Question : 'The purpose of this report is to develop appropriate understanding of learner in the context of management accounting by considering cost calculation approaches with reference to current traditional costing system. Discuss cost per unit of basic and advance models with reference to current traditional costing system. Analyze cost per unit of the two models in the context of Sewing Easy ltd. Evaluate motive of overseas buyers in respect with buying advanced model in Sewing Easy ltd. Identify the reason behind same overheads and suggesting ways in the context of fluctuations. Discuss the benefits and limitations of Sewing Easy ltd. ' Answer : INTRODUCTION Management accounting is the process of preparing reports and accounts which provides manager with accurate financial as well as statistical information for short-term decision making. In the context of business unit, management accounting ensures better planning and exerts control over the business organization. The present report is based on the case scenario of Sewing Easy ltd which mainly manufactures two models such as basic and advance. Now, with the motive to enhance customer base and maximize profit level business unit wants to explore operations at global level. Hence, in this, report will provide deeper insight about the cost of two concerned models under traditional and activity based costing method. Further, report also depicts the advantages and drawbacks associated with ABC system. You Share Your Assignment Ideas We write it for you! Most Affordable Assignment Service Any Subject, Any Format, Any Deadline Order Now View Samples Calculating cost per unit of basic and advance models of sewing machines under current traditional costing system Traditional costing system Overhead rate: Total manufacturing overhead / total labour cost Particulars Basic model (Figures) Advance model (Figures) Manufacturing overhead $250000 (refer W. N. 1) $451700 (refer W. N. 2) Labour cost (refer W. N. 3) 240000 390000 Overhead rate $1.04 $1.16 Working note 1: Computation of total indirect overheads for basic model Particulars Figures (in $) Inspection $20000 Assembly $90000 Production Scheduling $105000 Machine set-up $35000 Total $250000 Working note 2: Total indirect overhead cost assessment for advance model considering other operating expenses are enumerated below: Particulars Figures (in $) Total indirect expenses as per basic model $250000 Add: selling and administration $140600 Add: interest expense $25200 Add: office rent $35900. Total $451700 Working note 3: Computation of total labour cost Particulars Basic model (Figures in $) Advance model (Figures in $) Units produced and sold 1600 1500 Direct Labour cost per unit 150 260 Total labour cost 240000 390000 Calculation of total unit cost pertaining to basic and advanced model is as follows: Basic model (Figures in $) Advance model (Figures in $) Direct material cost per unit 325 560 Direct Labour cost per unit 150 260 Overhead cost (150 * 1.04) = 156 (150 * 1.16) = 174 Unit cost 631 994 Computing cost per unit of the two models of sewing machines under Activity based Costing Unit cost assessment as per activity based costing Particulars Indirect / overhead costs Relevant cost driver Total of activities Indirect / overhead costs / related cost driver Inspection $20,000 Inspection 950 $21.05 Assembly $90,000 Assembly 8000 $11.25 Production Scheduling $105,000 Production Scheduling 550 $190.91 Machine set-up $35,000 Machine set-up 350 $100 Particulars Total Indirect / overhead costs Total of activities Activity rate (A) Activity Usage (Basic model) (B) Activity Cost Assigned to basic model [C = (A * B)] Activity Usage pertaining to Advance model (D) Activity Cost Assigned to advance model E = (A * D) Inspection $20,000 950 $21.05 200 $4,210.53 750 $15,789.47 Assembly $90,000 8000 $11.25 4600 $51,750.00 3400 $38,250.00 Production Scheduling $105,000 550 $190.91 50 $9,545.45 500 $95,454.55 Machine set-up $35,000 350 $100.00 100 $10,000.00 250 $25,000.00 selling and administration $140600 $140600 * 36% = $50616 (refer w. n. 4) interest expense $25200 $25200 * 6% = $1512 (refer w. n. 4) office rent $35900. $35900 * 9% = $3231 (refer w. n. 4) Total overhead cost $75505.98 $229853 Per unit overhead cost $75505.98 / 1600 = $47.19 $229853 / 1500 = $153.24 Working note 4: Particulars Total Indirect / overhead costs Labour cost (advanced model) selling and administration $140600 390000 36% interest expense $25200 390000 6% office rent $35900. 390000 9% UPTO50% Avail The Benefit Today! To View this & another 50000+ free Enter Email Submit
INTRODUCTION In market there are variety of opportunity available which convert mindset of many people to become entrepreneur and serve in market. Hence, there are many products and services not available in market place even in quality too. Moreover, an entrepreneur is that who takes risk out of
INTRODUCTION For any organization it is very important to have a proper planning and management whether it is a small or big business. Planning is a tool which is used to formulate detailed planning and strategies to achieve the targeted aim or objective for business. It helps to grow organization
INTRODUCTION Innovation is an idea in which organization creates or implement an idea or invention into their goods and services which can help to increase their value and customers in the target market. For any business it plays an important role in upgrading them. It can be used a tool for the
INTRODUCTION Business planning can be defined as clear plan of ongoing activities that supports entity in expansion and enhancing profit of enterprise. Present study is based on Allied Worldwide Ltd which is IT firm. Company assists its corporate consumers to develop their business by providing
INTRODUCTION organizational behaviour is concerned with understanding, controlling and predicting of behaviour of people and interactive relationship is influenced by their culture. Behaviour of organization is an attempt to understand people on the basis of meeting the needs and wants of people
INTRODUCTION Planning for growth is required by which business can attain desired objectives with much ease. Present report deals with Exotic Coffee Shop which will start its new business by providing coffee to customers in Marylebone location in London. Business plan is outlined with main
INTRODUCTION For enhancing business in respect to global economics,, it is essential that company provide higher productivity which will improve and provide firm competitive advancement. To grow in market area, it is essential that organization take eligible candidates for operating business in an
INTRODUCTION Planning perform very important role in the growth and success of enterprise activities. It aid in determining of factors and making policies according to market situation. Use of policies made by companies contribute in accomplish of work and its objectives (Planning for growth,
INTRODUCTION Planning means to come with various approaches which are effective for growth of company and this is effective to make changes in business operations. Through planning it is possible to plan activities in approaches in significant way. There are possibilities that while planning
Introduction The concept of brand management focuses on the process which are helpful to an organisation in uplifting stature and popularity amongst the prospective buyers. Brand management takes into account ideal administration of tangible and intangible resources for the welfare of an
