Final Examination in Managerial Accounting

Kim Arrianne A. Cunanan

Master’s in Business Administration
Dr. Ian Guintu

1. Among the topics listed in our course outline, enumerate at least three of
these topics that you think your company utilizes and applies in its
operations and even in its decisions. Briefly discuss how these topics that
you have mentioned are being utilized and applied by your respective
companies or offices.

Answer:
 Standard Costing, Operational Performance Measures, and the
Balanced Scorecard.
 Decision Making: Relevant Costs and Benefits
 Profit Planning and Activity-Based Budgeting.

The 3 courses outline that I chose; first one is the standard costing,
operational performance measures, and the balance scorecard, why or how it is being
applied in the operations in our company? Well, our accounting department evaluate
performance of individuals and the other departments using standard costs, budgets
and variances and they will convert it in physical standards like for example the no. of
hours and the quality or the quantities of our work to the monetary equivalent. Setting
standard costs provide a basis for sensible cost comparison and it allows for
performance evaluation of the individuals. I think they are using standard costing
positively to motivate continual operating improvement.

Next is the decision making: relevant costs and benefits. Relevant cost is a
managerial accounting term that describes avoidable costs that are incurred only when
making specific business decisions. The concept of relevant cost is used to eliminate
unnecessary data that could complicate the decision-making process. Our management
uses relevant costs in decision making like prevented from focusing on information that
might otherwise incorrectly affect its decision.
 Last one is the profit planning and activity-based budgeting. Profit planning is
accomplished through the preparation of a number of budgets, which when brought
together, form an integrated business plan known as the master budget. The
management uses profit planning and budgeting to think about and plan for the future.
Means they are allocating resources where they can be used most effectively. They
also communicates management’s plan throughout the organization.

2. In our class, we have learned that various companies of differing nature,

products and/or services should be using and applying differing cost
accounting methods. Given the following companies/agencies/offices,
what do you think is the most appropriate costing method that should be
applied and why?

Answer:

A. Funeraria Paz
 Costing Method: Activity-Based Costing. It produces product
lines that take very different amounts of time with particular
processes. Activity-based absorption costing assigns all
manufacturing overhead costs to products based on the activities
performed to make those products. Activities may involve human
labor, equipment costs, energy and expendable resources, and
materials, but for analytic purposes the costs are all lumped
together under a single activity concept.

B. Municipal Disaster Risk Reduction and Management Council

(MDRRMC)
 Costing Method: Standard Costing. Standard costs are
estimates of unit costs at targeted output levels, including direct
materials costs, direct labor costs, and indirect costs. Standard
costs are used to prepare budgets for planned production and to
assess production that has occurred. The estimation of standard
costs requires the separate estimation of standards for direct
materials, direct labor, and overhead.
C. Universal Robina Corporation
 Costing Method: Process Costing. Used in most mass-
production settings, a process cost system analyzes the net cost of
a manufacturing process. Since most manufacturing processes
involve more than one step, a similar calculation is made for each
step to arrive at a unit cost average for the entire production
system.