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Management Accounting Report.

Extracts from this document...

Introduction

MANAGEMENT ACCOUNTING REPORT 3 INTRODUCTION 3 1. BREAK-EVEN 4 INTRODUCTION (BREAK-EVEN) 4 METHOD OF INVESTIGATION (BREAK-EVEN) 4 FINDINGS (BREAK-EVEN) 4 SUMMARY (BREAK-EVEN) 8 RECOMMENDATION (BREAK-EVEN) 8 2. MARGINAL COSTING 8 INTRODUCTION (MARGINAL COSTING) 8 METHOD OF INVESTIGATION (MARGINAL COSTING) 9 DESCRIPTION 9 FINDINGS (MARGINAL COSTING) 9 SUMMARY (MARGINAL COSTING) 11 RECOMMENDATION (MARGINAL COSTING) 11 2.1. PART TWO OF MARGINAL COSTING 12 INTRODUCTION (PART TWO OF MARGINAL COSTING) 12 METHOD OF INVESTIGATION (PART TWO OF MARGINAL COSTING) 12 FINDINGS (PART TWO OF MARGINAL COSTING) 12 GROSS PROFIT 12 NET PROFIT 12 CONCLUSION (PART TWO OF MARGINAL COSTING) 13 RECOMMENDATION (PART TWO OF MARGINAL COSTING) 13 3. INVESTMENT APPRAISAL 14 INTRODUCTION (INVESTMENT APPRAISAL) 14 METHOD OF INVESTIGATION (INVESTMENT APPRAISAL) 15 FINDINGS (INVESTMENT APPRAISAL) 15 CONCLUSION (INVESTMENT APPRAISAL) 17 RECOMMENDATION (INVESTMENT APPRAISAL) 18 4. BUDGETARY CONTROL 19 INTRODUCTION (BUDGETARY CONTROL) 19 METHOD (BUDGETARY CONTROL) 19 FINDING (BUDGETARY CONTROL) 19 CONCLUSION (BUDGETARY CONTROL) 25 RECOMMENDATION (BUDGETARY CONTROL) 26 4.1 BUDGETARY CONTROL PART B 27 INTRODUCTION (BUDGETARY CONTROL PART B) 27 METHOD (BUDGETARY CONTROL PART B) 27 FINDINGS (BUDGETARY CONTROL PART B) 27 CONCLUSION (BUDGETARY CONTROL PART B) 30 RECOMMENDATION (BUDGETARY CONTROL PART B) 30 5. STANDARD COSTING AND VARIANCE ANALYSIS 30 INTRODUCTION (STANDARD COSTING AND VARIANCE ANALYSIS) 30 METHOD (STANDARD COSTING AND VARIANCE ANALYSIS) 30 FINDINGS (STANDARD COSTING AND VARIANCE ANALYSIS) 31 CRITICAL EVALUATION 32 CONCLUSION (STANDARD COSTING AND VARIANCE ANALYSIS) 32 RECOMMENDATION (STANDARD COSTING AND VARIANCE ANALYSIS) 32 6. OVERHEAD ABSORPTION & JOB COSTING 33 METHOD OF INVESTIGATION (OVERHEAD ABSORPTION & JOB COSTING) 34 FINDINGS (OVERHEAD ABSORPTION & JOB COSTING) 34 CONCLUSION (OVERHEAD ABSORPTION & JOB COSTING) 35 APPENDIX 1 36 BREAK-EVEN 36 APPENDIX 2 37 MARGINAL COSTING 37 APPENDIX 3 38 INVESTMENT APPRAISAL 38 APPENDIX 4 39 BUDGETARY CONTROL 39 APPENDIX 5 40 STANDARD COSTING 40 APPENDIX 6 41 OVERHEAD ABSORPTION AND JOB COSTING 41 Management Accounting Report TO: Jenny Clarke FROM: Merita Myrtollari REF: The Oakdene Engineering DATE: 5th of March 2003 Introduction The purpose of this report is to help making decisions and recommendations to Oakdene Engineering limited company to develop new products. ...read more.

Middle

129999 137499 119999 119999 122499 109999 114999 137499 144999 135007 1530000 NET CASHFLOW -24503 7001 14001 6501 1 1 -14499 -13999 -6999 6501 35001 20993 30000 OPENIBG BALANCE 20000 -4503 2498 16499 23000 23001 23002 8503 -5496 -12495 -5994 29007 20000 CLOSING BALANCE -4503 2498 16499 23000 23001 23002 8503 -5496 -12495 -5994 29007 50000 50000 CASH FLOW FORECAST AT HIGHER PRICE NAME: PERIOD: RECEIPTS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL � � � � � � � � � � � � � Cash from debtors/ sales 105600 118800 132000 132000 105600 105600 118800 105600 118800 158400 198000 171600 1570800 TOTAL RECEIPTS 105600 118800 132000 132000 105600 105600 118800 105600 118800 158400 198000 171600 1570800 PAYMENTS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL Production 40000 45000 50000 50000 40000 40000 45000 40000 45000 60000 75000 65000 595000 Sales and Marketing 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 240000 Rates 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000 Finance 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 90000 Office payroll 18337 18333 18333 18333 18333 18333 18333 18333 18333 18333 18333 18333 220000 General office overheads 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 90000 Office equipment 10000 10000 Contingency fund 7500 7500 7500 7500 30000 Factory overheads 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000 TOTAL PAYMENTS 130837 118333 123333 130833 113333 113333 125833 113333 118333 140833 148333 138333 1515000 NET CASHFLOW -25237 467 8667 1167 -7733 -7733 -7033 -7733 467 17567 49667 33267 55800 OPENIBG BALANCE 20000 -5237 -4770 3897 5064 -2669 -10402 -17435 -25168 -24701 -7134 42533 20000 CLOSING BALANCE -5237 -4770 3897 5064 -2669 -10402 -17435 -25168 -24701 -7134 42533 75800 75800 MONTHLY SALES BUDGET Current Price �1,200 Incresed Price �1,320 Cumulative Sales Cumulative sales Month Unit � Unit � Current Price Increased Price ...read more.

Conclusion

Adverse variances can be caused by a number of issues. These issues are divided in to different categories. The categories are: Beyond the management control Within the management control Prices going up Staff absences Staff illness Supervision Power cuts Machine maintenance Fire Staff motivation Flood Materials Wastage Appendix 6 Overhead Absorption And Job Costing Fixed costs need to be spread in to the cost centres. Allocation is when it is possible to say how much has been used by each department. The way to do that is by using meters or swipe cards. Apportionment is when a method is used and agreed by all managers. Overhead absorption - after the overheads are in to the cost centres, they must be absorbed into the cost unit price. There are three possible methods that can be used: 1. Labour hours 2. Units of production 3. Machine hours Once the a price has been set to cover variable costs, fixed costs and profit, then estimates can easily be prepared for jobs. Job costing is used where: * Each job can be identifies separately from other jobs * Costs are charged separately for each job The main steps involved on the job costing are: * A separate job cost has to be issued for all jobs within an organisation. * If things are not looking to well for a particular job the managers then will take it on consideration. Cost units are the units of production to which costs can be charged. Cost centres are sections of a business which costs can be charged. The problems that might come from overhead apportionment and absorption costing are: * Managers might not agree with the decision taken * The way that they decide to separate the overheads it might not be fare on all departments within the company. * It might bring conflicts between managers and then it will be a communication break down within the business, which will affect the success of the company. 1 Merita Myrtollari 42 ...read more.

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