In: Accounting
Question 4
Ensure your explanation clearly explains the purpose of management accounting.
Tasks
Briefly explain the following:
No of tests |
Costs |
|
July |
30 |
7,315 |
August |
25 |
6,500 |
September |
34 |
8,120 |
October |
28 |
6,990 |
November |
32 |
7,950 |
December |
31 |
7,445 |
Task
Using the high low method, calculate the fixed cost per month and the variable cost per test.
d) King Ltd uses a job costing system. The company’s budget for the year included a budgeted total manufacturing overhead cost of $1,800,000 and budgeted total direct labour hours of 60,000 hours. Manufacturing overhead cost is applied to jobs based on direct labour-hours worked. During December, King Ltd started and completed one manufacturing job (Job 571). The events of December are:
Direct material cost: Job 571 |
$215,000 |
Indirect material cost for December |
$55,000 |
Other manufacturing overhead cost incurred in December |
$45,000 |
Direct labour cost (4,800 hours, including 100 hours idle time) |
$120,000 |
Indirect labour cost for December (excluding idle time) |
$40,000 |
Tasks
Solution 1
The differences between financial accounting and management accounting are as follows
Financial accounting generates information for the external users such as creditors, shareholders, government etc whereas Management accounting generates information for the internal users such as the managers, staff etc.
Only financial information is included in the financial accounting whereas both financial and non financial information are included in the management accounting.
Financial accounting lays emphasis on the historical records whereas management accounting lays emphasis on both historical records and future estimates.
The purpose of the financial accounting is to record the financial performance and financial position of an entity for a particular period whereas the purpose of management accounting is to facilitate the management in planning and in making appropriate decisions.
Financial accounting is standardized and the statements are to be prepared in compliance with the regulatory requirements. Management accounting is not standardized. The information required to be presented and its formats are decided upon by the entity.