Management Accounting

MANAGEMENT ACCOUNTING Answer -1 Costing is the allocation of disbursals link to products. The heart of Overhead is appoint the indirect apostrophize give care indirect material goes to material overhead, depreciation goes to the manufacturing overhead. As per the aging system, they didnt take hold represent drivers such as swot treat court and peculiar(a) role handling cost severally but they are allocating the cost drivers to plan cost and administrative cost and that leads to inefficient results and shows the low cost of per unit of motor. In the emeritus be system, there was difference in the assigning of validate related overhead as compared to the pertly be system. This difference resulted in determining the original manufacturing cost of the motors. The old be system ignored the concept of cost drivers and that resulted in under(a) estimating the cost of motor. The old cost system was employ the cost as technology costs and modified components cost and did not assigned the costs accordingly. In the smart cost system, they have established new cost drivers namely order touch cost and special component handling cost. additional component cost is a type of unit take cost whereas order processing cost is classified under caboodle level cost driver.

They introduced two new natural accomplishment 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 be system, they are allocating special components on average basis where as in new costing system they are allocating! as per the components used in the motors. In the old costing system, they do not have view as related overhead. The old system was not able to crucify the relationship between increased support costs and salmagundi in product mix where as new costing has easily achieved it. Later on, they also realised that material outlay and machine hours required to manufacture the motors was...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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