StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

BSc Accounting Programme -- Management Accounting -- Absorption vs Marginal Costing - Essay Example

Comments (0) Cite this document
Summary
The adoption of cost accounting will be useful in controlling the costs and for taking strategic management decisions. The main objectives of cost accounting are ascertainment of cost,…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.9% of users find it useful
BSc Accounting Programme -- Management Accounting -- Absorption vs Marginal Costing
Read TextPreview

Extract of sample "BSc Accounting Programme -- Management Accounting -- Absorption vs Marginal Costing"

Download file to see previous pages more value at lower cost.” In absorption costing apart from the direct costs which are allocated to the cost centers and the units produced, indirect costs are apportioned to the cost centers and the units produced on equitable basis. In the marginal costing system, the fixed and variable costs are segregated for ascertaining the effect of changes in volume on profit. The marginal cost will be very useful in taking management decisions. There are advantages as well as disadvantages in both the types of costing techniques. But, it is important to note that a good cost accounting system will be useful in identifying the unprofitable activities in an organization and inefficiencies in the system in any form. Variance analysis made by using cost accounting will be useful in highlighting the deviations from the planned performance for taking suitable management action. Absorption costing or marginal costing is used depending upon the purpose of the management activities.
Wherever material, labor and expenses could be identified with the cost centers they are directly allocated to them. Indirect materials, labor and expenses which could not be directly allocated to the cost centers are apportioned to the cost centers on equitable basis. “Full absorption costing is a costing method that accounts for all costs to the units produced by the activities of an organization through cost drivers.” (Galang-Manalo & Valenzuela-Manalo, 2011, 1.8.4)
Materials, labor and expenses which do not form part of the finished products are known as indirect material, labor or expenses as the case may be. These are collectively called as overheads. The overheads are subdivided into production overheads, administration overheads, selling overheads and distribution overheads.
Cost apportionment involves apportionment of the indirect costs to various cost centers on an equitable basis. For example, Works Managers salary needs to be apportioned to various departments such as ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“BSc Accounting Programme -- Management Accounting -- Absorption vs Essay”, n.d.)
BSc Accounting Programme -- Management Accounting -- Absorption vs Essay. Retrieved from https://studentshare.org/miscellaneous/1609252-bsc-accounting-programme-management-accounting-absorption-vs-marginal-costing
(BSc Accounting Programme -- Management Accounting -- Absorption Vs Essay)
BSc Accounting Programme -- Management Accounting -- Absorption Vs Essay. https://studentshare.org/miscellaneous/1609252-bsc-accounting-programme-management-accounting-absorption-vs-marginal-costing.
“BSc Accounting Programme -- Management Accounting -- Absorption Vs Essay”, n.d. https://studentshare.org/miscellaneous/1609252-bsc-accounting-programme-management-accounting-absorption-vs-marginal-costing.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF BSc Accounting Programme -- Management Accounting -- Absorption vs Marginal Costing

BSc Accounting and Finance: Financial Management

...as crucial for each organization, c) in most organizations, especially in SMEs, the working capital accounts represent the major part of the organization – often its entire assets (Droms et al. 2010); from this point of view, the working capital management is of critical importance not just for stabilizing but also for supporting the expansion of each organization’s operation. 3. Approaches used to managing inventory, receivables, cash and payables Because of the different effects of working capital on modern organizations, different approaches are likely to be used within these organizations when having to manage one or more parts (forms) of working capital, such as the...
11 Pages(2750 words)Essay

Thesis on the Decline Effect- based on the article by Jonah Lehrer (2010)

2 Pages(500 words)Thesis

Crime Reduction and Prevention Proposal

6 Pages(1500 words)Essay

Contrast and Compare Absorption Costing with Marginal Costing

...Learning EMEA Bhattacharyya A K, 2005, Principles And Practice Of Cost Accounting, Third Edition, PHI Learning Pvt. Ltd Boardguess (2009), Chapter 8- Absorption costing and Marginal costing, retrieved from http://www.boardguess.com/universitiesdeemed-universities/ignou/ignou-mca/ebook-mca/absorption-marginal-costing/1993-1993.htm Broadbent M, Broadbent M and Cullen J (2003), Managing financial resources, Illustrated Third edition, Butterworth-Heinemann Chadwick L (1993) Management Accounting, Illustrated Edition, Routledge Davies T and...
8 Pages(2000 words)Essay

Management Accounting - Materials Accounting / Absorption & Marginal Costing

...?Management Accounting - Materials Accounting Absorption & Marginal Costing College Question Different between Financial and Management accounting Financial accounting statements are prepared to be used by external parties such as creditors, shareholders and financial institutions while management accounting statements are prepared for the use of internal parties such as managers and employees (Bob 2004). Financial accounting mainly focus on summaries past financial dealings which are reported periodically in contrast,...
5 Pages(1250 words)Assignment

Management Accounting: Costing and Budgeting

...the information supplied in task 3 and your calculations for that task. (a) Complete the table below to produce a profit and loss account for the product for the month under marginal costing (MC) principles. £ £ Sales 144,000 Opening stock 14,000 Variable production costs 105,000 Closing stock (35,000) Cost of sales (MC basis) (84,000) Contribution 60,000 Fixed costs (30,000) Profit 30,000 (b) Complete the table below to produce a profit and loss account for the product for the month under full absorption costing (FAC) principles. £ £ Sales 144,000 Opening stock 18,000 Production...
10 Pages(2500 words)Essay

Absorption Costing Vs. Marginal Costing

...Absorption Costing Vs. Marginal Costing   Introduction: the Basic Concepts Explained   Lucey (2002, p defines costing as “the establishment ofbudgets, standard costs and actual costs of operations, processes, activities or products; and the analysis of variances, profitability, or the social use of funds.” From this definition it is apparent that costing basically encompasses the estimation of the costs of goods and services so as to provide information to management and facilitate management decision making. As such in deciding between...
9 Pages(2250 words)Assignment

Absorption and Marginal Costing

This technique of costing is also known as the full-cost technique (Sikdar, 2008). In reality, the technique of marginal costing takes into consideration the behavioral features of costs by segregating the costs into fixed and variable elements. The segregation is done because per unit variable cost is fixed and total costs are variable in nature but actually total fixed costs are fixed and per unit fixed cost is variable in nature. In addition, variable costs are handy in nature, whereas total fixed costs are unmanageable in nature. Short term planning makes use of the Marginal costing technique. Control and decision making in particular reference to the production of multi-products also uses marginal costing (Sikdar, 2008). The...
10 Pages(2500 words)Assignment

Management Accounting & Activity Based Costing

.... Variation in some costs like, energy, supplies and labour vary directly to the resources that support them. Some like supervisory salaries, rent and amortization vary indirectly to the supporting resources. Therefore, activities consume the resources and accountant and manager mush investigate for new cost drivers capable of establishing convincing relationship between the performed activity and the related costs based on consumption of resources. This enhances reliable predictions on the effects of decisions made regarding the activities and the related costs (Kallunki& Hanna 2008, p. 62-79). References List Kallunki, J., & Hanna, S....
2 Pages(500 words)Essay

Management Accounting: Costing and Budgeting

...and impairement of 969 931 decrease Intangible assets Total cost 42,927 38,556 decrease Accounts analysis method Y=a+bx;where y=total cost a=fixed cost,b=variable cost per unit,x=activity level per unit, bx=total variable costs 2012=42927=a+2453 2013=38556=a+2295 Fixed cost=a=40474 fixed cost=a=36261 Summary The employee compensations and benefits decrease from the year 2012 to 2013 by $1295 million.this shows that the company has reduced its employees.the general and adminstration expenses decreased from the year 2102 to 2013...
5 Pages(1250 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic BSc Accounting Programme -- Management Accounting -- Absorption vs Marginal Costing for FREE!

Contact Us