Explain management accounting in quantum company and essential requirements

Our team would answer three questions are given, including explanation of the accounting management system in Quantum company, the different methods used for accounting reporting, and fi

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National Economics University International School of Management and Economics

MANNAGEMENT ACCOUNTING

ASSIGMENT

Lecture: Nguyen Thi Phuong Hoa

Tutor: Le Quang Dung

Students: Pham Luu Thuy Linh – 10170428 – MA – A1

Le Dieu Linh – 10170429 – MA – A1

Ha Noi, September 25, 2018

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TIEU LUAN MOI download : skknchat@gmail.com

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INTRODUCTION 3

TASK 1 4

1) Explain management accounting in Quantum company and essential requirements4 a) In division A: 4

b) In division B: 5

c) In division C: 5

d) In division D: 6

2) Essential requirements of different systems 6

TASK 2 6

TASK 3 9

CONCLUSION 11

REFERENCE LISTS 12

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First and forehead, I would like to thank Mrs Nguyen Thi Phuong Hoa and Mr Le Quang Dung for helping our team a lot in the process of doing this assignment Without all

of your instruction, guidance and advice, we would not complete it

Our team would answer three questions are given, including explanation of the accounting management system in Quantum company, the different methods used for accounting reporting, and finally an overview of the system of this company

According to Rongala, Management accounting also known as Cost Accounting means the process of measuring and analyzing business costs, reporting all of the information related to finance and non-finance to support managers make better decisions

in achieving company goals

Besides that, management accounting would decide what are the products the company should focus on and how much they will pay for them, how much to serve the customers, and the profitability of customers and products They seek answers to these separate questions so that senior managers can concentrate on maximizing revenue (2015)

Managers need management accounting to get more knowledge to developing, communicating, implementing strategies, designing products and making decisions about marketing plans (Horngren, Datar and Rajan, 2015)

We will divide into three tasks with four division A, B, C and D to evaluate the performance of management accounting in Quantum company

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TASK 1

1) Explain management accounting in Quantum company and essential requirements

- In theory, a basic understanding of the process is a group of steps taken by

a department of the company The process-costing system amass cost as well as assign them when finishing accounting period, including direct materials, direct labor, and overhead to clearly processes, departments, or cost objects in an attempt to evaluate finished goods inventories (Steven Bragg, 2018)

In process costing system:

Total cost of producing Unit cost =

Total number of products

Process-costing movement:

Direct Materials

Direct Labor Work in process

Work in

Finished Goods Cost of Goods process

-Manufacturing - Department A Inventory Sold

Department B Overhead

From information is given, division A produces large quantities of water and juice

which are shipped for sale in many places, they are common in the market Basically, they

are mass production so that why the accountant applied the process-costing method to

calculate the profit

- Based on the Accounting Coach blog, normal costing is used to determine the cost of production encompass actual material and labor force costs, and production costs based on pre-defined production costs These three costs are called product prices and are used to determine the cost of capital and to value the inventory

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In division A, the company’s accountants use this method because their products are daily They need to apply the budget values for the overhead The reason is the input cost which just reported at the end of the month

- Job-costing system relevant to the process of hoarding information contain three types

Raw materials Direct workers Overhead for a work or service This approach is a great tool for tracking specific costs for

individual works and checking them to know if the expenses maybe decreased in future

jobs The alternative use is to see whether any excess costs incurred can be billed to the

clients (Steven Bragg, 2017)

- Job order costing movement:

Cost of Goods Sold

Quantum company used job-costing system for division B because the want to

consider each project as a different job and it will be indicated on the job cost sheet

- The process of monitoring and repairing equipment, materials and assets of the

factory as well as the equipment and products have reached the consumers In addition to

monitoring and repairing systems, inventory management is a collaboration of technology

( including hardware and software) (Nicole Pontius, 2018)

- In fact, managers will see every move in performance, so managers will

make better decisions and investments with each type of product Each inventory manager focuses

on different parts of the supply chain In addition, small and medium sized enterprises will be

interested in placing orders from suppliers and selling them to consumers at the end of the chain

(Andrew Marder, 2017)

- Division C imports products from Division A and others for sale and it also

has many affiliates So, this company has applied this inventory management

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system to division C to ensure that there will always be products delivered to

distributors and customers as well as reduce the maximum inventory

- Last but not least, Quantum company used activity-based costing (ABC) to determine each cost of different activities, then calculate the customer’s costs based on the services provided Because each performance is equivalent to different customers

- This is the way to identify and divide the costs for overhead operations then apply to the products This system recognizes the relationship between cost, overhead operations and products Through this, the company will assign non-direct costs to products less like random choices as a traditional method (Investopedia)

2) Essential requirements of different systems

- Process-costing system: It must be a company that produces the

same items in large quantities and mass on the market

- Normal costing system:

- Job-costing system: When the company wants to accurately

determine the cost and time for each job They need to know the customer requirements and then calculate the related costs and overhead

- Inventory management system: Accountants needs data reports

related to the raw materials received including raw materials sent to the manufacturing site Monitor the products sold in the market with available data to capture consumption levels and inventory control

TASK 2

1) Division A

Once a month, the accountant of Division A prepares for the table report Cost of production and cost difference for each factory, unit cost and sales table each product line and report on the amount and duration of inventory for each

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product line Manager use these reports to track and make decisions on

production and sales But he also asks each year performance reports and

product quality have not been made by the accountant

costs variances costs variances Materials

Direct labor costs

Overhead

Purified water

Juice

When accountants use tabular reporting, it will help managers see a clearer and more detailed list of production costs and material costs information But these are just numbers so it's harder to evaluate data

2) Division B

Using table support accountants control the actual cost and progress and time

Project 1 Project 2 Project 3

Cost

Cost variances

Progress

After 2 months, the accountant division B prepares to report to the manager about revenue and the difference in costs and progress Each project report and revenue for the department So, the manager can manage the reality costs and progress after that they may intervene in time Costs related to the original room Redo each project, but the accountant cannot provide that information

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3) Division C

At the end of the month, C Office's accountants prepare the report inventory time and balance (amount) for each type of inventory; and report the revenue and

profit for each store However, department managers require weekly sales reports

and monthly profit reports for each Inventory type He claims that the market

competition is very strong, and he tries to control costs and Increase sales whenever

possible

4) Division D

Summer time

Aerobic

42.42%

Yoga

32.32%

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Winter time

17.00%

Spa Aerobic Yoga

51.00%

32.00%

Water price

Electricity

price

Places costs

Monthly, accountants prepare for Divisional Report the profit variance and profitability of the manager for each service Accountants use pie and chart to illustrate Vivid profit sharing of each service Division managers know which profit-making services increase and that service is less profitable to reduce

Management is also concerned about the use of space summer and winter, but the accounting did not calculate this information

TASK 3

It is an easy to use method when the product cost is the same The company allocates business expenses based on how many processes are performed that each item in the production system This generates a simple average cost for each item created

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Accountants use the method in the production system because

of its flexibility The company will be easier to customize or remove a process when not needed It also reduces the cost of production for each product as well as controlling the amount of imported raw materials That way helps save a lot of money for business

This method can also generate cost errors in the product reporting process In fact, the input material may be higher than the price entered

in the table That leads to low business costs

Assigning cost: This system helps managers calculate the profits they earn from personal work, to help them evaluate and monitor specific jobs as expected This is a good way for companies to do high custom job (David Ingram,2018)

Reporting: It can track the performance of individuals and groups on cost control, efficiency and productivity Moreover, the advantage

of being able to identify the same quality between departments and compare performance over time was gave the manager by the cost of this process (David Ingram, 2018)

3) Advantages and Disadvantages of inventory management system:

This system is very important to a company if they do not want to be disturbed It stores all information and data under the control of the company They will gain local trust for their items, vendor specific information and the total inventory available

The system will help the department and the company control and evaluate which products have higher or lower consumption

However, sometimes items are entered at different times leading to the inconvenience of management of financial accounting

4) Activity-based costing:

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This system helps the company to determine the true cost of individual products and units better than traditional methods, which are easy to manipulate data and information From there, detailed information is available to improve the process and provide much more affordable to customers

CONCLUSION

Quantum company has four division A, B, C and D Each division has applied different accounting management systems Every accountants used the most suitable methods for divisions which can do the best job There are many benefits and drawbacks, however, the accountants did not apply thoroughly the advantages of systems

Costing systems:

1 Division A applied market prices because purified water and juices which are similar and mass products

2 Division B uses normal costing and job costing because the company makes different projects and exclusive

3 Division C and D use cost plus

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REFERENCE LISTS

1. Bragg, S and Bragg, S (2017) Job costing [online] Accounting Tools Available

at: https://www.accountingtools.com/articles/2017/5/14/job-costing [Accessed 26 Sep 2018]

2. Marder, A (2017) What Is an Inventory Management System, and What Features

Do I Need? [online] Blog.capterra.com Available at:

https://blog.capterra.com/what-is-an-inventory-management-system/ [Accessed 26 Sep 2018]

3. Pontius, N (2018) What is an Inventory Management System? – Camcode [online]

Asset Tag & UID Label Blog Available at: https://www.camcode.com/asset-tags/what-is-an-inventory-management-system/ [Accessed 26 Sep 2018]

4. Bragg, S and Bragg, S (2018) Process costing system [online] Accounting Tools.

Available at: https://www.accountingtools.com/articles/what-is-a-process-costing-system.html [Accessed 26 Sep 2018]

5. Invensis Technologies (2018) What is Management Accounting and its Importance

- Invensis Technologies [online] Available at: https://www.invensis.net/blog/finance-and-accounting/what-is-management-accounting-and-its-importance/ [Accessed 26 Sep 2018]

6. Ingram, D (2018) Advantages & Disadvantages of Job Order Costing & Process

Costing. [online] Smallbusiness.chron.com Available at: https://smallbusiness.chron.com/advantages-disadvantages-job-order-costing-process-costing-3082.html [Accessed 26 Sep 2018]

7. Civilserviceindia.com (2018) Job and Process Costing, Job Order Costing Vs.

Process Costing System [online] Available at:

https://www.civilserviceindia.com/subject/Management/notes/job-and-process-costing.html [Accessed 26 Sep 2018]

8. Smallbusiness.chron.com (2018) What Are the Advantages & Disadvantages of

Process Costing? [online] Available at:

https://smallbusiness.chron.com/advantages-disadvantages-process-costing-4098.html [Accessed 26 Sep 2018]

9. Business Case Web Site (2018) Activity Based Costing ABC vs Traditional

https://www.business-case-analysis.com/activity-based-costing.html [Accessed 26 Sep 2018]

10. Staff, I (2018) Activity-Based Costing (ABC) [online] Investopedia Available at:

https://www.investopedia.com/terms/a/abc.asp [Accessed 26 Sep 2018]

11 Horgren, C Datar, S And Rajan, M., 2015 Cost Accounting: A Managerial

Emphasis., 15th edition Pearson Education, p.4

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