Running Head: CASE STUDY ASSIGNMENT 1

Case Study Assignment

Student’s Name

Institutional Affiliation

Date
CASE STUDY ASSIGNMENT 2

Case Study Assignment

Requirement 1:

“Forest” was concerned with the management’s decision to shut the operations in the two

quarters mainly because he believes that there’s always an alternative or other way through

which the two quarters in question could be handled other than operations being closed down

completely. He even goes on to introduce two different costing methodology through which he

was to employ in proving his methodology, which is the normal costing as well as the

standardized costing.as such managements are not supposed to make such decisions relying on

the actual cost since; the accuracy of this kind of a model in regards to all the information’s that

concern the unit costing cannot be provided on the required timelines and more so all the units

produced are not stable and therefore tend to change from time to time.

Requirement 2:

Normal and standard costing are two cost evaluation methodologies that used for the same

purpose but have quite some variations among them. For instance normal costing is identified

with employing the actual costs for both its direct labor as well as the materials used.it does take

just three costs to evaluate the value of the goods out and the inventories. Note that in the case of

normal cost when variance is very minimal us that it’s insignificant, it’s pushed to the side of the

goods sold. Otherwise, it’s split into goods sold out, inventory showing work in progress and the
CASE STUDY ASSIGNMENT 3

inventory of the finished goods. On the other hand standard costing in all its production aspects

it has costs as a predetermined factor. Therefore, normal costing is likely to bring up an overhead

rate that is deemed more realizable, achievable as well as reason having in mind that they are

also likely to be more uniform.

Requirement 3:

When making the summations and the calculations for the normal account on all the

predetermined costs all variables that make up the quarterly totals are put into considerations and

thus re-computing these values may as well lead to inaccurate data or result for the annual

statement. Similarly to the standard costing where there is track of the changes in the costs in a

given period.

Requirement 4:

Many companies believe that different costing methods have different effects on their operations

as well as the effect on their output. for instance during that period where the price are

skyrocketing , an organization may resort to engage a costing methodology that will take care of

the expenses such as the tax savings, run along or rather blend with their income at that period

that prices going up. Some methodologies are considered very user friendly and therefore can

easily be executed by the organization, some methods are considered very poor in matters to do

with tax and therefore can cause a tax burden and thus not every company will go for such.

Requirement 5:

In the standard costing, we multiply the rate given by the projected output in that given period.

Variable overhead variance= (standard time x rate) – (actual time*rate)

CASE STUDY ASSIGNMENT 4

= (75*40000) - (200 000+80000)

=2.72 millions

Requirement 6:

Variable overhead variance as indicated above definitely makes up the difference in the variable

production cost in a given period. It can also in other terms be defined as being the producing

cost as well as the actual cost that ought to have been incurred. It’s been put in terms of the

number of machine hours in our case.

Requirement 7:

Costing methods are mainly engineered so that managements an easily borrow from them in

making decision. They need not necessarily to consult from other organizations. They provide

most related information to what exactly is being undertaken by the organization, they avail cost

information which they use I financial decision making.

CASE STUDY ASSIGNMENT 5

Reference

Datar, S. M., & Rajan, M. (2018). Horngren's cost accounting: A managerial emphasis.

Weygandt, J. J., Kimmel, P. D., Kieso, D. E., & Aly, I. M. (2020). Managerial Accounting:

Tools for Business Decision-Making. John Wiley & Sons.