Management Accounting Master - Research Paper Example

Summary

When the fixed cost for Component X has to be brought down it is charged on Component Y and it increases to cost of Component Y. It is obvious that it is unethical to allocate the costs of Component X to be charged to the customers of Component Y. It is also not according to the corporate guidelines in the overhead cost allocation…

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Management Accounting Master Research Paper

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Subject: Miscellaneous
Type: Research Paper
Level: Masters
Pages: 12 (3000 words)
Downloads: 4
Author: reinholdkrajcik

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The total number of operating hours taken by Operation 2 is 9144 hours. The difference between the total operating hours and the time taken for operation 2 is 3156 hours. If an operation 1 takes 4 hours, then it can be calculated that 789 operation 1 was done during the year. (d) Total variable cost for the year 2005From the information given, it can be understood that, the total cost were 22,554,525. Out of this amount the fixed costs are 18,000,000. The difference between the two is 4554525 which is the total variable cost.(e) Total variable cost of performing Op1 operations during the year It is also given that; the variable cost per operation for Op1 is 2175.

There were 789 operations 1 done during the year. So the total variable cost for operations 1 is 1716075. (f) Total variable cost of performing Op2 operations for the year 2005Out of the total variable costs, 4554525, the variable costs for operations 1 is 1716075. The difference between the two is 2838450, which is the total variable cost of operations 2(g) Variable cost of performing a Op 2 operationAs mentioned above the total variable cost of operations 2 is 2838450. There were 1905 operations 2 done during the year.

Hence, the variable cost per operation 2 is calculated by dividing the total variable cost by the number of operations which is, 1490. (h) Fixed overheads absorbed by a Op1 operation and Op2 operationCurrently the fixed overheads are absorbed by operation 1 and 2 on the basis of time taken for an operation. The total time taken for both the operations is 12300 hours and the total fixed costs are 18000000. If it is assigned based on the time taken for Op 1 and Op 2, then the fixed overheads for operation 1 is.

In case the extra production is into going to be consumed by Division B, additional marketing efforts should be undertaken to identify new customers. From the calculation above, it can be said that, the total number of operating hours during the year was 12300. The total number of operating hours taken by Operation 2 is 9144 hours. The difference between the total operating hours and the time taken for operation 2 is 3156 hours. If an operation 1 takes 4 hours, then it can be calculated that 789 operation 1 was done during the year.

From the information given, it can be understood that, the total cost were 22,554,525. Out of this amount the fixed costs are 18,000,000. The difference between the two is 4554525 which is the total variable cost. As mentioned above the total variable cost of operations 2 is 2838450. There were 1905 operations 2 done during the year. Hence, the variable cost per operation 2 is calculated by dividing the total variable cost by the number of operations which is, 1490. Currently the fixed overheads are absorbed by operation 1 and 2 on the basis of time taken for an operation.

The total time taken for both the operations is 12300 hours and the total fixed costs are 18000000. If it is assigned based on the time taken for Op 1 and Op 2, then the fixed overheads for operation 1 is 4618537 and for operation 2 is 13381463.

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