Description
1- Discussion: Direct Cost Variances & Flexible Budgets
The executive vice president of the company observed that the operating income for September was much lower than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. The manager is threatening to withhold year-end bonuses unless an explanation is presented. As the company’s management accountant, you have been asked to provide explanations for the disappointing September results. How can the data be presented to show that the managers did control the costs that were controllable?
Guidelines
Reply to at least two classmates' posts. Although there are no requirements to use a number of words, your response to your classmate's discussion should be substantive and add value to the discussion (i.e. reflecting on their response, asking to follow up-questions, etc.).
“Texting” or “chat” language is not appropriate when communicating within discussions.
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2- Discussion: Allocation of Support Dept Costs, Common Costs
In this chapter, we explore several techniques for allocation costs. Let's pretend you are on a committee to determine how much much tuition should increase per student for an upgrade in computer technology.
Explanation & Answer
View attached explanation and answer. Let me know if you have any questions.It is already done. Can you please check it first then tell me if you are satisfied with the answer. I just encode it accordingly since you did not provide any format.
1- Discussion: Direct Cost Variances & Flexible Budgets
As the company’s management accountant, data should be faithfully presented. It should show
all the incurred cost and the expected cost. Explaining the flexible budget that is being proposed
to the management providing that cost estimates we projected and recognizing the variances
outside of a certain range such as factors of production which are beyond managerial control. Also,
it should be noted that prediction in the budget is highly volatile for the nature of all the expenses
may not be the same because in the determination of the fixed and variable cost happens on a
arbitrary basis depending on the volume or level of activity. The management are doing its best
to the extent that we are proposing several budgets to increase income but there are some factors
or variances that are not predictable and beyond our control.
2- Discussion: Allocation of Support departments Costs, Common Costs
As one of the committees, in order to proceed with the upgrade in computer technology it need
to justify its costs. The university can decide how much tuition needed to increase per student by
the basis of the support department cost allocation for it cannot be allocated directly to the unit
upgraded since the upgrade do not pass through the support department and it exist to support that
class who utilizes the upgrade. Support departments cost is being recognized here to obtain a
mutually agreeable tuition for the fairness and cost-benefit of the university.
In allocating, I recommend the use of Direct method of allocation for it allocated only to the
producing departments which is probably suitable to the proposed upgrade in computer technology
even though not all the class will be utilizing the upgrade in computer technology. Direct method
assigns all the expenses of the support departments to every student in order to recover...
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