Management Accounting

MANAGEMENT ACCOUNTING Answer -1 appeal is the allocation of disbursals link to products. The nerve of Overhead is assigning the confirmative apostrophize like confirmative material goes to material overhead, disparagement goes to the manufacturing overhead. As per the ageing carcass, they didnt have embody drivers much(prenominal) as prepare administer hail and peculiar(a) component manipulation approach singly provided they are allocating the apostrophize drivers to externalize price and administrative follow and that leads to inefficient results and shows the low cost of per unit of motor. In the aging be schema, there was contrast in the assigning of confirm related overhead as compared to the pertly be system. This variance resulted in determining the lord manufacturing cost of the motors. The overaged be system ignored the model of cost drivers and that resulted in under(a) estimating the cost of motor. The old cost system was employ the cost as engineering cost and spare components cost and did non depute the costs accordingly. In the vernal be system, they have naturalized peeled cost drivers videlicet point processing cost and special component discussion cost. additional component cost is a type of unit take cost whereas order processing cost is sort under batch take aim cost driver.

They introduced two new natural action cost pools to know the accurate cost of per motor. They reduce the engineering costs and administrative cost by 1.74% & 7.46% respectively and allocated it to new cost pools. In the old costing system, they are allocating special components on average basis whereas in new costing system they are allocating as per the components use in the motors. In the old costing system, they do not have incite related overhead. The old system was not able to suppress the birth between increased support costs and change in product mix where as new costing has intimately achieved it. Later on, they also pull in that material expense and machine hours required to manufacture the motors was...If you require to get a all-encompassing essay, order it on our website: Orderessay

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