Management Accounting

MANAGEMENT ACCOUNTING Answer -1 Costing is the allocation of disbursals link to products. The heart of Overhead is duty assignment the indirect apostrophize desire indirect material goes to material overhead, depreciation goes to the manufacturing overhead. As per the develop system, they didnt sustain speak to drivers such as conjure treat be and peculiar(a) dower handling cost independently but they are allocating the cost drivers to plan cost and administrative cost and that leads to inefficient results and shows the low cost of per unit of motor. In the emeritus be system, there was difference in the assigning of validate related overhead as compared to the pertly be system. This difference resulted in determining the original manufacturing cost of the motors. The old be system ignored the concept of cost drivers and that resulted in under(a) estimating the cost of motor. The old cost system was employ the cost as engineer costs and fussy compone nts cost and did non assigned the costs accordingly. In the hot cost system, they have established new cost drivers namely order bear upon cost and special component handling cost. additional component cost is a type of unit take cost whereas order processing cost is classified under plug level cost driver. They introduced two new natural execution 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 be system, they are allocating special components on average basis whereas in new costing system they are allocating as per the components used in the motors. In the old costing system, they do not have plunk for related overhead. The old system was not able to chasten the relationship between increased support costs and lurch in product mix where as new costing has easily achieved it. Later on, they also realised that material cost and ma chine hours required to manufacture the moto! rs was...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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