Managerial accounting Essay Example | Topics and Well Written Essays - 1000 words - 1

Managerial accounting - Essay ExampleThis impression states that stock is valued at lower of NRV or represent. Since NRV is not given in this case, we go away take on the purchase price or the cost of stock which is 750 in this case.The cost of practised employees The cost of skilled employees is the direct cost of the hostelry. As a result, there wages can easily be allocated to this orderliness because we know that they provoke worked on this particular order during the week we can easily apportion this to the order and since it is the speculate of accountants to allocate all the recognizable costs to the appropriate cost focalizes, this order is the cost center and the cost activity of the workers is rightly apportioned to this order.The extra cash lost Accountants are only implicated with the explicit costs and they are least concerned with the implicit cost. Implicit costs are the luck cost like this one. These are not the real costs but are based on economic assumpti on of the next best alternative. Similarly, since these costs are based on assumptions, we cannot tell the completed amount of these costs. However, economists do use these costs when calculating normal profit of a project or of an item. But, since cost statement is done by accountants and not the economists, we will ignore these costs in the job order cost statement. We are only going to include those costs that seduce factual raise as the concept of materiality states. As a result, when preparing the job order cost statement, I have not include the implicit amount as it is of little value to the accountants. Machinery depreciation Machinery depreciation is a furbish up cost. It means that irrespective of the operations performed by the machinery, a depreciation charge will be levied. Such costs do not vary with the output or the operations performed and hence we cry (out) them the fixed costs. In this case, since we have made a violate adjustment of the fixed overheads, it w ill lam to double addition if we add this cost separately. In other words, the depreciation charge is already included in the fixed overheads and it will lead to distortion of the cost statement if we include a separate head for machinery depreciation. In more professional terms, these will windows dress the financial statement and hence will give a different picture to the cost statement than it is in reality. For the reasons given above, I have excluded the amount for machinery depreciation from the cost statement. Electricity The statement in the question tells us whether the order is stock or not, the machinery will be in continuous use. Since all machinery is run on electricity, we can engage that the charge of electricity is also fixed. The entire costs related to machine are fixed as it is indifferent to the order and hence these costs will also be included in the fixed overheads. Hence by adding them separately, we will again be making a mistake of double debiting our cost statement. This again will distort the cost of the order in reality and will make us assume that we are incurring more costs than we really are. This is called as window dressing and should be avoided from both the ethical and legal point of view. Hence, this amount is excluded from the job order cost statement. Fixed overheads certain(p) indirect costs are incurred when a company is working on a