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

Accounting in Management - Assignment Example

Cite this document
Summary
The assignment "Accounting in Management" provides reasonable factors that should be taken into consideration in accounting…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.3% of users find it useful
Accounting in Management
Read Text Preview

Extract of sample "Accounting in Management"

PART-A Optimum Production ment Particulars Alpha Beta Delta Selling price (Per Unit) £ 55 £ 44 £ 49 Less Marginal/Variable cost: Direct Materials £ 30 £ 12 £ 12 Direct Labour £ 10 £ 10 £ 20 Total £ 40 £ 22 £ 32 Contribution (Per Unit) £ 15 £ 22 £ 17 Considering the limiting factors that there are 1500 labour hours at £ 20 per hour and 10000 Kg of materials at £ 3 per Kg, the optimum production schedule for maximisation of the profit will be as follows: - Section 1 Production Mixes Alpha Beta Delta 500 units of Alpha at the rate of £ 55 £ 27500 500 units of Beta at the rate of £ 44 £ 22000 750 units of Delta at the rate of £ 49 £ 36750 Marginal Costs (Alpha) Direct Material 500 x 30 = 15000 Direct Labour 500 x 10 = 5000 £ 20000 Marginal Costs (Beta) Direct Material 500 x 12 = 6000 Direct Labour 500 x 10 = 5000 £ 11000 Marginal Costs (Delta) Direct Material 750 x 12 = 9000 Direct Labour 750 x 20 = 15000 £ 24000 Contribution (Total) £ 7500 £ 11000 £ 12750 The interpretation of the results obtained through the calculations in Section 1 is as below: - A careful scrutiny of the data provided reveals that the contribution of Beta at £ 22 is the highest. Since the main goal of Portland Ltd is profit maximisation, and there are limiting factors that labour hours and materials are restricted to 1500 labour hours at the rate of £ 20 per hour and Materials 10,000 Kg at £ 3 per Kg respectively, we will first and foremost complete the full production of Beta that is 500 units. This production would entail the use of 250 labour hours and 2000 Kgs of Materials. Thus, after the demand of Beta is met, we have a balance of 1250 Labour hours and 8000 Kg of Materials. The next higher contributor is Delta. Therefore, we would produce the full order of Delta for this 750 Labour hours and 3000 Kg of Materials. The balance left over would be 500 Labour hours and 5000 Kg of Materials, which would be used for production in respect of Alpha which is the least contributing product. The limiting factors only allow production of 500 Units of Alpha. The statement shown below would explain the position. Particulars Alpha Beta Delta Total Labour hours 500 250 750 1500 Material (Kg) 5000 2000 3000 10000 The above production of 500 units of Alpha, 500 units of Beta, and 750 units of Delta, constitutes the best product mix under the given circumstances, yielding the total contribution of £ 31250. The alternative product mixes are given below: - Production mixes Alpha Beta Delta 500 units of Alpha at the rate of £ 55 £ 27500 500 units of Beta at the rate of £ 44 £ 22000 750 units of Delta at the rate of £ 49 £ 36750 Marginal Costs (Alpha) Direct Material 500x 30 = 15000 Direct Labour 500x 10 = 5000 £ 20000 Marginal Costs (Beta) Direct Material 500 x 12 = 6000 Direct Labour 500 x 10 = 5000 £ 11000 Marginal Costs (Delta) Direct Material 750 x 12 = 9000 Direct Labour 750 x 20 = 15000 £ 24000 Contribution (Total) £ 7500 £ 11000 £ 12750 600 units of Alpha at the rate of £ 55 £ 33000 500 units of Beta at the rate of £ 44 £ 22000 500 units of Delta at the rate of £ 49 £ 24500 Marginal Costs (Alpha) Direct Material 600x 30 = 18000 Direct Labour 600 x 10 = 6000 £ 24000 Marginal Costs (Beta) Direct Material 500 x 12 = 6000 Direct Labour 500 x 10 = 5000 £ 11000 Marginal Costs (Delta) Direct Material 500 x 12 = 6000 Direct Labour 500 x 20 = 10000 £ 16000 Contribution (Total) £ 9000 £ 11000 £ 8500 750units of Alpha at the rate of £ 55 £ 41250 500 units of Beta at the rate of £ 44 £ 22000 125 units of Delta at the rate of £ 49 £ 6125 Marginal Costs (Alpha) Direct Material 750x 30 = 22500 Direct Labour 750 x 10 = 7500 £ 30000 Marginal Costs (Beta) Direct Material 500 x 12 = 6000 Direct Labour 500 x 10 = 5000 Marginal Costs (Delta) Direct Material 125 x 12 = 1500 Direct Labour 125 x 20 = 2500 £ 11000 £ 4000 Contribution (Total) £ 11250 £ 11000 £ 2125 Comparative study of the various alternative production mixes. Product mixes Relevant Contribution 500 Units of Alpha £ 7500 500 Units of Beta £ 11000 750 Units of Delta £ 12750 Total £ 31250 600 Units of Alpha £ 9000 500 Units of Beta £ 11000 500 Units of Delta £ 8500 Total £ 28500 750 Units of Alpha £ 11250 500 Units of Beta £ 11000 125 Units of Delta £ 2125 Total £ 24375 It seen from the above comparative study that Alternatives 2 and 3 yield lower contributions as compared to Alternative 1. Therefore, Alternative 1 is the most appropriate. The method adopted in Section 1 is Marginal Costing to determine the maximum profit for Portland Ltd, taking in to consideration the limiting factor, viz.1500 labour hours and 10000 Kgs. Materials Linear Programming: In this analysis there are three types of products Alpha, Beta, Delta. The number of items produced is 500 Units of Alpha, 500 Units of Beta, and 750 Units of Delta respectively. Total contribution is£ 7500 Alpha, £ 11000 Beta, and £ 12750 Delta. There are two constraints in this scene. Materials available are only 10000 Kg and labour hours 1500. Alpha, Beta, Delta denoted as X1, X2, X3. Objective Z = 7500X1 + 11000X2 + 12750X3 Subject to constraints 5000X1 + 2000X2 + 3000X3= 10000 250X1 + 250X2 + 750X3 = 1500 X1 > 0, X2 >0 and X3>0 The limiting factors in the problem are availability of 1500 labour hours @ £ 20/hour and 10,000kgs of materials @ £ 3/kg. Since 1000 units of Alpha would consume 10,000Kgs materials, there would be no materials left for producing Beta and Delta. Beta has the maximum contribution of £ 22/unit and therefore it has to be produced on first Priority. The next higher contribution is from Delta viz. £ 17/unit. Therefore, the second priority would be given to Delta and third priority to Alpha. This is also in line with Principles of Marginal Costing and meets the requirements of Portland Ltd, of maximize their profit. The circumstances in which we would use the two alternatives are: First Alternative: Product Mix: 600 units of Alpha, 500units of Beta and 500units of Delta. The contribution/unit are £ 15, £ 22, and £ 17 for Alpha, Beta and Delta respectively. Next we multiply unit contribution with ordered quantity for each product. Objective: Z =9000 X1 + 11000 X2 + 8500 X3 Subject to constraint For producing 600 units of Alpha, 6000 kg of materials are required For producing 500 units of Beta, 2000 kg of materials are required For producing 500 units of Delta, 2000 kg of materials are required. For producing 600 units of Alpha, 300 labour hours are required For producing 500 units of Beta, 250 labour hours are required. For producing 500 units of Delta, 500 labour hours are required 6000 X1 + 2000X2 + 2000X3 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Accounting in Management Assignment Example | Topics and Well Written Essays - 4250 words, n.d.)
Accounting in Management Assignment Example | Topics and Well Written Essays - 4250 words. https://studentshare.org/finance-accounting/1705863-management-accounting
(Accounting in Management Assignment Example | Topics and Well Written Essays - 4250 Words)
Accounting in Management Assignment Example | Topics and Well Written Essays - 4250 Words. https://studentshare.org/finance-accounting/1705863-management-accounting.
“Accounting in Management Assignment Example | Topics and Well Written Essays - 4250 Words”. https://studentshare.org/finance-accounting/1705863-management-accounting.
  • Cited: 0 times

CHECK THESE SAMPLES OF Accounting in Management

Accounting and management

The management should initiate proper steps to ensure that they can check the adverse labour rate variance and material cost variance.... Methodical accounting of all expenses must be carried out and reviewed on a periodical basis so that the purpose for which a cost is occurring gets effectively monitored....
5 Pages (1250 words) Essay

The Master Budget Plan for the Company

The business involves printing the pages, preparing the cover and putting them together to get the finished book.... ‘XYZ' will be registered… The initial operations of the company will be headquartered at XYZ, London and the books will be distributed throughout London. The company primarily focuses on the target market of tourists, children This is a growing market as evident from the fact that £ 85 billion is spent annually on UK tourism, especially London....
5 Pages (1250 words) Essay

Traditional Methods and Activity-Based Costing

This report explains the traditional methods of cost accounting adopted by the management and the method of activity based costing as an alternative to the traditional methods for better costing of manufacturing and overhead costs. These methods are explained in detail below… the modern method of activity based costing is also explained with brief advantages of the method for a clear estimation and allocation of overhead cost. The method of allocation of cost is suitable when there is a clear separation of the most suitable components on basis of (Accounting Tools) If a company produces 2 different products namely Pi and Chi, the Company has cost of overheads which is 500....
4 Pages (1000 words) Essay

Bond Motorhomes: Differentiation Strategy

This is despite the fact that it is small in size that has made the management resort to crude ways of management to run the company.... As it stands, the company operates its operations in a very crude way, which has to stop by way of formulating organizational procedures and clear management structures.... The company has a major issue concerning maintaining its employees due to unclear employee management structures.... This calls for the management to streamline all the operations of the company, formulate a plan of action, enact ways of recruiting employees and devise a way of recruiting...
6 Pages (1500 words) Essay

Management accounting

Ultimately, it may have resulted due to poor planning by the management of Geeta.... This indicates that the number of units the company budgeted to sales were greater on aggregate basis, as compared to the actual number of units sold during.... This maybe due to a decline in the labor productivity, evidenced by unfavorable… Moreover, the sales price volume is also adverse....
5 Pages (1250 words) Essay

Financial Analysis of Business Based on Assumed Financial Amounts

The business is supposed o start in January 2015 and she is confident that by the end of July she will achieve her full potential.... Edith organizes parties and events for the… The organizing fee comprises decoration of the room with the help of balloon or room enhancements or theme party....
9 Pages (2250 words) Assignment

Management Accounting of the Ozmedic Company

Increasing pressure from these independent sales agents regarding the adjustment of the mission rate coupled with vital issues required by the management before making various decisions necessitated a close and thorough analysis of Ozmedic.... From this volume of sales, the Ozmedic's management would be indifferent of the option to choose because both results to a loss of AUD $2,840,000.... The firm's management should increase its promotional efforts so that a more viable level is achieved....
7 Pages (1750 words) Essay

How Accounting Can Help Businesses to Overcome Recessions

The aim of this review “How accounting Can Help Businesses to Overcome Recessions” is to get acquainted with the works related to the Global Financial Crisis and the International Financial Reporting Standards.... Because the profession of accounting is so important for the businesses today particularly because of the advancements in technology in the last two decades there has been a lot of research conducted on the methods employed by different businesses while recording data....
12 Pages (3000 words) Research Paper
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.
Contact Us