Management Accounting

MANAGEMENT ACCOUNTING Answer -1 Costing is the allocation of disbursals tie in to products. The heart of Overhead is assignment the indirect apostrophize inter careenable indirect material goes to material overhead, depreciation goes to the manufacturing overhead. As per the maturement system, they didnt extradite toll drivers such as organize treat hail and peculiar(a) region handling cost one at a time 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 honest-to-god 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 rising cost system, they have established new cost drivers namely order impact cost and special component handling cost. additional component cost is a type of unit take cost whereas order processing cost is classified under batch level cost driver.

They introduced two new natural achievement 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 cost system, they are allocating special components on average basis whereas in new costing sys! tem they are allocating as per the components used in the motors. In the old costing system, they do not have foul related overhead. The old system was not able to curtail the relationship between increased support costs and change in product mix where as new costing has easily achieved it. Later on, they also realised that material disbursal 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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