROC
Department of International Trade
Ta–Hwa Institute of Technology, Hsin–Chu, Taiwan, ROC
Abstract
The aim of this paper is to analyze the operational costs of a hot spring inn in the Yang–Ming–Shan area of Taiwan. The activity–based costing method
was used to compute lodging, hot spring use and meal serving costs per customer. This paper overcomes all the obstacles to implementing full–scale
ABC–based accounting to ... Show more content on Helpwriting.net ...
The fifth section compares results of the ABC method and the traditional method. Some conclusions are presented in section six.
2. Literature review
Poorani and Smith (1995, p. 58, 63) observe: "The hotel and the B&B industry have very different financial aspects arising from contrasting ownership
motives. In the hotel industry the emphasis is on maximizing profitability whereas the B&B industry has been traditionally characterized by innkeepers
who embarked on inn–keeping as a second career to satisfy lifestyle goals. But the current economic environment has blurred that distinction. Hoteliers
are trying to be more sensitive to customers' needs and create an environment for personalized service. Meanwhile, many entrepreneurs are entering the
B&B segment with strictly financial motives". Their investigations attribute financial characteristics to the B&B industry and find that innkeepers in
USA with midsize and larger operations not only were highly successful in reaching their career goals but also achieved their economic objectives as
measured by return on investment and equity. However, notwithstanding the importance of financial aspects, the studies incost structure of the B&B
industry anywhere in the world were rare. One reason is the inn's private–ownership arrangements; others are the fragmented industry structure and the
lack of systematic cost and revenue data.

Unlike the situation in the B&B industry, there have been a large number

Management Accounting Practices in Japan
Journal of Accounting & Finance Volume 13 No. 2 September 1999 Manasement Accountins Practices in Japanese Manufacturing Firms; An Empirical
investigation Hema Wijewardena AnuraDeZoysa** Introduction During the last 'few decades there has been a dramatic change in the business and
technological environment, specially due to the increased use of new manufacturing practices and technologies such as Just–in–Time (JIT), Total
Quality Management (TQM) and Computer Integrated Manufacturing (CM). Consequently, it is argued that management accounting systems have to
change in response to the needs of this new environment (Bruggeman and Slagmulder, 1995). However, in the recentpast accountants in Western
countries, particularly... Show more content on Helpwriting.net ...
|1 | |Fabricated metal products |6 |101–500 |26 | |Textile |3 |501–1,000 |23 | |Chemical products |24 |1,001–10,000 |44. | |Machinery and Computers _ |16
|10,001–70,000 |3 | |Electronic and electric equipment 15 |20,001–30,000 |2 | |Transportation equipment |12 |Above 30,000 |1– | |Furniture and Fixtures
|1 |19 | | |Miscellaneous | | | | |Nature of market competition |Firms % |Export/Sales Ratio |firms % | |Slight competition | ' 0

Reflection On Managerial Accounting
REFLECTING JOURNAL ON MANAGERIAL ACCOUNTING COURSE
By Name
Course
Instructor
Institution
Location
Date Reflecting Journal on Managerial Accounting Course
Introduction
The first impression of the course managerial accounting for managers was that it would involve learning how to manage operations of a firm,
especially in relation to its financial records and activities to ensure efficient and successful operation of a firm. I expected to learn how to deal with
the final financial records and using them to perform an analysis of the records which will help to make informed decisions. It would also involve
learning how to deal with the accounting records to make effective budget plans in considerations of resources available. My expectations of the course
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For instance, the concept of cost estimation which assists in estimating future expenditure as the expenditure depends on the cost of the respective
activities can be applied in the setting of a budget which is simply an estimate and schedule of all costs required to be assigned to an activity. One can
make an estimation of the resources required for an activity by applying the cost estimation techniques. Since there are limiting factors to each activity
such as scarcity of resources for activities, the concept of constraints can be applied together with the concept of cost volume profit analysis to ensure
that maximum benefits are driven from the scarce resources and the number of activities that are available. This facilitates the allocation of resources
that most equitable and profitable. The theory of constraints is also applicable in the process of setting up budgets. In setting up budget one considers the
amount of resources that are available and cannot therefore set a budget plan that exceeds the amount of resources that are available. This implies that
the budget is constrained by the amount of

Benefits Of Using Electronic Health Records
Meaningful Use is the incentive program with the intention of helping physicians provide better care to their patients through financial rewards and
punishments. Those Eligible professionals (EPs) who choose not to demonstrate meaningful use of electronic health records (EHRs) are about to face
a 1% penalty in their Medicare reimbursements. These penalties will increase by 1% each year until 2019 when they finally cap–off at 5%. And just to
make it that much more aggravating, EPs won't get away with a one–time demonstration, they must continue to demonstrate meaningful use each and
every year through 2019 to avoid these penalties.
The Centers for Disease Control and Prevention has reported that, by the end of 2013, 78% of office–based physicians were using some form of EHR
and 69% were planning on applying for meaningful use incentives.
Meaningful Use and Its Effects on RCM
Since the advent of value–based (VB) care and reimbursement models, more and more physicians are being held accountable for the value of the
services they provide and being paid for that value instead of for the services themselves. The big question of course is, how will meaningful use
affect the Revenue Cycle Management systems and operational processes that have been in place and supporting a fee–for–service structure for
decades?
Additional Costs
Let's start with the most obvious effect of meaningful use on RCM which is the added high cost providers are expected to absorb to pay for software and

Gaap Ifrs And Ifrs For Extractive Activities
To: File
From: Julie Kang
Date: October 29, 2015
Subject: GAAP–IFRS Conversion– Extractive Activities
Executive Summary
This memo provides guidance on what changes will be required to convert the statements from GAAP to IFRS for extractive activities. The first thing
that I will cover is the the current treatment under GAAP, followed by the treatment required under IFRS. After that I will talk about how the
company can convert its current statement from GAAP to IFRS. Thereafter I will provide an example for GAAP, which will be followed by an
example of the conversion to GAAP to IFRS. Concluding with to make a recommendation for the appropriate treatment to convert them from GAAP to
IFRS.
Current treatment under GAAP Under US GAAP,... Show more content on Helpwriting.net ...
Lastly the guidance on production stripping applies to all extractive activities other than oil and gas. The stripping costs incurred during the production
phase of a mine are included in the cost of inventory extracted during the period.
Treatment required under IFRS The treatment required under IFRS is that it provides specialised extractive industry guidance only in respect of
expenditure incurred on exploration for and evaluation of (E&E) mineral resources after obtaining a legal right to explore and before achieving
technical feasibility and commercial viability. There is no industry–specific guidance on the recognition or measurements of pre–exploration
expenditure or development expenditure. Pre–E&E expenditure is generally expensed as it is incurred. Entities identify and account for
pre–exploration expenditure, E&E expenditure and development expenditure separately. Each type of E&E cost may be expensed as it is incurred or
capitalised, in accordance with the entity's selected accounting policy. Capitalised E&E costs are classified as either tangible and intangible assets,
according to their nature. The test for recoverability of E&E assets can combine several cash–generating units, as long as the combination is not larger
than an operating segment. Stripping costs incurred during the production phase of surface mining are included in the cost of inventory extracted
during the period, if appropriate, or are capitalised as a non–current asset if they

Gg Toys Case Analysis Essay
G. G Toys Case Analysis
By
Managerial Accounting
June 16, 2013
Costing systems are components of a broader accounting system used by a given company or organization. Their main function is to keep a focused
eye on expenditures made by the company in question. Synthesis of Existing Cost Models to Meet System of System Needs, p.86. G.G. Toy's
production process for dolls started with the basic raw materials needed for the bodies of the dolls, wool and things for the hair and clothing and all of
these things were consist in production initially. Then, in its modern Chicago manufacturing facility, the company machine–molded the vinyl and resin
into doll bodies and even had varies different styles and designs for the ... Show more content on Helpwriting.net ...
Using activity–based costing will allow different overhead set up for each type of doll, production can be done at one time and the results would
produce different contribution margins.
The Springfield plant is simply doing one thing and that is producing cradles, there is no need for a different costing system there. Using the cost study
conclusions, the actual unit cost for the Geoffrey doll is $15.21. The actual unit cost for specialty–branded doll #106 is $35.10 and the actual unit cost
for the cradles is $23.72. See the profitability of each doll under the new and old systems have been compared and contrasted below. (old system)
Geoffrey Doll Specialty–Branded #106 Cradle
Standard unit cost($) 19.19 23.74 23.70
Selling price($) 21.00 36.00 30.00
Contribution margin($) 1.81 12.26 6.30
CM Ratio 9% 34% 21%| | (ABC) Geoffrey Doll Specialty–Branded #106 Cradle
Standard unit cost($) 15.21 35.10 23.72
Selling price($) 21.00 `36.00 30.00
Contribution margin($) 5.79 0.90 6.30
CM Ratio 28% 3% 21%|

When comparing the product costs with each other, the

Nature And Theories In Management Accounting
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter begins by looking at the literature that will give considerable information about Management Accounting and the practices of Small and
medium Enterprises, bringing out the interdependence and interrelation of one to the other.
2.2 Overview of Management Accounting
Management accounting was first known as cost accounting. This origin was reflected in the earlier title for practitioners of cost or works accountants
(Wilson and Chua, 1988). Accounting historians have long endorsed the view that cost accounting is a product of the industrial revolution (Johnson,
1981). For example (Wilson and Chua, 1993) claimed that cost accounting was practiced by the mechanized, multi process, cotton textile factories that
appeared in England and United States around 1800. This point of view was consistent with Garner (1947) who pointed out that cost accounting had
emerged only after eighteenth century as a ... Show more content on Helpwriting.net ...
This change has resulted to a range of modern management accounting. This is evident through the adoption of innovative modern management
accounting techniques like Cash Flow analysis, Activity–based costing, cost volume profit Analysis, Balanced Scorecard, Standard costing among
others. This new techniques seem to be gradually adopted by Ghanaian SMEs.
Management accountant is less likely to take decision but rather provides data which is aids management in decision making. Management accountant
deals with future outcome. It helps in planning the future – because decisions are always taken for the future course of action. Many theories have been
developed to management accounting, among them which this study seeks to address is the contingency

A Brief Note On Farm Hardware Products Division As The...
Task 1
Answer 1.1 – Farm Hardware Products Division as the costs associated with your activity on the basis of the definition of the following is a brief
description of your understanding of it.
A .Direct costs – A product, labour and materials costs directly associated with the productioncosts– direct cost. Other expense, loss or: is considered
as indirect costs are more difficult to determine if a particular product and administrative expenses, and the like.
B. Indirect costs– indirect costs (such as a special project, such as a facility, process or production) cost that are not directly responsible for the cost of
materials. Indirect costs are fixed or variable, be can. Administration, personnel and security costs and indirect costs.
C. Fixed costs– management accounting, the appropriate period, fixed costs, a function that is defined as a business process change costs not does.
For example, in spite of a seller to rent and utility bills to pay. Marketing, split between variable and fixed costs, it is important to know how.
D. Overhead costs – Direct labour, direct materials and direct costs in addition to the income statement and all of the overhead costs overhead costs–
cost. Expenses and accounting fees, advertising, insurance, interest, legal fees, labour, rent, repairs, supplies, taxes, telephone bills, travel expenses,
and the application of the burden.
E. Variable costs– A few needed to complete this project costs– variable cost, the cost of direct

Activity-Based Costing ( ABC ) Essay
Activity–Based Costing ( ABC )
Summary
The business environment in the 1990s is markedly different from that of the past when conventional cost accounting procedures were established.
Activity–based costing (ABC), pioneered in the late
1980s, offered a new costing approach consistent with the changed environment. However, ABC did not diffuse rapidly into the business community.
This article demonstrates why adopting ABC is important by documenting the potential of ABC in supporting contemporary managerial decision
making.
Introduction
Everything happens faster in business today. Even new management tools
(some say "fads") follow a meteoric path. For example, the ink on new articles describing activity–based costing (ABC) was hardly ... Show more
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The "corporate socialism" in which some products pay the bills of other products is exposed. It is the purpose of this article to illustrate how ABC
more accurately reveals the true costs of operating in the business environment of the mid–1990s and supports managerial decision making by
providing information consistent with this environment. Beyond the smoke and mirrors, ABC can contribute to success. What is ABC?
The full cost of a manufactured product or line of products includes direct labor, material, variable overhead, and fixed costs. Direct labor and
material are normally observed and measured by manufacturing and maintained as "standards." The overhead costs are reported by responsibility
centers, such as departments or plants. The difficult decision is what to do about allocating overhead costs to products or territories. The typical
business uses a two–step system for absorption costing in which costs are accumulated in a pool and then allocated to specific products based on a
single, plant–wide base, such as direct labor hours utilized in producing the product [2]. Other allocation bases are machine hours or direct labor cost,
for example. The wide use of direct labor hours as an allocation basis is historical. When cost accounting systems were being developed in the
mid–1920s, labor was a major cost and thus a target of management attention. However,

Management Accounting
Management Accounting
Contents
1. Introduction 3
2. Traditional costing system and its limitations 3
3. Activity–Based Costing 4
4. Case Question 4
5. Analysis of the different result between traditional costing system and ABC system 5
6. Limitations of ABC system 6
7. Conclusions and Recommendations 6 8. References 7 ... Show more content on Helpwriting.net ...
But it is impossible to sustain competitiveness without an more accurate cost calculation mechanism. (Ozbayrak, Akgun and Turker, 2004) As an
alternative method to take the place of traditional cost accounting methods, ABC assigns costs to several activities with multiple cost drivers. (Copper
and Kaplan, 1988) The costs of each product are based on each product's use of these activities. Using multiple activities as cost drivers instead of
single one, it can effectively reduce the risk of distortion and provides more accurate cost information. (Kim, Park and Kaiser, 1997)
In the ABC system, the total cost of a product equals the cost of the raw materials and direct labor plus the sum of cost of all value adding activities
to produce it. The usage of organization resources are linked with these activities to produce. (Gunasekaran and Sarhadi, 1998) Each product needs a
number of activities such as designing, engineering purchasing, quality control and transportation. Each activity uses resources of different kinds
such as the working time of manager. Cost drivers are measures of activities performed such as number of units produced, labor hours, number of
orders and so on. In this case, the cost drivers consist of setup labor, equipment, rent, billing clerical and other. As the cost drivers are related to the
activities, they occur on certain level. For example, the setup labor cost in this case is based on batches level. Most the other are using

Cost Accounting: Its role and ethical considerations Essay
Cost Accounting: Its role and ethical considerations
Introduction:
Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions
and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost
Accounting and Auditing– Public Accounting
Managerial accounting is concerned with the use of economic and financial information to plan and control the activities of an entity and to support the
management in planning and decision–making process.
Cost accounting is the subset of managerial accounting and it helps management in determination and accumulation of product, process or service cost.
... Show more content on Helpwriting.net ...
In cost accounting, the lack of understanding of the accounting and finance process by the business manager is an incentive for the unethical employee
to manipulate the system. Ethics help management in:
В· Providing factual and true information to its users,
В· Determining the nominal price of its products,
В· Maintaining appropriate professional relationships, and
В· Maintaining efficacy
In today?s world of corporate scandals, an appreciation of ethical standards and a commitment to the proper reporting and disclosure of financial
information needs to be constantly reinforced within the area of accounting.
Absorption and Variable Costing:

Absorption Costing: All costs (fixed and variable) of production are product costs. Which means under absorption costing, both variable and fixed
manufacturing costs are included as a part of the cost of the product manufactured.
Variable Costing: Only those costs of production that vary directly with activity (variable costs) are treated as product costs. Under variable costing,
only the variable manufacturing costs are included as a part of the cost of the product manufactured. The fixed manufacturing costs are treated as an
expense of the period in which they are incurred.
Selling and administrative costs
The basic difference between absorption and variable costing relates to the handling of fixed manufacturing

Management Accounting: Information for Creating Value and...
CHAPTER 1
MANAGEMENT ACCOUNTING: INFORMATION FOR CREATING VALUE AND MANAGING RESOURCES
ANSWERS TO QUESTIONS
1.1 There are several possible answers to the question. QANTAS, the national airline of Australia, has faced a number of changes to the business
environment in recent years, including deregulation of the domestic aviation industry. This resulted in increased competition as new firms attempted to
enter the industry. The most notable of these was two failed attempts by Compass to succeed in the market and gain market share by savagely cutting
prices. Its major competitor, Ansett Australia, collapsed in 2001 resulting in QANTAS having almost a monopoly for a short period. A powerful UK
airline, Virgin, has also entered the market, ... Show more content on Helpwriting.net ...
They also have non–financial resources such as staff and employees, information, work processes, patents, logos and trademarks, committed customers
and suppliers and so on. Management accounting should be concerned with non–financial resources, because these determine the capabilities and
competencies of the organisation which enable it to survive in a business environment that is becoming increasingly more global and more fiercely
competitive. Organisations manage both financial and non–financial resources in order to enhance customer and shareholder value. Management
accountants use a variety of processes and techniques to help management to enhance value creation, including: (a) (b) (c) (d) Systems which support
the formulation and implementation of strategies. Provision of resource management systems such as information for planning (budgets) and control
(performance measures). Provision of cost estimates for various purposes. Contribution towards activities which enhance the organisation's competitive
advantage. Management accounting information is provided to managers and employees within the organisation, whereas financial accounting
information is provided to interested parties outside the organisation. Management accounting reports are unregulated, whereas financial accounting
reports are legally required and must conform to Australian accounting standards and corporations law. The primary source of data for management
accounting

The Purposes Of Full Absorption Product Costs
I.Introduction
The aim of this essay is to explain the purposes of full absorption product costs which are categorized into traditional method and
Activity–Based–Costing (ABC) system; to examine the benefit of ABC system that outweigh traditional method; to analyse the survey finding that
only about 15 per cent of companies surveyed use ABC system; and to justify why ABC system has been found to be more useful in financial and
service organisations. The essay is divided into five main parts. First, the purposes of calculating full absorption product costs will be explained. Second,
a comparison between traditional method and ABC system will be drawn to find out that the ABC system is considered more useful than the traditional
method. ... Show more content on Helpwriting.net ...
Traditional method tends to use arbitrary allocations that are not significant determinants of the costs. On the contrary, ABC mainly uses
cause–and–effect allocations as significant determinants of the costs and refrains from arbitrary allocations. Therefore, cause–and–effect allocations
should be used to get accurate assignment of indirect costs to cost objects. Figure 1 below describes the different types of product costing systems.
Figure 1: Types of Product Costing System Management accounting textbooks (Kaplan and Atkinson, 1989; Drury, 1992) explained that there are two
purposes of product costs: first, for financial accounting by calculating the manufacturing costs incurred during a period between costs of goods sold
and inventories; second, for managerial decision–making requirements by providing useful information.
For decision–making purposes, product cost information is one of the most important inputs for pricing decisions or product–mix decisions.
Organisations that sell highly customized or differentiated products or services, or who lead the market, have some choice in setting their selling
prices. The pricing decisions can be influenced by the cost of the product. Other organisations have their selling prices set up by the market as they
only have little or no power over the selling prices of their products. However, cost information is still considerably important for

Safety Monitoring Devices, Inc. Costing Method
Tarun Aswani
Professor
SAFETY MONITORING DEVICES, INC. COSTING METHOD
Safety Monitoring Devices, Inc. (SMD) was without the proper cost allocation framework. The company was in dire need of a system that would
look at overhead costs and direct costs as it pertained to their two products, the simpler ODD and the more complex TGD. The company already had a
traditional existing cost method in place, but had suggesting to changes to an activity–based costing (ABC) method. Before implementation, discussion
of identifying costs and profit levels using ABC are discussed along with providing management with data to support this decision.
Accounting Issue and the Relevant Accounting Practice
The account issue addressed in this case study was whether to continue with the existing costing method for each product line or implement a
activity–based costing method. The ABC method allows for an organization to allocate direct and indirect costs to products and obtain an accurate
level of costs and profit for each unit produced, thus allowing the company to improve their overall operational effectiveness. ABC does differ from
the existing costing method described in the case as the old method does not account for volume related overhead costs which must be allocated to the
specific ODD and TGC products. There are clear benefits associated with implanting the ABC method. First, costing for each product line are clear
and accurate which provides a reliable indication of a variable

PAT0075 Assignment 1
APPENDIX I
PAT 0075 COST AND MANAGEMENT ACCOUNTING
GROUP ASSIGNMENT
Trimester 3, 2014/2015
Instructions:
1) This is a group assignment with each group not exceeding 5 students
2) Use standard A4 size white paper with Times New Roman font and size 12
3) Line spacing (1.5 lines); 2.54 cm margin
4) Each page (except cover) must be numbered and justified
5) The deadline for submission is on or before 04/05/2015 by 5 p.m. (Monday, week 6)
QUESTION 1
Tenrack is a fairly large manufacturing company located in the southern United States. The company manufactures tennis rackets, tennis balls, tennis
clothing and tennis shoes. All products bearing the company's distinctive logo, a large green question mark on a white flocked tennis ball. The ... Show
Therefore, one of the major tasks is deciding which costs to manage in order to achieve the company's profitability targets. In other words, you must
identify the airline's most important cost objects to track, measure and control.
REQUIRED
Identify and clearly explain the cost objects that are critical to the company's success.
(15 Marks)
Grading Rubrics for Assignment Question 2:
(5)
(4)
Introduction: Clear and
Clear and

Explain the detailed adequate meaning of explanation of explanation of cost object the meaning the meaning of of cost objects cost objects weightage:
with some with some
0.5
examples. examples. Content:
Clear and
Clear and
Explain the detailed adequate general explanation of explanation of business general general activities for business business airline activities for
activities for company airline airline company company weightage:
0.5
Content
Clear and
Clear and
Identify and detailed adequate explain 5 explanation of explanation of cost objects 5 cost objects 5 cost objects that are that are that are critical
critical to critical to the to the the company' company' company' success success success Identify 5 cost Identify 4 cost weightage: 2 objects objects (3)
Clear but brief explanation of the meaning of cost objects with some examples. Clear but brief explanation of general business activities for airline
company
(2)
Unclear
explanation of the meaning of cost objects with some examples. Unclear explanation of general business activities for

Inventory and Raw Materials
Week 01
APPLICATION: JOB–ORDER COSTING
EXERCISE2–1 the work of Management and Managerial and Financial Accounting
1. WHEN DIRECTING AND MOTIVATING, MANAGERS MOBILIZE PEOPLE TO CARRY OUT PLANS AND RUN ROUTINE OPERATIONS.
2. The plans of management are expressed formally in BUDGETS
3. PLANNING consists of identifying alternatives, selecting among the alternatives the one that is best for the organization, and specifying what
actions will be taken to implement the chosen alternative.
4. Managerial accounting places less emphasis on PRECISION and more emphasis on TIMELINESS than financial accounting.
5. MANAGERIAL ACCOUNTING is concerned with providing information for the use of those who are ... Show more content on Helpwriting.net ...
DATA FOR THE MOST RECENT MONTH'S OPERATION APPEAR BELOW:
Beginning raw materials inventory $ 60,000
Purchases of raw materials $ 690,000
Ending raw materials inventory $ 45,000
Direct labor $135,000
Manufacturing overhead $370,000

Role of Cost Accounting and Ethical Consideration
RUNNING HEADER: Role of Cost Accounting and Ethical Consideration
Role of Cost Accounting and Ethical Consideration
Introduction Cost accounting is used to help management understand how much it cost to run a business. Understanding the role of cost accounting is
important when one is trying to put together a team of managers to help run the company. The CEO of a merchandising organization needs to hire a
CFO to run the accounting system, but the CEO has little understanding of cost accounting. The CEO will hire a consultant to help her understand the
role of cost accounting, the role of ethics in cost accounting, and compare and contrast the absorption and variable costing.
Role of Cost Accounting Cost accounting is the area ... Show more content on Helpwriting.net ...
Ethical analysis needs to be instutionalized as an integral part of phases in decision making process.
Compare and Contrast Absorption and Variable Cost
It is important for the CEO is the manufacturing organization to understand the different between absorption cost and variable cost. One different
between the two are the way accounting treats fixed manufacturing overhead. Absorption cost is all the manufacturing overhead costs applied to the
manufactured goods (Hilton, 2003). Variable cost is applied to work in process as product cost, and fixed overhead costs are expensed as period
cost. Other different is the timing of when fixed overhead becomes an expense. Variable fixed cost is expense immediately, and absorption fixed cost
is inventoried until the goods are sold. Fixed cost is expense in both accounting system. Both systems have advantages and it will be up to
management to decide which works best for their organization. Below is a list of each system advantages:
"Advantages of Absorption costing Fixed MOH is treated as the same as other product costs, e.g. DM, DL Consistent with long–run pricing decisions
that must cover full cost External reporting and income tax law require AC
Advantages of Variable

Cost Allocation
Cost Allocation
ACC/561
April 23, 2012
Cost Allocation
The purpose of cost allocation is to identify and correctly allocate costs associated with a job, product, or service. The main uses of cost allocation are
to facilitate decision–making regarding costs, justify prices charged for products and services, cost control, and for optimal utilization of resources.
There are several methods used for cost allocation, depending on the type of product or service offer by the company.
Variable cost allocation includes only variable manufacturingcosts, such as direct materials, direct labor, and variable manufacturing overhead.
Absorption cost allocation includes manufacturing costs, including both variable and fixed overhead as ... Show more content on Helpwriting.net ...
The Step method of cost allocation, allocates costs between service departments in steps, starting with the service department that provides the most
service to the other service departments. After this allocation takes place, the next step in the process allocates costs to the department that provides the
next most service. This keeps stepping down until all costs have been allocated between service departments (Accounting For Management, 2012).
The Reciprocal method of allocating costs takes into account all activity between both interdepartmental service departments and operational
departments. For instance, the custodial department services both the mail room and the manufacturing department. The cost of the portion of
custodial service provided to the mailroom would be allocated directly to the mailing department, and cost of the portion of custodial service provided
to the manufacturing department would be allocated directly to the manufacturing department. Unlike the step method that only allocates forward from
the service departments providing the most service to those providing least, the reciprocal method can work backward. At the same time costs of the
custodial department are being allocated to the mail room (because of the mail room being cleaned), the mail room will allocate costs to the custodial
department for the mail that needs to be picked up and delivered there. Thus, reciprocal activity is

Accounting (Managerial) 530 Portfolio Case Study
Accounting (Managerial) 530 Portfolio Case Study
Imagine you are applying to become a trainee in a management consulting company, Solutions Inc., which claims to deliver innovative solutions. They
are looking for innovative employees who engage with their work. The selection process will be rigorous. You know you will be asked to submit
reports based on questions regarding your knowledge of management accounting practice and strategic management accounting. To provide a context
for the reports, you have been provided with a scenario in the form a case study on which the questions are based. To answer the questions you are
going to have to do some research in the library. Giving you the questions is a method to test your information ... Show more content on Helpwriting.net
...
Prepare a submission for management on how this may be done, and the difficulties that they are likely to face in undertaking this sort of analysis.
Issue 5:
Previously the company did not use budgets because the owners were the managers of the business and close to activities being managed and did not
feel the need for budgets. As the company has grown, and the operations have become more diverse, professional managers have been recruited.
Include in your submission an argument for budgeting, indicating the benefits of budgeting, and the factors to take into consideration when faced with
uncertainty regarding sales growth.
Issue 6:
The company has a need to make choices sometimes whether to make or buy certain of the products carrying their brand. On other occasions they are
also required to make decisions on special prices when a potential retailer makes an offer to buy goods from them at a price lower than their normal
price.
The management currently make their decisions in these matters based on the average cost of goods sold in the previous accounting period.
Discuss the concept of Relevant cost and benefits, and the type of accounting and non–accounting information they would need for such decisions.
Instructions for the portfolio submissions:
1. Assume that the management of the company has little technical knowledge

Benefits Of Using Electronic Health Records
Meaningful Use – the incentive program with the intention of helping physicians provide better care to their patients through financial rewards and
punishments. Those Eligible professionals (EPs) who choose not to demonstrate meaningful use of electronic health records (EHRs) are about to face
a 1% penalty in their Medicare reimbursements. These penalties will increase by 1% each year until 2019 when they finally cap–off at 5%. And just to
make it that much more aggravating, EPs won't get away with a one–time demonstration, they must continue to demonstrate meaningful use each and
every year through 2019 to avoid these penalties.
The Centers for Disease Control and Prevention has reported that, by the end of 2013, 78% of office–based physicians were using some form of EHR
and 69% were planning on applying for meaningful use incentives.
Meaningful Use and Its Effects on RCM
Since the advent of value–based (VB) care and reimbursement models, more and more physicians are being held accountable for the value of the
services they provide instead of the services themselves. The big question of course is, how will meaningful use affect the Revenue Cycle
Management systems and operational processes that have been in place and supporting a fee–for–service structure for decades?
Additional Costs
Let's start with the most obvious effect of meaningful use on RCM which is the added high cost providers are expected to absorb to pay for extensive
training. An InformationWeek survey

Cost Accounting Terminologies, Purpose of Cost...
Part 1– Conceptual Framework
Cost Accounting
Cost accounting, as a tool of management, provides management with detailed records of the costs relating to products, operations or functions. Cost
accounting refers to the process of determining and accumulating the cost of some particular product or activity. It also covers classification, analysis
and interpretation of costs. The cost so determined and accumulated may be the estimated future costs for planning purposes, or actual (historical) costs
for evaluating performance. The Institute of Cost and Management Accountant (ICMA), London, definedcost accounting as "the process of accounting
for cost from the point at which expenditure incurred or committed to the establishment of its ... Show more content on Helpwriting.net ...
a) Performance measurement: This measurement can be done by comparing current costs with those who were expected – or standard costs budgeted
cost – to the degree of knowing which of them have been controlled. Deviations of expected with the current – variances – can be identified, evaluated
and discussed by managers.
b) Cost of goods and services: In manufacturing companies, the costs of goods must be measured to determine the cost of items transferred from work
in process inventory to finished products. To meet the demands for information, a cost system should measure all the costs of manufacturing process
and allocate a portion of those costs to each unit of output. The cost to obtain, maintain and manage the manufacturing plant or building should be
added to the cost of material and productive work that requires each unit. The first are called indirect costs and the two last are called direct costs.
c) Profit analysis. Information in costs is essential to analyze the profits obtained from a product or product line. The information on the cost of a
product enables managers to assess the contribution margin – the difference between

Activity Based Costing And How It Works
I chose to write about activity based costing. I chose to write this paper because I wanted to know more about activity based costing and how it
works. According to our text, activity based costing (ABC) has received a lot of attention since the 90's. ABC has a lot of more details and can be
more complicated than all the other costing methods, however it's more accurate. "Costing systems are information systems. They require a specific
type of information such as direct labour hours and units produced, to be of value. It is from the input data that product costs and other information are
determined according to the specific costing system defined methodology. The results obtained would depend on the costing system used, since the
same input data could be used in different ways. In this case the traditional costing system or an activity based costing system" (Marx.) A costing
system should provide information to help minimize waste, but should not be wasteful in itself. In other words, the resources required to design,
implement and maintain a costing system should be less than the benefit derived from the use of the system (Marx.) "Activity based costing (ABC)
assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of
machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost of those activities
only to

Health Care Business Analysis Individual Paper
Health Care Business HCS/577 June 29, 2015 Benjamin Ovando Health Care Business Analysis In creating a new operating budget a decision had to
consider the type of budget that would best fit the needs of the hospital. Since there is several financial management practices involved with creating an
operating budget, we must understand which practice will help us create a budget that is substantial for the needs of Patton Fuller Community
Hospital. The Patton Fuller Community Hospital Nursing Statistics provided information including cost of nurse per hour, cost of nurse per 24 hour
day, number of nurses per patient, number of nurses per day, nursing cost per day, and nursing cost per month. This statistical budget is the basis
... Show
Managerial accounting provides essential data about the functions within the business. The reports that are provided by the managerial accountants
focus on the performance of the business and the business environment. Managerial accounting is manager oriented and managerial accounting focus
on the accounting duties of a manager. Managerial accounting is used on a day to day operation providing an analysis of cost and the cost benefits.
Managerial accounting function as a source for the business developments and the capital budgeting. The primary concern with managerial accounting
is to provide positive outcomes in the business production and the profit. The financial management aspect focus on providing the necessary
information to the stockholders, stakeholders, and creditors are outside the business. Financial management generates reports and statistics about the
business financial health and well being. The financial management enables stockholders to view his or her investments and see how well the
investment in progressing. The financial management tools also give future stockholders the opportunity to make future decisions. The list of seven
rules is a very clear guide for the truest financial reporting. The first rule is going concern. This states that financial

Costing System And It 's Usefulness
Costing System and it's Usefulness
Kashyap Pd. Marahatta
BUS 535 Managerial Accounting
Professor: Dr. Kaveh Shamsa
Westcliff University
11/23/2016
Abstract
This paper will discuss about the different costing system that a company can adopt. It will also try to shed light into the similarities and differences
among the job order costing and process costing. It will try to find out which costing a service firm such as an advertising agency would use. Then it
will focus on how both the systems provide decision–making information for a company. After that this paper will also talk about activity based
costing, provide examples where activity based costing is preferred over traditional costing. Then, it will explain how this costing is useful in decision
making.
Costing System and it's usefulness
For any firm, it is very much critical and crucial for the accurate estimation of product costs in order for the operations to be profitable. It is very much
essential for companies to know which products would actually generate profit for them which can only be found out by correct cost estimation. For
such cost estimation companies adopt certain system basically known as a costing system or product system or a cost accounting system. Costing
system (cost accounting system), can simply be understood as a system that can be adopted or used by a company or a firm for estimating the cost of
their products (goods or services) so as to analyze profitability, valuation of

Article Review And Exploration Cost Theory: Literature Review
CHAPTER TWO
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.1 Theoretical framework:
The following theories formed the basis on which this study lies: exploration cost theory, theory of environmental management accounting,
environmental quality cost theory, environmental audit theory, eco–efficiency accounting theory and the environmental sustainability theory.
2.1.1: Exploration Cost Theory by PricewaterhouseCoopers International (2011)
According to PricewaterhouseCoopers (2011) exploration cost theory holds that evaluation costs are incurred to assess the technical feasibility and
commercial viability of the resource found. This theory further gives clear meaning of exploration and evaluation expenditures incurred by an entity in
connection with the expenditures for and evaluation of mineral resources before the ... Show more content on Helpwriting.net ...
Estimating annual environmental costs (for example, costs of waste control, cost of mopping up oil spilled and gas flared including the fines paid)
2.Budgeting and setting targets for improvements in environmental performance
3.Product pricing
4.Investment appraisal (for example, estimating clean–up costs at the end of a project life and assessing the environmental costs of a project)
5. Identifying opportunities for cost savings
6.Estimating savings from environmental projects.
Although environmental management accounting information is intended for use mainly by management, it is also included in reports that the entity
publishes externally, such as sustainability reports/environment reports.
2.1.3 A theoretical framework for environmental management accounting, By Bebbington, J and Gray, R (2001):
The Authors suggested a framework for EMA based on providing information to management:
1. that is gathered from internal or external sources
2. As monetary or physical measurements: physical measures of energy consumption, pollution and so on can be converted into a monetary measure
3. As historical or forward–looking

The Case Of Pedro And His Peanut Business Essay
Introduction
In the case of Pedro and his peanut business, Pedro started a business of selling peanut bags and considered marginal costing approach for allocating
cost, whereby he is making money but his accountant Mark Webb depicts a real picture of how he should allocate costs to his peanuts business that
involves taking into account the fixed overheads by absorbing them, this process is known as absorption costing technique. Using absorption costing
mark is able to tell Pedro that actually he is incurring a cost of $6,252 by doing the business of peanuts. He has also explained to him the advantages of
using this techniques and how he can recover the cost and make profit out of peanut business.
Part A
In the following case Mark Webb has based his thinking on absorption costing and not on marginal costing approach on the basis of which Pedro was
calculating cost and making profit. Marginal costing is a traditional method and as per (QFinance 2014) an accounting system that treat variable and
fixed costs differently. It is a system in which variable costs are charged to cost units and fixed costs of the period are written off in full against the
aggregate contribution. Whereas, according to CIMA (2005), absorption costing has been defined as "a method which assigns direct costs or a
proportionate part of overheads to cost units by use of one or more absorption rate".In other words as per Ultimate Resources(2011) an accounting
practice in which fixed and variable costs of

Management Accounting And Practices Of Small And Medium...
2.1 Introduction
This chapter begins by looking at the literature that will give considerable information about Management Accounting and the practices of Small and
medium Enterprises, bringing out the interdependence and interrelation of one to the other.
2.2 Overview of Management Accounting
Management accounting was first known as cost accounting. This origin was reflected in the earlier title for practitioners of cost or works accountants
(Wilson and Chua, 1988). Accounting historians have long endorsed the view that cost accounting is a product of the industrial revolution (Johnson,
1981). For example (Wilson and Chua, 1993) claimed that cost accounting was practiced by the mechanized, multi process, cotton textile factories that
appeared in England and United States around 1800. This point of view was consistent with Garner (1947) who pointed out that cost accounting had
emerged only after eighteenth century as a result of the rise of the factory system in the industrial revolution. The traditional view contends that cost
accounting arose due to the increased use of fixed capital prompted accountants during the industrial revolution to graft cost accounting onto the
double–entry system (Johnson, 1981). Garner (1947) argued that the practices and theories of cost accounting origins can be traced to the fourteenth
century. (Garner, 1947) explained that the English, Flemish and German commerce have encountered significant growth during this period. and various

Cost Allocation for Decision Making
Introduction The purpose of this paper is to answer a few important questions: Why do companies allocate costs? How do companies allocate costs?
And how this cost allocation can affect the decision making of the company. It is important for the companies to find the proper method to allocate the
costs. Cost allocation is an important issue in many companies because many of the costs associated with designing, producing and distributing
products and services are not easily identified with the products and services that are created. It would have been easier for companies to allocate cost
if costs were directly traceable with the products and the cost allocation would have been minor issue for the company. The decision–making ... Show
A direct cost can be traced to a product or service which includes: Direct labor– which is the cost of the labor that's directly connected to a product or
services. Direct labor is sometimes called touch labor, since direct labor workers typically touch the product while it is being made.( Ray H. Garrison,
Eric W. Noreen and Peter C. Brewer p 39–40) An example of direct labor is an assembly line worker. Labor cost that cannot be physically traced to
the creation of products, or that can be traced only at great cost and inconvenience, are considered to be indirect labot.( Ray H. Garrison, Eric W.
Noreen and Peter C. Brewer p 40) Direct material are those materials that become an integral part of the finished product and whose cost can be
traced to the finished product.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p39–40) Manufacturing overhead is the third element so
manufacturing cost, it includes all costs of manufacturing except direct materials and direct labor. Manufacturing overhead includes items such as
indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on
manufacturing facilities. Only cost associated with operating the factory are consider to be manufacturing overhead cost. A company also incurs other
costs associated with its selling administive functions, but these costs are not included as part of manufacturing overhead. Only those

Kootney Bicycle Case
Case Study:
Kootenay Bicycle Company
Prepared for:
Cam Shackelton
Feb 13, 2007
EXECUTIVE SUMMARY
Kootenay Bicycles (Kootenay) build custom frame or bike in a large metropolitan area in western Canada since 2002. Although sales have been steadily
increasing since inception, it has not been successfully translated to profits. Signs of operational inefficiencies, lack of financing and limited
expandability limits its growth.
This report analyzes Kootenay's current strategic alternatives, with a diagnosis of the company at all levels to formulate the best strategic direction the
company should undertake. As a result, the following strategic options were considered and Kootenay is recommended to: ... Show more content on
Helpwriting.net ...
External Environment Multiple alternatives have surfaced for Kootenay including facility expansion, financing and channel distribution. These
opportunities can assist Kootenay to address the growing demand in Canada and North American for high–quality customized frame bicycle market.
Externally, Kootenay must compete with the low cost mass–manufacturer, custom bike makers at all levels and unexpected demands in the market.
Financial Analysis As shown in Exhibit, profitability has been a concern to Kootenay– gross margins are below industry average of 28–50% for its
complete bike products (EntrГ©e; –0.83%, Dlux; 7.76%, and Ultra;–6.73%) where materials have represented a high percentage of the costs (58 –
74%). Selling frame alone has shown stronger profitability (23.33%) but overall returns needs to be improved (ROA/ROE are –14%/–22%). Activity
ratio has shown the benefit of order–to–make or no overstocking of selling products (inventory turnover is 13.07 days) but Kootenay has an extended
collection period (18.96 days). Its shortage of cash ($780) discourages any short–tem obligations. As for its coverage ratios, a large part of the equity is
financed through owner's investment. Also, the allocation of 100% salary to direct labour cost has masked any labour that should be regarded as

manufacturing overhead.
Mission Statement & Owners' Preference Currently, Kootenay does not have a

Managerial Accounting: John Deere Component Works Essay
Managerial Accounting: John Deere Component Works
John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component
parts. The demand for JDCW's products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in
JDCW's competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided
to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate
costing system.
Q1. How did the competitive environment change for John Deere Company between the 1970 and 1980? ... Show more content on Helpwriting.net ...
This cost method does not provide the best system for JDCW's cost allocation. By using only three overhead rates the present system grossly
undermines the true production costs since other activities of the production process are not acknowledged. The system also fails to compute material
usage variances, which only further discredits the accuracy of the accounting cost structure. For more accurate measure of material usage, the quality
assurance department must include this variance calculation in its weekly report.
A further weakness is that the accounting department issues reports that only indicate how each area operates, rather than evaluating the performance
of each area, which would prevent a constriction in cost efficiency. These weaknesses prevent JDCW from accurately accessing its true costs.
Q3. How were the limitations of the existing cost system overcome by the ABC Cost System? What are the implications of the ABC system?
Essentially, with the current cost system, the managerial analysis is highly flawed due to a lack of crucial in–depth cost information, as indicated by:
1) JDCW already had three cost pools with appropriate cost drivers for each; 2) JDCW distinguished variable ("direct") and non–variable ("period")
overhead; 3) JDCW did not fall in the trap of charging under–capacity utilization out to current production levels (i.e., they used "normal volume" in the
denominators of their

Low Pass Rates
FACULTY OF COMMERCE AND LAW(DEPARTMENT OF BANKING AND FINANCE) RESEARCH TOPIC: A STUDY TO DETERMINE THE
REASONS For LOW PASS RATES IN MANAGEMENT ACCOUNTING AND TAX LAW AND PRACTICE
– BACHELOR OF COMMERCE IN
ACCOUNTING, BANKING AND FINANCE AT THE HARARE AND CHITUNGWIZA REGION OF THE ZIMBABWE OPEN UNIVERSITY.
ABSTRACT: Background: A study of the results of Management Accounting and Tax, Law and Practice for the past three semesters revealed
average pass rates of 33 and 35% respectively.These low pass rates triggered the desire for the researcher to carry out a study to find out the reasons
behind this state of affairs. Literature Review: In France and the U.K. it was generally agreed that students found the concepts of... Show more content
on Helpwriting.net ...
It has to be remembered that most of ZOU. Students are working parents with school or college going children. These kinds of pressures are the
backdrop to a typical student life at ZOU. Time management becomes an interesting challenge to those who do not have an abundance of it. When this
high–wire balancing act fails to deliver ,a scapegoat has to be found. That is when mitigating excuses are postulated e.g. the lecturers are out of
their depth in their specialty areas, modules are outdated etc. The legitimacy or not of these excuses is part of the subject of this study.
1.1)STATEMENT OF THE PROBLEM: Given the above background it is apparent that there is a gap between students' expectations and the results
from their studies. 1.2)RESEARCH OBJECTIVES: a) To find out the reasons for the low pass rates in management accounting and tax, law and
practice. b) To find ways of countering this negative trend and pass our recommendations onto the relevant people. 1.3)RESEARCH QUESTIONS:
Basically here we gave out a questionnaire with a grid of possible factors that may or may not affect the students' success or failure. It was
accompanied by open ended questions. 1.4 SIGNIFICANCE OF THE STUDY: The study was necessitated by the low pass rates in the past three
semesters. Consequently the results of the study will influence how ZOU, the students and other stakeholders view and approach

Questions On Direct Costs And Cost Objects Essay

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