Managerial Accounting Journal of Accounting Education

Question: Discuss about the Managerial Accounting for Journal of Accounting Education. Answer: Management Accountant has critical position in a company having the responsibility of securing the assets of the organization and monitoring it from Frauds activities. The management accountant is risk taker, owners of the assets, organizers and the strategists of the organization. As an accountant of the association, it is an essential obligation to guarantee that the individual interest ought not to tracking stock into the contention with the enthusiasm of the organization (DRURY 2013). Employees and colleagues who involve in fraud, they must be suspended immediately. Furthermore, if such situation occurs, it must be instantly conveyed to the compliance and fraud department as well as the HR department of the company. As an Accountant the following steps should be taken The diverting of organization's assets for individual use is an unethical movement and cannot be acknowledged. Primarily action will be taken that, take away all control of the asset for any suspicious activity of the organization, investigation will be conducted, and clues against him have to be collected and report it. He is my colleague or the immediate supervisor it will not be a good to approach to talk to him face to face because it is related to organization's asset and the matter is quite genuine. (Braun 2013) 2. Cost of goods manufactured is 1617600 the calculation is given in Table 1. Cost of goods sold is 2076600, the calculation is given in the Table 1. Details Amount Amount Direct: Material 378000 Labor 480000 Prime cost 858000 Indirect: Material 84000 Labor 186000 Dep. Of manuf. Equip. 264000 misc. Plant O/H 135000 Property tax on manuf. Plant building 28800 Plant Utility 92400 Factory cost (Gross) 790200 opening W-I-P 140400 Closing W-I-P -171000 759600 Factory cost (Net) or cost of goods manufactured 1617600 General office expenses 305400 Depreciation of office equipment 123600 429000 Cost of production 2046600 Open. Fin. Goods 540000 Close. Fin. Goods -510000 30000 Cost of Goods Sold 2076600 Marketing distr. Cost 30000 Cost of Sales 2106600 Table 1: Cost Sheet (c) Inventorial cost are direct and indirect raw material which is 378000 and 84000 respectively, opening and closing W-I-P and Finished goods which are 140400 171000 and 540000 510000 respectively. Whereas period cost is general expenses, depreciation on office equipment and marketing and distribution cost which are 305400, 123600 and 30000 respectively. (d) The value of the cost of goods manufactured in the income statement is Rs. 1617600. However, Cost of goods manufactured schedule is used to determine the period cost of producing products. This amount is achieved after transferring it finished goods statement. Example is discussed below in Table 3. COST SHEET Particulars amt amt Direct materials used Opening R. M. 5200 Cost of R.M. Purchased 40000 total R.M. 45200 Closing R.M. -4000 Total R.M. used 41200 Direct labor 100000 Manuf. O/H Indirect R.M. Labor 40000 dep. And other fact. Exp. 13850 53850 Total manuf. O/H 195050 Open. WIP 120000 Close. WIP -95000 25000 Cost of goods manuf. 220050 Income Statement Particulars amt amt amt Sales 450000 COGS Open. Fin. Goods 14200 Cost of goods Manuf. 22300 Total good avail. For sale 36500 Close. Fin. Goods -10900 COGS 25600 Gross Profit 424400 Selling exp. 86300 Admin. Exp: Off. Salary 30000 Dep. Off. Equip. 11500 insurance 15000 Total Admin exp. 56500 Total operate. Exp 142800 EBIT 567200 Interest -4562 EBT 562638 Tax -15632 NET INCOME 547006 Table 3. Cost Sheet 3.Budgeted manufacturing overhead rate of each department is given below in Table 4. Manuf. O/H rate Depart. 100 = 57500/4000 =14.35/machin. Hr. Manuf. O/H rate Depart. 200 = 62500/8000 =7.18/ machine hr. Table 4. Budgeted overhead manufacturing head Journal Entries Sl.no. Particular Dr. Cr. 1. Material Control Deprt. 100 A/c 110000 To, Accounts Payable A/c 110000 2. W-I-P Control Depart. 100 A/C 32500 Manuf. O/H Control Depart. 100 A/C 7500 To, Material Control Depart. 100 A/c 40000 3. W-I-P Control Depart. 100 A/C 52500 Manuf. O/H Control Depart. A/C 11000 To, wages payable control A/C 63500 4. Manuf. O/H Control Depart. 100 A/C 17250 Lease payable control A/C 16250 To, Utilities payable control A/C 1000 5. W-I-P Control Depart. 100 A/C 11500 To, Manuf. O/H Allocated A/C 11500 Total cost of the Job A in given below in Table 5. Particulars Amt(Rs.) Direct Material Depart. 100 32500 Direct Material Depart. 200 13500 Direct Manufacturing Labor depart. 100 52500 Direct Manufacturing Labor depart. 200 53500 Manufacturing O/H Depart. 100 11496 Manufacturing O/H Depart. 200 2343 TOTAL 165839 Table 5. Total job cost An allocation base is the premise whereupon a substance dispenses its overhead expenses. (Kaspina et al. 2014) An allocation base appears as an amount, for example square footage involved. Taken a toll designations are for the most part used to dole out overhead expenses to created stock, as needed by a few accounting systems. The normal portion process in a multi-division organization is: Assign working division costs to items and administrations. Allocate administration division expenses to working offices. A decision marker that a designation base is fitting is when changes in the portion base relate to changes in the real cost. Here are a few cases of appropriation allocation bases: The PC administrations office allots its costs taking into account the quantity of PCs utilized by each working division, or by the quantity of administration calls to each working office. The HR office distributes its costs given the quantity of representatives working in each working division. Most associations utilize a little number of assignment bases to allot overhead expenses; however, a point by point movement based costing system may utilize a significant expansive number of them. Supervisors ought to know about each allotment base being utilized, since it is the premise for overhead charges being allocated to their specializations. They may adjust the exercises of their areas of expertise to decrease their utilization of every designation base, subsequently lessening the costs allotted to the department. For example: Allocating Manufacturing Overhead Via Direct Labor Particular Product A Product B TOTAL Units of product to be manufacturer 7563 15235 Direct labor hours/ unit 13 20 Total Direct labor hours expected 98319 304700 Total annual expenses. Manufac. O/H Costs - - 1260000 Manuf. O/H Cost per Direct labor hours - - 5 Manuf. O/H alloca./Unit of Product 20 30 Manuf. O/H Alloc. To all items 491595 1523500 4 Production cost worksheet if spoilage is recognized and the weighted-average method is used is given in Table 6. Production Cost Worksheet Flow of Production Physical Unit Direct Material Conversion WIP- Begin. 37500 Started During Period 55000 Total account 92500 Goods Units Completed 75000 75000 75000 Normal spoilage 3000 3000 3000 WIP-ending 14500 14500 8700 Accounted for 92500 92500 86700 Costs Total Direct Mat. Conversion WIP-Begin 35000 25000 10000 cost added during period 156406.25 113750 42656 Total costs to account for 191406.25 138750 52656 Divided by equivalent units 92500 86700 Equivalent Unit Costs 2.10733564 1.5 0.60733564 Assignment OF COST Cost trans. Out 158050.173 Normal Spoilage 6322.00692 WIP Ending: Direct Material 21750 Conversion 5283.82007 Cost accounted for 191406 Table 6. Production Cost Worksheet and Assignment of cost Cost accumulation refers to collection and maintenance of the database of the cost occurred from business in the process of operation (Kaplan and Atkinson 2015) .Two most important cost accumulation are of two types, Job order system and Process costing system. From our research we have found out Process Costing has an advantage over cost accumulation because of the following reason: Cost management Process costing creates mistakes in the production system. Administration bookkeepers must figure equal units in the process costing framework. Comparable units speak to the measure of unfinished merchandise left in a procedure toward the end of a bookkeeping period. This count may just be a best figure or an appraisal by administration bookkeepers (Horngren et al. 2014) Consistency - Many companies gives permission to their department individually (Ellul et al. 2015). Through the execution of a procedure costing framework, an organization will guarantee that each division, paying little heed to work, works in a uniform way. This will permit individuals from the assembling store network to be in a state of harmony with each other. Inventory Control - The IRS utilizes this data to precisely esteem the business with the goal that duty appraisals can be made. - The IRS requires all organizations that keep up a stock to fastidiously track and report its supply. Tracking stock can be an awkward errand for extensive enterprises. This procedure can be streamlined, be that as it may, through the usage of a procedure costing framework. Flexible - Entrepreneurs use process costing since it makes an adaptable creation process. (Kinney and Raiborn 2013)Organizations expecting to refine their procedure can basically include or expel a procedure as vital. This likewise permits organizations to bring down their generation cost for every great. Reference List: Braun, K.W. 2013, "Custom fabric ventures: An instructional resource in job costing for the introductory managerial accounting course",Journal of Accounting Education,vol. 31, no. 4, pp. 400-429. DRURY, C.M., 2013.Management and cost accounting. Springer. Ellul, A., Jotikasthira, C., Lundblad, C.T. and Wang, Y., 2015. Is historical cost accounting a panacea? Market stress, incentive distortions, and gains trading.The Journal of Finance,70(6), pp.2489-2538. Horngren, C.T., Datar, S.M., Rajan, M.V., Wynder, M.B., Maguire, W.A.A. Tan, R.C.W. 2014,Cost accounting: a managerial emphasis,2nd edn, Pearson Australia, Frenchs Forest, NSW. Kaplan, R.S. and Atkinson, A.A., 2015.Advanced management accounting. PHI Learning. Kaspina, R.G., Khapugina, L.S. and Zakirov, E.A., 2014. Employment of activity-based costing in the process of company business model generation.Life Science Journal,11(8), pp.356-359. Kinney, M.R. Raiborn, C.A. 2013,Cost accounting: foundations and evolutions,9th edn, South-Western, Cengage Learning, Mason, OH.