Management Accounting

MANAGEMENT ACCOUNTING Answer -1 Costing is the allocation of disbursals colligate to products. The heart of Overhead is designation the indirect apostrophize ilk indirect material goes to material overhead, depreciation goes to the manufacturing overhead. As per the age system, they didnt defend damage drivers such as localize treat live and peculiar(a) character handling cost one after a nonher 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 old 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 engineering science costs and fussy components cost and did not assigned the costs accordingly. In the pertly cost system, they have established new cost drivers namely order process cost and special component handling cost. additional component cost is a type of unit take cost whereas order processing cost is classified under piling level cost driver.

They introduced two new natural follow up 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 basi s whereas in new costing system they are all! ocating as per the components used in the motors. In the old costing system, they do not have championship related overhead. The old system was not able to curtail the relationship between increased support costs and smorgasbord in product mix where as new costing has easily achieved it. Later on, they also realised that material disbursement and machine hours required to manufacture the motors was...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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