StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Project Management Accounting(BBAC501) - Essay Example

Cite this document
Summary
Lecturer Subject Code Project Management Accounting (BBAC501) Colonial Tap Company (CTC  COLONIAL TAP COMPANY (CTC) FINANCIAL PERFORMANCE FOR THE YEAR ENDED Sales   $980,000 Less Expenses:     Material Purchased $300,000   Factory Wages-Production line $250,000   Production Supervisor’s Salary  $35,000   Rent  $80,000   Council Rates  $5,000   Sales Staff $110,000   Advertising  $18,000   Equipment Depreciation  $25,000   Electricity  $12,000   Manager’s Salary  $80,000   Truck Lease  $10,000   Total Expense   $925,000       Net Profit   $55,000  Comment on cost classification According to the financial statement pres…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.3% of users find it useful
Project Management Accounting(BBAC501)
Read Text Preview

Extract of sample "Project Management Accounting(BBAC501)"

Download file to see previous pages

To put this into lump light it would be good to know what constitute a cost in manufacturing process. Manufacturing Overhead Costs Stocks are normally classified as an asset in the financial statements, and it is very pertinent note that each product mentioned as en inventory includes the costs of the following: 1. Direct material 2. Direct labor 3. Manufacturing (or factory) overhead Direct material and labour costs are directly traceable to the product being produced. Manufacturing (or factory) overhead on the other hand consist of costs which indirectly relate to factory and on this regard they are divided and allocated to each unit of product.

Accordingly this cost are reported in balance sheet inform of finished goods and work in progress (WIP) (GAAP). There are also other costs that would be treated as manufacturing overhead depending on the circumstances for instance, a loyalty or property tax imposed on a factory building. Although it will appear as fixed cost GAAP requires it allocation and assignment to each unit of manufactured product during such period. Other manufacturing overheads; 1. Material handling e.g. fork lifting opera oration for moving materials and units. 2. Technical expertise for setting up manufacturing equipment which requires some specifications. 3. Work force who inspect and supervise products as they are being manufactured.

In my estimates the following are the assumptions which hold in my review 1. There was virtually no beginning inventory of raw material, work in process and finished goods. 2. At the end of the month, 10% of the materials purchased remained on hand, work in process amounted to 20% of the manufacturing costs incurred during the month, and finished goods inventories were negligible. 3. The factory occupies 80% of the premises, the sales area 15% and administration 5%. 4. Most of the equipment is used for manufacturing, with only 5% of the book value being used for sales and administrative functions. 5. Almost all of the electricity is consumed in the factory. 6. The truck is used to deliver finished goods to customers. 7. The manager spends about one-half of his time on factory management, one-third in the sales area and the rest on administration.

Product Costing Cost ($) Cost ($)  Direct material 300,000 Direct labor 250,000 Prime Cost 550,000 550,000 Manufacturing (or factory) overhead Rent (80% of 80,000)Assp. No. 3 64,000 Production Supervisor's salary 35,000 Electricity (Assp. No. 5) 12,000 Manager's salary (80,000 x 1/2 Assp. No. 7) 40,000 Equipment depreciation (25,000x95% Assp. No. 4) 23,750 174,750 Total cost of production 724,750 Colonial Tap Company (CTC) Financial Statements for the month ended Cost ($) Cost ($) Sales 980,000 Less C.O.G.

Total cost of production 724,750 Less Material at the end ( 10% of 300,000 Assp. No. 2) (30,000) Less Work in progress (20% of 174,750 Assp. No. 2 ) (34,950) 659,800 Gross Profit 320,200 Non Manufacturing Expenses Administrative Expenses Council Rates 5,000 Rent (80,000 x 15% Assp. No. 3) 12,000 Manager's Salary (80,000x2/3 Assp. No. 7 ) 266,667 Equipment

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Project Management Accounting(BBAC501) Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Project Management Accounting(BBAC501) Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/finance-accounting/1494872-project-management
(Project Management Accounting(BBAC501) Essay Example | Topics and Well Written Essays - 1250 Words)
Project Management Accounting(BBAC501) Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/1494872-project-management.
“Project Management Accounting(BBAC501) Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/finance-accounting/1494872-project-management.
  • Cited: 0 times

CHECK THESE SAMPLES OF Project Management Accounting(BBAC501)

Management Accounting of Sober Plc

(a) Calculate the total profit on each of Sober plc's three types of product using each of the following methods to attribute overheads: (i) The existing method based upon labor hours; and (ii) Activity Based Costing....
7 Pages (1750 words) Essay

Management accounting

management accounting Table of Content Abstract 3 Introduction 3 Desirability and Effectiveness of accounting information for organizational control 4 Accuracy, Scope and Faithfulness of accounting information 7 Implication of accounting information for management control 9 Control vs.... hellip; Accountability 12 Conclusion 13 Reference 15 Abstract This study represents one of the most important areas of management accounting i.... So, management accounting systems has major importance in organizations as it consists of some integrative mechanisms that are capable for summarizing the qualitative effect of organizational actions or activities in quantitative values....
12 Pages (3000 words) Essay

Management Accounting

The author of this essay "management accounting" encompasses the concept of accounting.... The two major subfields of accounting are management accounting and financial accounting.... Many individual country studies have been done on the national management accounting practices all over the world (Broomwitch and Wang, 1991; Amat et al, 1994 etc).... This has changed the image of management accounting as an objective discipline and showed the political nature of accounting....
12 Pages (3000 words) Essay

Nature and Importance of the Finance Function

anagement accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information that assists managers in specific decision-making within framework of fulfilling the organizational objectives (The ICFAI University Press, 2004).... anagement accounting --- Importance of Stakeholders In the highly competitive environment, the survival of an organization may depend on how well stakeholders are managed....
12 Pages (3000 words) Essay

Management Accounting

The paper "management accounting" provides an overview of the emphasis on the changing needs of present-day costing systems to aid management decisions by eliminating the flaws of traditional costing systems.... nbsp;The design of a management accounting system should be guided by the challenges being faced by managers.... Modern-day management accountants are faced with the problem of inadequacies in the traditional costing systems and are constantly on the lookout for newer methods of collecting and allocating costs to different products/services....
9 Pages (2250 words) Report

Management accounting

Variances are usually a composition of two things, difference that accrues from activity and difference based on efficiency of usage and price.... A number of reasons can cause variances.... The causes of… 1.... Economy- The economy can affect the actual sales volume of a company.... This is because a budget is usually put in place a few months or weeks before the actual sales takes place....
8 Pages (2000 words) Essay

General Perspective of Management Accounting

Introduction to management accounting management accounting is the application of accounting information by company managers so as to equip them with better management and control aspects of the organization and help them with informed business decision making process in an effective manner.... management accounting is different from financial accounting in the sense that the latter is done for the use of shareholders and company creditors, while the former is designed for the application by company management. ...
3 Pages (750 words) Essay

The Future of Management Accounting

This paper “The Future of management accounting” identifies the difference between the two roles in order to identify whether management accounting will evolve into a strategic function over time.... There are many different factors that classify strategic management accounting.... hellip; The author of the paper states that the future of management accounting does not lie in the strategy angle of linking business goals with internal cost components....
10 Pages (2500 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us