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    Cost Presentation

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    The document discusses cost management and accounting, specifically: 1) The differences between managerial and financial accounting, including their uses and reporting requirements. 2) The roles of a management accountant such as budgeting, planning, decision making, and controlling. 3) How overheads in organizations like colleges are indirect costs that help create goods and services, and different methods for assigning these costs, including direct process and step-down methods.

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    Cost Presentation

    Uploaded by

    MJ j
    49 views8 pages
    The document discusses cost management and accounting, specifically: 1) The differences between managerial and financial accounting, including their uses and reporting requirements. 2) The roles of a management accountant such as budgeting, planning, decision making, and controlling. 3) How overheads in organizations like colleges are indirect costs that help create goods and services, and different methods for assigning these costs, including direct process and step-down methods.

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    The document discusses cost management and accounting, specifically: 1) The differences between managerial and financial accounting, including their uses and reporting requirements. 2) The roles of a management accountant such as budgeting, planning, decision making, and controlling. 3) How overheads in organizations like colleges are indirect costs that help create goods and services, and different methods for assigning these costs, including direct process and step-down methods.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    49 views8 pages

    Cost Presentation

    Uploaded by

    MJ j
    The document discusses cost management and accounting, specifically: 1) The differences between managerial and financial accounting, including their uses and reporting requirements. 2) The roles of a management accountant such as budgeting, planning, decision making, and controlling. 3) How overheads in organizations like colleges are indirect costs that help create goods and services, and different methods for assigning these costs, including direct process and step-down methods.

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    of 8

    COST MANAGEMENT

    ACCOUNTING

    presented by: Maryam qassim- ST10754


    DIFFERENCES BETWEEN MANAGERIAL
    AND FINANCIAL ACCOUNTING 

    Managerial accounting  Financial accounting 


    1.Used by managers within the organization 1.Used by external shareholders 
    employed by the managers of the organization   2.Provides financial health check for the
    2. Concentrates on internal process and decisions company 
    making    3.Reports are mandatory 
    3. provides both financial and non fiancial 4.Provides financial information in form of
    information  financial statements 
    4. not required by law, at managements discretion 5.provides historical data
     
    5.Data is historical, present and forward looking 
    ROLE OF MANAGEMENT ACCOUNTANT

    Budgeting and
    Planning:  controlling Descions-making: 
    forecasting
    • short-term and • Preparing and • Monitoring • Select an
    long-term monitoring internal processes alternative 
    planning budgets  to ensure they • Understanding
    • allocating • Identifying meet required the losses
    resource variances  criteria, goals and incurred when an
    •  setting goals • Taking corrective specification's  alternative is
    acction  selected 
    OVERHEADS AND THEIR
    APPORTIONMENT 

    Colleges must pay for things


    Overheads in colleges are
    like electricity costs, salaries
    indirect costs that aid in
    for college administrators, and
    creating the end result of
    the purchase of necessary
    producing goods or services. 
    equipment.

    Both the direct process and


    the step-down method can be
     The step-down method
    used to assign expenses
    divides costs from the most
    to indirect costs. The
    important service departments
    department that actually puts
    to the less important ones in
    the resources to use is the one
    order.
    to which the direct process
    allocates the costs.
    OVERHEADS AND THEIR RE-
    APPORTIONMENT  

    • Reapportionment is when the overhead costs of a service center are divided among the production cost
    centers to make sure that service costs are spread out fairly. There are three methods of
    reapportionment: direct, step, and reciprocal

    Direct method divides up total service costs based on how


    much service each cost center gets. 

    Step method assigns service center costs to production


    departments and some service centers. 

    Reciprocal method divides costs based on the reciprocal


    relationship between the departments and services provided 
    CALCULATIONS FOR DIRECT METHOD

    Language  Accounting  Total

    allocated overhead cost OMR 40000 30000 70,000

    Re-apportionment direct 24000*10/20=12000 24000*10/20=12000 24,000


    method (IT) 

    Re-apportionment direct 20000*500/900=11111 20000*400/900=8889 20000


    method (library)

    Total 63111 50889 114000


    CALCULATION FOR STEP METHOD

    Language accounting IT Library Total

    Allocation of overhead cost 40000 30000 24000 20000 114000

    Re-apportionment step method 24000*10/25=9600 24000*10/25=9600 (24000) 24000*5/25=48


    (IT) 00 24000

    Total 49600 39600 0 24800

    Re-apportionment step method 24800*500/900= 24800*400/900=110 0 (24800)


    (library) 13778 22

    Total 63378 50622 0


    114,000
    REFERENCE:
    • Fernando, J. (2022, March 16). Accounting. Investopedia. https://www.investopedia.com/terms/a/accounting.aspKieso,
    D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate accounting (16th ed.). John Wiley & Sons, Inc.krishnan,
    vidhya (2019). Managerial Accounting - Definition, Objectives & Techniques - Zoho Books. [online] Essential Business
    Guides. Available at: https://www.zoho.com/books/guides/management-accounting.html.Horngren, C. T., Datar, S. M.,
    & Rajan, M. V. (2012). Cost accounting: A managerial emphasis (14th ed.). Pearson Education.Garrison, R. H., Noreen,
    E. W., & Brewer, P. C. (2015). Managerial accounting (15th ed.). McGraw-Hill Education.Tuovila, A. (2022, August
    23). Managerial Accounting. Investopedia. https://www.investopedia.com/terms/m/managerialaccounting.aspMurphy, C.
    (2022). How to Interpret Financial Statements. [online] Investopedia. Available at:
    https://www.investopedia.com/terms/f/financial-statements.asp.Kenton, W. (2022, August 27). Financial Accounting.
    Investopedia. https://www.investopedia.com/terms/f/financialaccounting.asp‌pant, S. (2015, October 24). 7 Roles of
    Management Accountant. Your Article Library.
    https://www.yourarticlelibrary.com/accounting/management-accountant/7-roles-of-management-accountant/65109
    Burns, J. (2013). Management accounting. Mcgraw-Hill Education.Tuovila, A. (2019). Overhead. Investopedia.
    https://www.investopedia.com/terms/o/overhead.aspHigh-low method: What is apportionment in accounting? (n.d.).
    Gocardless.com. https://gocardless.com/guides/posts/what-is-apportionment/‌
    Re-apportionment of service cost centre costs | F2 Management Accounting | ACCA Qualification | Students | ACCA
    Global. (n.d.). Www.accaglobal.com. Retrieved May 8, 2023, from https://www.accaglobal.com/gb/en/student/exam-
    support-resources/fundamentals-exams-study-resources/f2/technical-articles/re-apportionment-of-service-cost-centre-
    costs.html#:~:text=The%20direct%20method
    ‌

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