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About this document
- Pages
- 9 pages
- Price
- $9 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting, Business
- Module
- WMP 7075
This assignment analyses the accounting practices of MGPM, a manufacturer and trading firm. It identifies the drawbacks in their accounting practices that led to a reported negative profit despite increased sales. It is for the WMP 7075 module.
What's inside
- MGPM's accounting practices and reported negative profit
- Cost classification and categorization for production and assembly operations
- Cost control for individual operations
- Make or buy decision for paste material
- Cost of quality for internally produced paste
- Warranty and after-sales services costs
Who it is for: Students of the WMP 7075 module. (Postgraduate)
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Summary
Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information. It helps managers make informed business decisions. This document uses a case study to show how to analyse a company's accounting practices.
Cost classification
Costs are classified into direct and indirect costs. Direct costs are easily traced to a product. Indirect costs are not. Utility costs, insurance premiums, labor costs, and depreciation are examples. These costs are divided into production and assembly operations, and general and administrative operational costs.
Production overheads
Production overheads are indirect costs associated with the production process. Import duties, dock charges, transportation costs, storing costs, and receiving costs are examples. These overheads are added to the invoice price of materials for cost accounting. The document asks how to determine and categorize these overheads.
Costing and control systems
Formal costing and control systems help manage and reduce costs. The document gives details of total costs. These include raw materials, payments to employees, and hiring specific machines. The document asks how to institute these systems in the company.
Break-even analysis
Break-even analysis determines the minimum quantity of items to produce to earn maximum profit. The document gives details of expected profit margins, fixed mark-ups, and interest on firm-owned property. The document asks how to establish the minimum price for items based on this analysis.
Key terms
- Direct costs
- Costs that can be directly traced to a product.
- Indirect costs
- Costs that cannot be directly traced to a product.
- Production overheads
- Indirect costs associated with the production process.
- Break-even analysis
- A method to determine the minimum quantity of items to produce to earn maximum profit.
- Fixed costs
- Costs that do not change with the level of production.
- Variable costs
- Costs that change with the level of production.
Questions this document helps with
- How do I classify costs for production and assembly operations?
- What production overheads should I add to the price of materials?
- How do I determine the minimum price for items based on break-even analysis?
Summary written with AI from the document's text.
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