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Assignment example - Managerial Accounting
Finance & Accounting
Pages 5 (1255 words)
Name Instructor Course Date Managerial Accounting 1. (a) (i) Valuation basis 1. Since the absorption basis lays emphasis on direct costs, $500 per day on salary is not to be considered under project cost. 2. Material A requirements 10,000 square metres 10,000*6 =60,000 5,000*6.30= 31,500 Total expected direct cost on material A=$91,500 Actual cost of material A 7*10,000=$70,000+ (5,000*6.50) =$102,500 102,500-91,500=11,000 The inventory of material A will form part of direct cost for material A to be used in the manufacturing process…
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5. Machine requirements Man hour costs 1,000*15=$15,000 1,000*12.50=12,500 2,500 Man hour costs forms part of direct labour costs since it must be met for the process to take place. 6. Engineer’s charges Monthly salary= 42,000/12=$3,500 This forms part of the indirect labour cost since it is not primary for the initial stage of the project. (ii) The valuation in the context of the proposed tender is valid hence need to be considered by the company. The direct costs being considered on the basis of absorption cost are lower than the overall revenues expected from the entire project. Direct material A is the direct material A available in stock and awaiting to be used in the manufacturing process. Direct material B is the direct material B available in stock and awaiting to be used in the manufacturing process. Direct Labour is the amount of direct labour that will be used in the production process to generate initial revenue. ...
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