Use The Management Accounting Costs And Concepts Template

Use The Management Accounting Costs And Concepts Template Linked In Th

Use The Management Accounting Costs And Concepts Template linked in the resources to complete the following in your Financial and Managerial Accounting textbook: Problem 14-1B, page 664. Problem 14-5B, page 666. Problem 14-1B Cost computation, classification, and analysis C2 C3 Listed here are the total costs associated with the 2017 production of 15,000 Blu-ray Discs (BDs) manufactured by Maxwell. The BDs sell for $18 each. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) Compute the manufacturing cost per BD. Check (2) Total variable production cost, $35,250 Analysis Component Assume that 10,000 BDs are produced in the next year. What do you predict will be the total cost of plastic for the BDs and the per unit cost of the plastic for the BDs? Explain. Assume that 10,000 BDs are produced in the next year. What do you predict will be the total cost of factory rent and the per unit cost of the factory rent? Explain. Problem 14-5B Inventory computation and reporting C4 P1 Shown here are annual financial data at December 31, 2017, taken from two different companies. Required Compute the cost of goods sold section of the income statement at December 31, 2017, for each company. Include the proper title and format in the solution. Check (1) TeeMart cost of goods sold, $200,000 Write a half-page memorandum to your instructor (a) identifying the inventory accounts and (b) identifying where each is reported on the income statement and balance sheet for both companies.

Paper For Above instruction

Introduction

Management accounting plays a crucial role in helping managers make informed decision-making regarding costs, pricing, and financial reporting. The given problems involve classifying costs, calculating costs per unit, and analyzing inventory practices. These tasks provide insights into cost behavior, product costing, and inventory reporting, essential components in managerial accounting.

Problem 14-1B: Cost Classification and Manufacturing Cost Per Unit

The first problem requires analyzing the total costs associated with the production of 15,000 Blu-ray Discs (BDs) in 2017 by Maxwell. It involves classifying each cost as variable or fixed and as product or period costs. The classification aids in understanding cost behavior and assisting in budgeting and decision-making.

The total variable production cost is given as $35,250 for 15,000 BDs, resulting in a unit variable cost of $2.35 ($35,250 / 15,000). To classify each cost, one must examine the nature of each expense; for example, costs like plastic and direct labor are variable because they change with production volume, while factory rent may be fixed if it remains constant regardless of output.

Predicting future costs involves calculating the expected expenses for a production volume of 10,000 BDs. Assuming linearity, the total plastic cost would decrease proportionally to $23,500 ($2.35 * 10,000), leading to a per-unit plastic cost remaining at $2.35. Factory rent, if fixed, would stay at a constant amount, e.g., $10,000, making the per-unit rent cost $1.00 ($10,000 / 10,000).

Problem 14-5B: Inventory Computation and Reporting

The second problem involves analyzing annual financial data to compute the cost of goods sold (COGS) for two different companies at December 31, 2017. This task requires understanding inventory accounts—such as raw materials, work-in-progress, and finished goods—and their placement on financial statements.

A half-page memorandum to the instructor would identify inventory accounts like raw materials inventory, work-in-progress inventory, and finished goods inventory. It would specify that raw materials and work-in-progress are reported on the balance sheet under current assets, while cost of goods sold appears on the income statement, directly reducing gross income.

The COGS calculation for each company involves the formula:

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Beginning inventory + Purchases – Ending inventory = COGS

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Given that TeeMart's cost of goods sold is $200,000, the memorandum would explain that this figure is reported on the income statement under gross profit, and the respective inventory accounts are reported on the balance sheet under current assets.

Analysis and Implications

The classification of costs into variable and fixed components provides managerial insights necessary for budgeting, cost control, and pricing strategies. Understanding the proportion of fixed costs, such as rent, enables managers to evaluate the impact of production volume changes on overall profitability. Meanwhile, accurate inventory reporting fosters transparency and compliance with accounting standards, essential for stakeholders’ confidence.

Costs like plastic are directly linked to production volume, emphasizing the importance of volume-based costing for product pricing and profitability analysis. Conversely, fixed costs such as rent require careful management to minimize unnecessary expenses and optimize resource allocation.

Furthermore, understanding the structure of inventory accounts and their reflection in financial statements is crucial for accurate financial analysis and reporting. Proper inventory management ensures a truthful representation of a company's financial status and supports strategic decision-making.

Conclusion

Managerial accounting encompasses cost classification, per-unit cost computation, and inventory reporting, all vital for effective business management. The insights gained from these analyses aid in strategic planning, cost control, and accurate financial reporting, contributing to enhanced organizational performance.

References

• Helfert, E. A. (2014). Financial and Managerial Accounting. McGraw-Hill Education.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Drury, C. (2013). Management and Cost Accounting. Cengage Learning.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis. Pearson.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial & Managerial Accounting. Wiley.
• Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems. McGraw-Hill Education.
• Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.
• Anthony, R. N., & Biggs, W. D. (2009). Management Control Systems. McGraw-Hill.
• Langfield-Smith, K., Thorne, H., & Wilson, A. (2018). Management Accounting: Information for Creating and Managing value. McGraw-Hill Education.
• Hilton, R. W., & Platt, D. E. (2013). Managerial Accounting. McGraw-Hill Education.