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This is the portion of overhead cost variance that arises due to the actual variable overheads differing from the allowed variable overhead. This arises when the company uses more time to manufacture the product due to defects in production.
This arises due to actual number of units sold differing from the budgeted number of units at standard sales margin per unit this may be due to increased taste and preference of consumers, or increase in quality and advertisements.
SMPV arises as a result of real selling charge differing from the standard selling cost. This is influenced by prices of competitors, demand for the product or even the price of compliments to the product.
Traditionally, overheads have been absorbed to products based on direct labour hours used direct labour cost machine hours utilized or number of units produced. This traditional method of absorbing overheads emerged when factor overhead constituted a small proportion of the manufacturing cost. There was an assumption of a linear relationship between the volume of production and the use of this activity basis. However overheads have recently grown significantly as a proportion of production cost in a decline in direct labour cost and the computerization of the production or manufacturing systems.
Consequently, the relevance of continued use of the traditional overhead costing method has been watered with the emergence of new methods of production such as robotic technologies. Flexible manufacturing systems, computer manufacturing kaizen costing and activity based costing.
Activity based costing is the cost attribution to cost units on the basis of the benefit the product receives from the activity performed such as ordering, material receiving and handling, setting up machines, scheduling of jobs or assurance of quality.
ABC argues that overheads are incurred because of the activities being performed to
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……………………………………………...6 References…………………………………………………………………………………………7 Introduction British Airways plc (BA) is one of the largest airlines worldwide and is considered as the national carrier of the United Kingdom based on its large fleet, international flights and destinations.
This contingency management depends on the manager’s personal leadership style. It also relies upon the talent and behaviours of the regular employees. The contingency theory is a line of thinking that there is no one ideal way of leadership. It also contends that certain leadership styles may be effective in some situations, but not so in others.
Since the director’s of companies cannot execute their company’s strategies on their own, they have to rely on people and thus create an organization structure that allows decentralization of management responsibilities. According to Hoskin & Macve (1990, pg.
Management accounting emphasizes on decision making and forward looking instead of the old or historical data which the basic accounting used to emphasize. There are different methods that have emerged because of management accounting and some of these techniques are; Activity Based Costing (ABC), Grenzplankostenrechnung (GPK), Resource Consumption Accounting (RCA), etc.
This paper contains an introduction to the topic of discussion, literature review, a research methodology that was used to collect data, a section for analyzing the data, and a last section for conclusion. Table of Contents 1 1.0 Introduction 3 2.0 Literature review 4 2.1 Accounting 4 2.2 Management control/ accounting systems 5 2.3 Management accounting and decision-making 6 3.0 Research methodology 7 4.0 Analysis 8 4.1 Supporting arguments for Johnson and Kaplan’s (1987) argument 8 4.1 Arguments against the criticism issued by Johnson and Kaplan 9 5.0 Conclusion 11 References 12 1.0 Introduction The field of management has witnessed numerous transformations that are mainly attributed to
Management accounting is a branch of accounting which mainly deals with various managerial aspects. This is primarily handled by the managers within the organization, and it is an essential component in taking appropriate decisions. The concept of management accounting comes under the Management accountant who is responsible for the preparation of financial statements, and management accounting report for appropriate decision making.
"The process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources.
They play different roles in the process of satisfying the needs of the stakeholders of a particular organization. This essay attempts to provide a clear understanding regarding the differences that exist between the management
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