ACCT2522 Management Accounting 1 Period 1, 2013 Tutorial Week 3 – Cost fundamentals Overall Motif We can explore important assumptions of cost functions and talk about the human relationships between price behaviour, cost estimation and cost prediction. The concept of cost driver research and its program to expense estimation and cost administration will also be mentioned. We will even describe how you can estimate expense behaviour applying managerial view, engineering methods and other quantitative techniques.
Wanted Learning Outcomes and Important Reading Langfield-Smith, K., L. Thorne, and R. Watts. Hilton (2012).
Management Accounting 6e: Info for Controlling and Creating Value, sixth ed, McGraw-Hill Australia Pty Ltd. (Hereafter referred to as LS) • Phase 2 • Chapter several (include Appendix 3 part on “Evaluating the regression equation” g. 108109) THEME 3 EXPENSE BASICS Following the completion of this subject, you should be able to: 1 . 2 . 3. four. 5. 6th. 7. almost eight. Why are costs important? Exactly what does ‘different costs for different purposes’ mean? Appreciate and apply various classifications of costs. Understand price drivers as well as the role of cost new driver analysis. Identify and apply the activity structure of costs and expense drivers.
Describe the associations between expense estimation, cost behaviour and cost prediction. Understand and apply different methods for price estimation. Figure out some functional issues experienced in estimating cost features. 1 Tutorial Questions (must be prepared prior to the tutorial) Query 1: Langfield-Smith, Chapter three or more, Case three or more. 41 Parts Q3-8 just Please note that numbers in the cost capabilities should be rounded off to 2 dec places. Surpass regression results are the following: Part you: If only affected person load is regarded as as a determinant of operations costs, a straightforward regression can be utilized, utilising Surpass.
The output is definitely reproduced listed below. Regression Stats Multiple 3rd there�s r 0. 927088078 R Rectangular 0. 859492304 Adjusted 3rd there�s r Square 0. 824365379 Regular Error 401. 9749382 Findings 6 ANOVA df Regression Residual Total 1 four 5 Coefficients Intercept People 6 181. 36646 several. 838509317 DURE 3 953 664. 596 646 335. 4037 some 600 000 Standard problem 730. 0175478 0. 775999898 MS 395 3665 161583. 9 Farreneheit 24. 468191 Significance Farreneheit 0. 00778042 t Stat 8. 467422 4. 946533 P-value 0. 0010661 zero. 0077804 Lower 95% 5 154. 51281 1 . 6839882 Upper 95% 8 208. 220107 five. 993030436
Portion 2: The moment both individual load as well as the number of unexpected emergency procedures are considered as determinants of management cost, a multiple regression must be used. Utilising Excel, the regression stats are reproduced below. Regression Statistics Multiple R zero. 92919029 Ur Square 0. 86339459 Altered R Sq . 0. 77232432 Standard Problem 457. 669779 Observations six ANOVA Regression Residual Total df two 3 5 SS a few 971 615. 12 628 384. 8797 4 six-hundred 000 MS 1 985 808 209 461. 6th F being unfaithful. 480532 Significance F 0. 05048959 Regular Lower Rapport Error t Stat P-value 95% Intercept 5943. 98625 1161. 190869 5. 18871 0. 01443 2 248. 558665 Urgent 24. 9140893 85. 10570782 0. 292743 0. 788799 -245. 930256 Patients three or more. 80756014 zero. 889819838 some. 279024 0. 023443 0. 975756281 Uppr Lower Higher 95% 96. 0% 96. 0% being unfaithful 639. 414 2 248. 5599 639. 414 295. 7584 -245. 932 96. 7584 6th. 639364 0. 975756 six. 639364 a couple of Question 2: Refer to Beth and Jessie’s ice cream factory from the guide last week. Make sure you assume that moreover to peanut butter ice-cream, Beth and Jessie have extended their operations to produce Extra Chewy Dessert Dough ice-cream and Extremely Creamy Strawberry Cheesecake ice-cream. They appointed semi-retired gourmet on a project-by-project basis to assist develop these two flavours, and he is at present experimenting with one more new taste , Extremely Juicy Mango Delight. All of us further imagine the processes are exactly the same to manufacture all types of ice-creams, only that different flavors and different “extra ingredients” happen to be added. A. Please provide examples of this: Cost target = A box of ice-cream. 1 ) A unit level cost 2 . A group level expense 3. An item level expense 4. A facility level cost M. For each with the your illustrations, 1 . Recommend a potential cost driver installment payments on your
Classify the price as manufacturing or non-manufacturing 3 Self Study Questions and Solutions (complete in your time) 1 . 2 . several. 4. LS, Chapter a couple of, Self-Study issue 1 . LS, Chapter 2, Review Question 2 . 7 LS, Phase 3, Issue 3. 34. Mowen, Phase 3, Question 3. twelve. (Note: You aren’t required to operate a regression, the outcome table is usually provided below. 4 Do it yourself Study Queries and Solutions (complete that you really need time) 1 . LS, Phase 2, Self-Study problem 1 ) Solution is on s. 61-62 with all the following amendments: 4) Solution should a, and h. (Sales and marketing tend to be used reciprocally. 7) Response should be a, and never b. (The word-processing equipment is used for supervision purposes and should not become inventorised. ) 9) Answer should be a, and either g or h. (If the newest product packaging is designed to attract customers’ attention and increase revenue, the cost of materials can also be regarded a marketing cost. ) 2 . LS, Chapter 2, Assessment Question 2 . 7 When analysing cost behaviour the ‘level of activity’ refers to the level of job performed inside the organisation. The activity generally causes the cost and, for this reason, the amount of activity is often referred to as the amount of cost drivers.
Activity may be expressed in many different ways, including units made, number of machine hours, quantity of direct labour hours, volume of transactions, kilometres driven, kwatts used, pages printed, volume of set-ups, number of engineering hours and so on. a few. LS, Phase 3, Issue 3. thirty four. Answers to the question will change. Rather than buying right solution, students should certainly seek a comprehension of the principles. 1 . Given that a a lot of the time technician is definitely hired, this kind of component of the cost is a set cost.
The additional cost of fixes by the neighborhood dealer may be related to the quantity of instruments utilized in the school, or number of several hours of teaching. A semi-variable cost. 2 . The number of audit hours is a cost driver, which, in return may be related to the number of college students (influencing the quantity of transactions. ) A variable cost. 3. No cost rider , a fixed cost, step-fixed cost in the event the number of college students grew past the ability of existing admin staff to cope and an additional new personnel has to be chosen. 4. Number of students enrolled, or number of hours of instruction. Adjustable cost.. At no cost driver i actually. e. a set cost (if annual set salary paid) or, (if paid with an hourly basis) the number of hours employed or the number of several hours of training (i. elizabeth., a variable cost). six. Number of college students enrolled. A variable cost. 7. A fixed cost, no driver. (However, in the long term, the expense of new musical instruments purchased will drive the depreciation demand. ) 8. Probably fixed, no cost new driver. 9. Volume of hours the college is wide open. A semi-variable cost. your five 4. Mowen, Chapter several, Question a few. 10 Note: You may have a slightly different figure due to rolling (e. g., ±1). 6th
