StudentShare solutions
Triangle menu

Management Accounting Scenarios and Applications - Assignment Example

Not dowloaded yet

Extract of sample
Management Accounting Scenarios and Applications

In this way, a proper mechanism can be developed which can easily assist the departmental head regarding the cost patterns (Drury, 2006). Variance Analysis Variance Analysis is the next tool which can be used by the departmental heads after the incurrence of actual costs (Drury, 2006). This tool supports the departmental managers as to identify the cost which is actually representing more deviations from the estimated/budgeted/standard cost. Once the cost is identified to have shown deviations, proper investigations should be conducted as to find out the causes of the deviations of that cost. The variance can be either favorable or adverse; however, the departmental heads should investigate both types of variances because at times the favorable variances occur due to using substandard raw materials or other similar issues. By utilizing the above mentioned tools, the departmental heads can easily trace as well as monitor and control the cost patterns of their department. Email 2: The following response is generated to guide Brenda in respect of the equipment to be included in the capital budgeting process: Identification of Cash Flows For any equipment to be included in the capital budgeting process, the first and foremost step of including the particular item is the identification of all possible cash inflows and outflows along with their evaluation (Garrison, 2009). All the equipments have a particular initial outlay followed by the benefits (cash inflows in monitory terms) over its remaining useful life. However, the exact amount of cash inflows to be received is a bit judgmental task and needs careful estimation and forecast. The scenario mentioned in the case, needs a little adjustment as the printing machine to be purchased has a useful life of less than a year. Generally, equipments which are included in the capital budgeting process have a useful life of more than a year and their cash flows are estimated on yearly basis. In this scenario, the situation is a bit different. Here, an adjustment can be made such that a discount factor on monthly basis should be used by Brenda, and the Net Present Value of the printing machine should be calculated on monthly cash flow basis. If the NPV of the printing machine comes in positive figures, then the printing machines should be recommended for the final capital budgeting process. However, in case if the negative figure comes up for NPV, then plan for acquiring the printing machine should be discarded as it is no more feasible for Brenda to exploit the machine in best possible manner (Gupta, 2001). Email 3: Breakeven Quantities This response is presented for Carl’s inquiry regarding the breakeven quantity. Under the existing situation when fuel changes are not added in the cost of the product, the contribution earned is $1.87. However, if the cost of fuel is added, then contribution is decreased to around $1.72. As a result of this change in the cost of the product, the breakeven quantity to be sold is also changed such that before the increase in the cost, the breakeven quantity is around 445,283 units. However, after the increase in the cost, the breakeven quantity is increased to around 484,116 units. Target Profits Assuming if the company is also interested in earning some profits of let’s say $100,000 then in that case, the company needs to sell some more units so that they can earn this much profit. It can be ...Show more

Summary

Email 1: In response to Andrew’s email, the following strategy is advised to make a control over the sales expenses: Budgeting An effective way of estimating, controlling and monitoring, budgeting is the most preferred as well as an effective tool that can assist the departmental heads…
Author : janicekovacek
Management Accounting Scenarios and Applications essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Management Accounting Scenarios and Applications"
with a personal 20% discount.
Grab the best paper

Related Essays

Risk Management: Principles and Applications
A short position in calls Selling a call on the stock offers some limited protection against modest price declines; however one would still incur losses if the prices were to fall by a large amount. This is because the potential profits for the call writer are opposite to those of the call holder.
10 pages (2500 words) Assignment
Summary of Statement of Financial Accounting Concepts 7
This Statement is significant because it provides the framework to use the future cash flows in accounting measurements at initial recognition or fresh-start measurements. It describes the principles that are helpful in using the present value especially when the future cash flows and their timings are uncertain.
5 pages (1250 words) Assignment
Management accounting
The main purpose of the operating statements of income statement is to help the companies to evaluate their performance on the basis of sales and expenses. The income statement reflects strongly upon the profit and loss occurred in the company according to the sales and expenses of the firm.
7 pages (1750 words) Assignment
Management accounting
The management process is dynamic consisting of various activities, elements and functions (Hermanson 2010). The key major management functions involve planning, controlling, decision making and communicating. It is notable that management accounting information is very vital in executing these management functions in an organization.
4 pages (1000 words) Assignment
NEEDS DOCUMENT, USE CASES, AND SCENARIOS
All the enumerated areas within the corporation are applying various business systems of which each of them gives challenges. On this basis, integrating system to facilitate customers purchasing products easily is projected. Automating most of the processes is the project the company has embarked.
7 pages (1750 words) Assignment
Management Accounting
The main reason for doing this is that, these investments involve commitment of large sums of funds; they take a long time, require much commitment from the management and are irreversible. The four major techniques used for evaluating investment in capital projects include: accounting rate of return (ARR), Payback period technique, net present value (NPV) technique, and internal rate of return (IRR) (Gotze, et al., 2007).
11 pages (2750 words) Assignment
Management Accounting
The decisive issue in management accounting is whether the government, organization or consumer is more contented with the transaction or dealing made. Civic actions will tend to generate either more benefits or demerits that determine
6 pages (1500 words) Assignment
Management accounting
ements and the information provided by the company, it is evident that the company is producing and selling units less than its budgeted figures show. The variance analysis is the most commonly used tool for evaluating the performance of a business by comparing its costs and
7 pages (1750 words) Assignment
Management accounting
The organizing fee comprises decoration of the room with the help of balloon or room enhancements or theme party. She is about to start her business
6 pages (1500 words) Assignment
Management Accounting
The primary purpose of the costing systems in companies is to ensure that the cost of production, operation and other activities are determined and controlled. The management accountants
7 pages (1750 words) Assignment
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation