BCAS QATAR CENTRE

BTEC IN BUSINESS MANAGEMENT

Management Accounting:

Costing & Budgeting

NAME

BM/QR/ /

SEMESTER - 3

Date

Table of Contents

Introduction4

TASK 1 Collect And Analyze Cost Information within A Business4

1.1 Define the term Cost, Cost Unit, Cost Centre & explain different types of cost that any organization would incur during their operation.4

1.2. Explain with examples why different costing methods are used by organizations in the modern context5

1.3 Collect production details from the above example and calculate cost per unit, stock value & profit using absorption and marginal costing methods6

TASK 2: Scenario7

2.1 Define the term break even analysis and critically evaluate the advantages and disadvantages of this concept.7

2.2 Calculate C/S Ratio using the available information, explain the concept of contribution and it's important in decision making process7

2.3 Calculate BEP, BE Sales value, Margin of Safety and the profit at the budgeted activity level8

2.4 If the company wants to earn the same amount of profit in 2nd situation how many units that have to sell in the market?9

TASK 3: Scenario9

3.1 Calculate the contribution from each product (X, Y, Z)9

3.2 Considering the material as a limiting factor identify the most and the least profitable product by ranking them9

Considering the material as a limiting factor, the product X is the most profitable product with the conributuion margin of $24. While, the Product Y is the least profitable as its contribution margin is $15.9

3.3 Referring to the question 3.2 identify the production level in each product (X, Y, Z) and calculate the profit for a month10

3.4 Change in economic condition result in a decrease in demand of product (Y) by 500 Units. Calculate new production level & the profit from operation10

TASK 4: Scenario11

4.1 Explain the term inventory and approved methods available to value of those components by GAAP.11

4.2 Using the above methods calculate purchase value, cost of inventory distributed and the closing stocks.11

4.3 As a Management Accountant compare and contrast the above methods and recommend suitable method to achieve the organizational objective11

TASK 5: Scenario15

5.1 Explain in detail the purpose of Budget15

5.2 Assess different budgeting method (Zero Based Budget and Incremental Budget)16

5.3 Prepare relevant budgets in order to draw up a master budget for the Company17

5.4 Prepare a cash budget for the months of January, February and March 2013 for the Company.17

TASK 618

6.1 Calculate variances for the data presented18

6.2 Identify possible causes for the variances and recommend corrective action.18

6.3 Prepare an operation statement reconciling budgets & actual results.19

6.4 Explain the responsibility centres of an organization.19

Conclusion20

Costing & Budgeting

Introduction

Costing and budgeting carries an important place in every organization. Without the role of costing and budgeting, it becomes almost impossible for any organization to carry out their financial activities. In this papers there are six tasks discussed and carried out in order to explore the clear concept of costing and budgeting. There are also different aspects discussed about the cost information a lot different costing methods within a business which is very much important to understand. Furthermore the paper provides a detail study about the term inventory and approved methods available to value of those ...