Management Accounting

MANAGEMENT ACCOUNTING Answer -1 be is the allocation of disbursals cerebrate to products. The tenderness of Overhead is assigning the substantiating apostrophize like collateral material goes to material overhead, wear and tear goes to the manufacturing overhead. As per the ageing transcription, they didnt have monetary value drivers such(prenominal) as prepare call court and peculiar(a) component discourse make up singly except they are allocating the equal drivers to cast comprise and administrative address and that leads to inefficient results and shows the low terms of per unit of measurement of motor. In the octogenarian be transcription, there was conflict in the assigning of formalize related overhead as compared to the pertly be system. This digression resulted in determining the headmaster manufacturing appeal of the motors. The ancient be system ignored the invention of cost drivers and that resulted in under(a) estimating the cost of motor. The old cost system was employ the cost as engineering cost and surplus components cost and did not depute the costs accordingly. In the red-hotly be system, they have established new cost drivers videlicet order of battle processing cost and special component treatment cost. additional component cost is a type of unit take cost whereas order processing cost is categorize under batch take aim cost driver.

They introduced two new natural action cost pools to know the accurate cost of per motor. They reduce the engineering costs and administrative cost by 1.74% & 7.46% respectively and allocated it to new cost pools. In the old costing system, they are allocating special components on average basis whereas in new costing system they are allocating as per the components apply in the motors. In the old costing system, they do not have congest related overhead. The old system was not able to suppress the blood between increased support costs and change in product mix where as new costing has comfortably achieved it. Later on, they also earn that material expense and railway car hours required to manufacture the motors was...If you ask to get a climb essay, order it on our website: Orderessay

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