Standard costing and variance analysis by any government involves expenditure, levying, loaning, regulating, altering assets liberties or liability regulations. Government or organizational action normally…
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Economists and accountants imply that two diverse fields in terms of cost and variance analysis. Therefore, when economists describe cost through variance analysis and standard costing, they include the sacrifice of opportunities and important choices. From an accountant’s perception, standard costing and traditional budgeting are prospective, subjective, and occasionally costs-evaded. The following paper will look into the alleged advantages, and demerits of standard costing, variance analysis and traditional budgeting in management accounting (Callahan, Stetz, and Brooks, 2011, p. 199).
Certain criticisms of traditional budgeting arise from the descriptions of the significant terminologies used by economists and accountants in the government and organizations (Emmanuel, Kominis and Slapnicar, 2008, p. 2). Time management is the establishment of interceding variables that improve the perception of time. A budget is an estimated total cost or income for an operation or activity covering a particular period. This way, accounting managers are able to ease pressure on their behaviors and perceive control over time and operations assumed significant in variance analysis (Emmanuel, Kominis and Slapnicar, 2008, p. 3). A budget can also be an arrangement for the management and control of assets and expenses. Motivation in variance analysis involves control through a set of processes, instruments, performance measures that organizations or governments deploy to lead and inspire all workers to accomplish set goals (Callahan, Stetz, and Brooks, 2011, p. 199). Human relations association forms part of the base for motivation in accounting to enhance an easy repetitive assignment involving financial compensation of all transactions in an organization (Eker, 2007, p. 105). Performance evaluation is the valuable control of the chief tasks from diverse units. These units are normally situated at the very end of the production procedure
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Accountability 12 Conclusion 13 Reference 15 Abstract This study represents one of the most important areas of management accounting i.e. desirability and effectiveness of accounting for management control. Accounting is the most effective device used by managers and management for organizational control.
XYZ Financial Consultants were engaged by Sprockets Ltd to evaluate their prevailing job costing system for its efficiency. It was understood that Activity Based Costing method is being considered to replace the current traditional system and that recommendations in this regard were required.
The main purpose of the operating statements of income statement is to help the companies to evaluate their performance on the basis of sales and expenses. The income statement reflects strongly upon the profit and loss occurred in the company according to the sales and expenses of the firm.
The management process is dynamic consisting of various activities, elements and functions (Hermanson 2010). The key major management functions involve planning, controlling, decision making and communicating. It is notable that management accounting information is very vital in executing these management functions in an organization.
The main reason for doing this is that, these investments involve commitment of large sums of funds; they take a long time, require much commitment from the management and are irreversible. The four major techniques used for evaluating investment in capital projects include: accounting rate of return (ARR), Payback period technique, net present value (NPV) technique, and internal rate of return (IRR) (Gotze, et al., 2007).
The cost driver in a particular group is selected depending on the cause effect link in the cost object and the firm’s ability to have overhead costs. The Institute of Management Accounting indicates that ABC is advantageous
However, following changes in overhead costs during 2015 saw the cost or producing one foot of pipe rise to $0.40 and the selling price remaining at $0.39. At this moment, if the company is making one foot of pipe at a cost of $0.40 and sells it at $0.39, it