Costing Systems Assignment: Job And Process Costing, Joint Costing, Variance Analysis, And Budgeting

Task

A: 

There exists a huge difference in the construction of the great Pyramid of Giza during its establishment 4500 years ago. The establishment of the pyramid involved the use of conventional approaches that included various stages like the planning, execution, initiation, designing and closing. During the construction of the great pyramid, certain limitations were there that included cost, mechanisms and the resources (Tucker, & Schaltegger 2016). The implementation of the new cost management accounting process would lead to a variation in the difference within the techniques used for the purpose of construction along with the termination of limitations discussed earlier.

In this respect, which is in relation to the construction of the great pyramid, the implementation of the process costing would be ideal. It would be helpful for the segregation of cost that would assist in handling the cost of construction. The cost per unit of the products has been estimated to be the cost that is similar to the cost found to be in processed costing. The processed costing is dependent on the standard cost that is helpful when a wide range of products is manufactured (Voußem et al., 2017). The construction of the pyramid would become very complicated without explaining the real cost that is associated. Nevertheless, the introduction of the processed costing would be helpful in allocating the real cost of the product.           

 Computation of Equivalent Units:

Cost per Equivalent Units:

 

Cost of Finished Goods and Closing Stock:

Particulars		Amount
Total Joint Production Cost	A	$250,000
Less: Joint Cost allocated to A	B	$187,500
Joint Cost allocated to B	C=A-B	$62,500
Sales Volume of C (in kg.)	D	60000
Selling Price per kg. of C	E	$4.50
Net Realisable Value of C	F=DxE	$270,000
Net Realisable Value of D	G=Fx(C/B)	$90,000
Sales Volume of D (in kg.)	H	40000
Selling Price per kg. of D	I=G/H	$2.25

The net profit, earned in general circumstances, are computed below:

However, if the company sells product A for $2 per kg at the spilt-off point, the the outcomes of the business operation would be as follows:

As the company would incur huge loss in this new scenario, it should process product A further instead of selling it outside.

The process of variance analysis refers to identifying and recognising the case of variance in the expenditure and income of the values that are budgeted from the values of the present year. The factors that have led to the arrival of the fluctuations in the budgeted amount is recognised with the help of the variance analysis. Furthermore, it aids to effective budgeting operations eventually. The potency of the control mechanism is analysed by undertaking such assessments that aids the management in coming up with ideas that would assist in restricting such divergences (Alawattage et al., 2017). It aids in assisting during the allocation of the responsibilities, which makes the departments occupied with the control methods.    

The evaluation of the variance is regarded a vital equipment in business management and is pertinent in the management accounting method. It aids in evaluating the reason for deviation among the anticipated and the real values that aids in enhancing the efficiency and in that manner assists in maintaining the command over the expenditure of the project by efficient supervising of the planned versus and the real expenditure. The various issues, opportunities and the patterns with respect to the short-term and the long-term accomplishment for any venture of the company are discovered with the help of efficient variance evaluation. It aids in determining the variances of cost and revenue.   

1 Job costing

The quantitative examination has been significant in several other locations like the assessment of the performance, human resource department and organizational behaviour. It aids in giving out open communication regarding the feedback expectation and the performance of various other departments. The financial end result of the company is associated directly with the performance of the human resource and the variance assessment aids in creating the relationship between the changes in numerous departments (Van der Stede, 2015). The implementation of the variance analysis aids in evaluating the responses of the employees in several aspects that will assist in achieving the feedback. The managers at several levels functioning in various departments utilise the variance evaluation that aids them in introducing the efficient mechanisms and equipments of managing the costs. They look to obtain the maximum level of benefit from the variance of material usage.

A:

 

Workings:

B: 

The construction of the budget in the company requires to be undertaken in order to make sure that it inserts into the regulations and the policies of the government. It is essential to choose the cost efficient variants during the construction of the budget. There are four crucial proportions are associated in the method of formulation of the budget (Klychova et al., 2015). The budget integrates assigning the resources in a strategic manner and manages the expenses aggregately. The means of political demands requires to be persistently applied for enhancing the revenue estimations that aids in toughening the connection among the budgetary policies and the expenses. During the time of carrying out the budget, it is essential to consider certain political factors and the required information that is lacking (McLaren et al., 2016). The preparation of the budget on the core ventures is associated and is dependent on the enhanced political assistance of the company. A company is always financially and politically answerable as both of them are interconnected with each other. The flaws in the preparation of the budget depend on several political factors and with respect to government, the preparation of the budget is considered as the political method. The budgetary evaluation by the government is constructed while looking at the fiscal and the monetary policies (Grunewald et al., 2014).  

The budget proposal is a communalist program as explained in the figure above. As various departments of a company are associated with the construction of the budget, it is definitely possible that there can be changes in the anticipated figures that might be for their own interest and not providing the purpose of the organization (Bouten, L., & Hoozée 2013). The significant ingredients associated in the construction of the budget are significantly related with the decision making power of the company.

References

Alawattage, C., Wickramasinghe, D., & Uddin, S. (2017). Theorising management accounting practices in Less Developed Countries. The Routledge Companion to Performance Management and Control.

Bouten, L., & Hoozée, S. (2013). On the interplay between environmental reporting and management accounting change. Management Accounting Research, 24(4), 333-348.

Grunewald, K., Syrbe, R. U., & Bastian, O. (2014). Landscape management accounting as a tool for indicating the need of action for ecosystem maintenance and restoration–Exemplified for Saxony. Ecological Indicators, 37, 241-251.

Klychova, G. S., Zakirova, A. R., Zakirov, Z. R., & Valieva, G. R. (2015). Management aspects of production cost accounting in horse breeding. Asian Social Science, 11(11), 308.

McLaren, J., Appleyard, T., & Mitchell, F. (2016). The rise and fall of management accounting systems: A case study investigation of EVA™. The British Accounting Review, 48(3), 341-358.

Tucker, B. P., & Schaltegger, S. (2016). Comparing the research-practice gap in management accounting: A view from professional accounting bodies in Australia and Germany. Accounting, Auditing & Accountability Journal, 29(3), 362-400.

Van der Stede, W. A. (2015). Management accounting: Where from, where now, where to?. Journal of Management Accounting Research, 27(1), 171-176.

Voußem, L., Kramer, S., & Schäffer, U. (2017). ANNOUNCEMENT DAVID SOLOMONS PRIZE Sponsored by CIMA.