ACCOUNTING

Managerial Accounting Practices

Abstract

In this assignment we have to resolve the accounting and budgeting problem of Andrew and Brenda. Andrew is the president of a new division that has been started in the south-east to manufacture customized electrical components. Brenda is the head of production and wants to purchase an offset press to print manuals instead of purchasing them from local print shops.

Managerial Accounting Practices

The first email is from Andrew, the president of a new division that has been started in the south-east to manufacture customized electrical components. After the first two months he feels that his sales cost are out of control.

•Respond to Andrew with a prescription for control systems that he can put into place to forecast, monitor and control sales expenses.

Andrew has to review the purchases of office suppliers. He has to find ways to position his product away from his competitors and create greater value in the product. He has to encourage his employee to submit the cost cutting ideas regularly and reward them with recognition. To adjust the out of control sales expenses Andrew has to check the sales expense trend of electrical components. First he has to consider the direct cost of manufacturing. It is preferable that the use of the service is controlled on the basis of units of service rather than on the basis of cost. It is necessary that all cost of manufacturing which are overhead costs is allocated to production (Dayananda, 2002).

According to the classification of expenditure used in the cost accounting department, the budget of overall production costs include an estimate of expenditures for each department in the factory. The confidences with which they may be made spending plans depend on: 1) the reliability of accounting records and 2) the seriousness of the administration's attitude towards the planning of expenditure. As with most sub-budgets, it is desirable to have estimates of production costs prepared by manufacturing managers. The manager of each responsibility center should help in the preparation of cost estimates.

The manufacturing overhead is that part of the total cost of production is not directly identifiable with products or specific jobs. The manufacturing overhead consisting of: 1) indirect material, 2) indirect labor (including wages) and 3) all other miscellaneous expenses of the factory.

The manufacturing overhead include many different items of expenditures which causes problems in their apportionment or distribution of the goods.

There are two different types of ...