Management Accounting For Advanced Management – Calculation Of Costs Of Cakes And Over-Applied Overhead
Discuss about the Management Accounting for Advanced Management.
Part 4:
Calculating cost of cakes:
|
Month |
Month days |
Total Cakes |
Direct Labour hours |
Direct Labour Costs |
Oven Hours per day |
Oven Hours per month |
Total Electricity Cost |
Rent |
Other Expenses |
|
1 |
31 |
9,800 |
88,200 |
29,400 |
17.07 |
529.20 |
4158.0 |
2500 |
8000 |
|
2 |
28 |
8,000 |
72,000 |
24,000 |
15.43 |
432.00 |
3430.6 |
2500 |
6000 |
|
3 |
31 |
7,000 |
63,000 |
21,000 |
12.19 |
378.00 |
3029.1 |
2500 |
5500 |
|
4 |
30 |
6,500 |
58,500 |
19,500 |
11.70 |
351.00 |
2849.6 |
2500 |
7500 |
|
5 |
31 |
7,200 |
64,800 |
21,600 |
12.54 |
388.80 |
3178.5 |
2500 |
7536 |
|
6 |
30 |
7,000 |
63,000 |
21,000 |
12.60 |
378.00 |
3132.9 |
2500 |
9565 |
|
7 |
31 |
8,000 |
72,000 |
24,000 |
13.94 |
432.00 |
3547.4 |
2500 |
9676 |
|
8 |
31 |
8,300 |
74,700 |
24,900 |
14.46 |
448.20 |
3686.7 |
2500 |
10007 |
|
9 |
30 |
8,500 |
76,500 |
25,500 |
15.30 |
459.00 |
3702.5 |
2500 |
7589 |
|
10 |
31 |
9,000 |
81,000 |
27,000 |
15.68 |
486.00 |
3862.4 |
2500 |
6700 |
|
11 |
30 |
9,500 |
85,500 |
28,500 |
17.10 |
513.00 |
4037.4 |
2500 |
9900 |
|
12 |
31 |
10,000 |
90,000 |
30,000 |
17.42 |
540.00 |
4286.2 |
2500 |
10000 |
|
Total |
98,800 |
14,820 |
296,400 |
175 |
5,335.20 |
42,901.30 |
30,000.00 |
97,973.00 |
Explaining difference actual and budgeted values:
|
Particulars |
Actual Amount |
Budgeted Amount |
|
Number of cakes |
98,800 |
115,000 |
|
Total oven hours |
5,335.20 |
6,210 |
|
Total labour hours |
14,820 |
17,250 |
|
Total labour costs |
296,400 |
$345,000 |
In addition, the above table mainly states the overall difference in actual and budgeted amounts of the cake company. Moreover, the cost structure of the company is mainly related on the number of cakes that is been produced. Thus, the declined production of cakes has mainly increased the overall difference in actual and budgeted figure. Kaplan and Atkinson (2015) mentioned that companies to understand the difference in their budget and actual value incurred during the fiscal year mainly use variance analysis.
Calculating over and under applied overhead of the year:
|
Particulars |
Amount |
|
Budgeted Manufacturing overhead |
$ 194,521 |
|
Actual Manufacturing overhead |
$ 170,874.30 |
|
Over applied |
$ 23,646.70 |
The above-depicted table mainly states that the overall manufacturing overhead is over applied by $23,646.70. In this context, Tuominen (2012) stated that excess overhead applied during the production period is mainly known as over applied overhead, which is mainly derived by the company to derive effective budgets in future.
Reference:
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Tuominen, A., 2012. Activity-based costing in cost management: the impact of KONE PSR on sales overhead costs.