Programme Title: BACHELOR OF ARTS BUSINESS AND MANAGEMENT

Module Code / Title: Batch No:BAMD22110A

UGB253/MANAGEMENT ACCOUNTING FOR BUSINESS

Name of student: Student ID:

OTHUMANGHANI MOHAMED AZMAL SIDI2101051850
Title of Assignment:
BAMD5 UGB253

Name of lecturer: MR.LIM KAIM SOON

Total number of pages: (including this Words count:

cover page): 2756

Submission Date: 11/11/2022 Due Date: 11/11/2022

I declare that this assignment is my original work and that I have acknowledged any use of
published or unpublished works of other people. I understand that I will be penalized for plagiarism
and late submission.

Signature of student:

Contents
Traditional Costing.............................................................................................................................3-4
ABC Costing.....................................................................................................................................…4-5
Advantages and Disadvantages..........................................................................................................5-6
Perfomance and evaluation system...................................................................................................6-8
perfomance measurement and strategic information.....................................................................8-13
Linkage between Perfomance and budgetting...............................................................................13-14
Q3A................................................................................................................................................14-15
Q3B.................................................................................................................................................15-18
Reference and citation...................................................................................................................18-19
Q1a)

Conventional(traditional) cost accounting system

Conventional method is also referred as traditional method

All manufacturing cost that is assigned to the making of the product is known as
Conventional cost accounting system. Manufacturing cost like labour, material cost and other
expenses are important elements.

Traditionally, manufacturing overhead costs are assigned to the products produced.

Manufacturing overhead costs were traditionally allocated based on the number of output
units, direct labor hours, or production machine hours.

Allocating a manufacturer's goods based on a single factor (for example, machine hours) is
likely to result in inaccurate costs.The traditional method holds a record that mainly focuses
of the production of goods or labour/machine hours. It is easier to keep track as not much
data is involved. Some businesses have been following this method.

The traditional costing system applies general costing to

product at a fixed cost Traditional costs are taken into account
a set of indirect costs in traditional costing systems When indirect
low cost compared to direct cost, traditional costing method is optimal

There are several steps in the traditional costing process, including the following:

1.  Find out indirect costs

2.  estimate indirect calls for a certain period of time).
3. Find more information about labor hours and mission hours).
4. The time needed for the production is very crucial
5. Compute the predetermined overhead rate (see below).
6. Apply overhead to products using the predetermined overhead rate.
Q1b)

Traditional Cost Accounting Vs Activity-Based Cost Accounting

In the field of accounting, corporate accounting traditional cost and cost is

There are two different methods for allocating indirect costs (overall costs) to products
Both methods estimate the costs involved for later production Allocate these costs to products
based on the control cost ratio. The difference lies in the accuracy and complexity of the two
methods Traditional cost simpler and less accurate than ABC, and in general specify the cost
for products based on arbitrary average. ABC is more complex and precise traditional costs.
This method first allocate indirect costs to activities and then allocate costs to products based
on the use of products of activities

Traditional Costing Advantages and Disadvantages

Traditional price accounting structures are less difficult and less complicated to put into
effect than ABC structures However, traditional calculation structures aren't as correct as
ABC structures Conventional calculation structures also can result in large below and over
calculations. Benefits of activity-primarily based totally costing Activity-primarily based
totally costing structures are greater correct than conventional costing structures This is due
to the fact they offer a greater correct breakdown of oblique prices However, ABC structures
are greater complicated and high priced to put into effect The transition from conventional
costing to activity-primarily based totally costing is complicated. An ABC machine can offer
higher price statistics and assist control to manipulate efficiently and higher recognize a
company's aggressive advantages, strengths and weaknesses. Oftentimes, whilst confronted
with an growth in misplaced sales because of pricing mistakes because of faulty costing data,
managers understand the want for a higher costing machine like ABC. The ABC machine has
the finest effect on groups which have regions of excessive, growing price, or have many
merchandise, services, clients, processes, or a mixture of those Examples are flora generating
preferred and non-preferred merchandise, excessive and coffee quantity merchandise, and
mature and new merchandise Companies that take delivery of small and huge orders, provide
preferred and custom designed deliveries, or fulfill all clients, which include individuals who
require common adjustments and services earlier than or after delivery, in addition to clients
who hardly ever request unique services, can substantially benefit from costing structures sort
of activity. .
Q1c)

Advantages & Disadvantages of Traditional Costing

Simple traditional encryption Allocating costs according to the average common ratio. ..
Profitable because it is Less complex than activity-based costing, a company's accounting
does not need to spend a lot of time calculating traditional costs
Widely understood internal
Easy to explain outside
Limited accuracy
Futile
Let go of the unexpected
Too simple
Benefits of the ABC
1 It offers a plus exact unit cost. Because there is more accuracy in cost calculation, using
ABC can help devise better pricing and sales strategies ..
2 It allows you to dig deep cost overview. ..
3 ABC can be applied to all general expenses. ..
4 It can be moved to cost of services. ..
5 It provides quantifiable information Data.
Disadvantages of activity-based costing It can difficult to explain to those who have invested
in the process he may have limits value for some organizations Price of The ABC
implementation may not match its cost Regular ABC also requires modification of other
systems the specified cost is Finally an estimate
Q2a)

Bringing proof to endure in decision-making is a crucial thing of powerful and green

organization. Performance dimension and assessment are key equipment to be had to assist
policymakers and software managers broaden systematic proof, recognize how nicely rules
and packages are working, and perceive feasible improvements. Both assessment and overall
performance dimension generate data that falls alongside the continuum of proof, function
techniques for systematic assessment, and purpose to facilitate gaining knowledge of
approximately and enhance consequences of presidency activities. At the equal time, there
are crucial variations among those techniques that dictate what every can inform us
approximately packages and rules.

Performance Measurement

Continuous collection, monitoring, verification, and

Reporting data on preselected behaviors related to the amount and type of
Activities, delivered products and services, activity results

Objective:

Measuring progress towards preset goals

Determining whether an activity is meeting its goals

Set output/result targets and make adjustments when not met

Serves as an early warning system

major changes at work

The data are mostly quantitative

Data points are scored against target values or against

previous data for the same metric to see trends over time

It helps to state output goals it lets us how many people participated any proex with numbers
or percentage who were willing to participate in the program to achieve that targeted goal and
it keeps track of to ration that took the participant to achieve the targeted goal
Evaluation

Individual and systematic studies to examine how well all or part of a government program,
intervention, policy, regulation or other activity is working
Purpose: To evaluate the effectiveness of a program, intervention, policy or regulation,
relative to its absence or one or more alternative approaches
Establish a cause-and-effect relationship between an activity and the results that those
affected by it
Address performance questions, performance differences in different settings or populations,
and contextual factors
Data and analytical techniques guided by evaluation questions
Often includes both quantitative and qualitative data
In the case of causal studies, complex methods are required to isolate the effects of other
influences

It analyzes certain individuals in the program

it also assesses the people who achieved their targeted goal and also study from the result
why some of them didn't achieve their target

it also explores different methods on how the participant experience different from a different
organization

Basically, performance measurement and evaluation important to understand the objective

and subjective assessment of individual and organization to achieve greater heights.
Q2b)

Strategic Information

1. it access internal and external requirements that the customer wants and it also finds out
the key factors that code boost the performance.

2. Information and data is gathered to improve the overall performance and to be competitive
with others.

3. Information sources are refined for the performance to meet its standard in an organization
as it act as a guideline

4. The performance will be reviewed

5. the data and performance information it's purely for the organization to share among
themselves for their own reference and protect it's confidentiality.

6. Data and information that they acquired has to be accurate reliable and timely and secure
and confidential. all this information really took a lot of time and effort.

7. They have to protect they are software and hardware from any leakage of information to
their competitors.

8. Not all information are to be shared only certain information will be shared.

Balancing the quality cost against expected revenue gains

 Quality is an investment.
  Quality efforts must be made financially accountable.
 It is possible to spend too much quality.
 Not all quality expenditures are equally valid.

Overview
Criteria for Performance Excellence Results
The Scope of Performance Management
Human Resource Measure
Customer-Focused Measures
HR Measures can relate to employee well-being, satisfaction, training and development, work
system performance and effectiveness

The Balanced Scorecard

Direct measures of customers satisfaction and dissatisfaction.

Product and Service Measures

Organizational Effectiveness Measures
Measures and Indicators
What is Data?
Quarterly Performance Audit

Relate to attaining key organizational goals and includes unique and innovative measures to
track business development.

Include internal quality measurements, field performance of products, defect levels response
times and data collected from customers.

Leadership and Social Responsibility Measures

Financial and Market Measures
The Role of Comparative Data
The representation of facts that come from some type of measurement process.

Financial performance might include revenue and return on investments while marketplace
performance includes market shares.

Looking at data without a basis for comparison false sense of achievement.

Refers to the Numerical Information that results from measurement.

Managing Information and Knowledge Assets

What is Measurement?
Information

 Financial Perspective

The ultimate result that the business provides to its shareholders.

 Internal Perspective

The performance of the key internal processes that drives the business.

 Customer Perspective

Customers’ needs and satisfaction

 Innovation

Rooting for a future success.

Derived from the analysis of data.

The act of quantifying the performance dimensions of products, services, processes, and
another business activities.

Just collecting data is not enough Companies must ensure that data is reliable and accurate,
that hardware and data processing software system is reliable and data and information
available to everyone who needs them in a timely and safe manner who should not have
access to it.
Designing the Effective Performance Measurement System
Identifying and Selecting Process Measures
Linking Measures to Strategy
Practical Guidelines for Designing a Performance Measurements
1. Identify all customers of system and determine their requirements and expectations

2. Define the work process that provides the product or service.

3. Define the value-adding activities and outputs that compose the process.

4. Develop specific performance measures or indicators.

5. Evaluate the performance measures to ensure their usefulness.

Provides a means of setting targets and allocating resources for short-term planning,
communicating strategies, aligning departmental and personal goals to strategies, linking
rewards to performance, and supplying feedback for organizational learning.

Aligning Strategic and Process-Level Measurements

Enterprise Resource Planning (ERP)

Process-Level Measurements
Integrated software packages information systems that organize and provide the infrastructure
for management information in all companies.

SMART - Simple, Measurable, Actionable, Related and Timely

 Fewer is Better.
 Measures should be linked to factors needed for success.
 Should include a mix of past, present, and future.
 Should be based around the needs of the customer.
 All employees should be measured without any hierarchy exceptions.
 It should contain a target or a goal

Data Reliability

Analysing and Using Performance Data

Data Accessibility and Security

The Cost of Quality

Knowledge Management
Analysis
All organizations measure and reports cost as a basis for control and improvement.

Refers to an examination of facts and data to provide a basis for effective decisions.
Interlinking
Term that describes t quantitative modelling of cause-and-effect relationship between
external and internal measures, such as the relationship of customer satisfaction measures to
internal process measures.

Data Mining
Quality Cost Classification
Quality Cost in Service Organization
Appraisal Cost
Prevention Cost
The process of searching large database to find hidden patterns in data, using analytical
approaches and technologies such as cluster analysis, neural networks and fuzzy logic.

Those associated with efforts to ensure conformance to requirements, generally through

measurement and analysis of data to detect nonconformance

Investment made to conforming products from occurring and reaching the customer,
including the following specific cost:

The nature of quality costs differs between service and manufacturing organizations.

 Test and Inspection Cost

 Instrument and Maintenance Cost
 Process measurement and Control Cost

 Quality Planning Cost

 Process Control Cost
 Information Systems Cost
 Training General Management Cost

Capturing Quality Cost through Activity-Based Costing

External Failure Cost
Internal Failure Cost
Occur after poor-quality products reach the customer

Incurred as a result of unsatisfactory quality found before the delivery of a product to the
customer
Activity Based Costing organizes information about the work or activity that consumes
resources and delivers value in a business.

 Cost due to Customer complaints and Returns

 Product recall cost and warranty claims
 Product liability cost

 Scrap and Rework Cost

 Cost of Corrective Action
 Downgrading Cost
 Process Failure

Q2c)

Performance evaluation is important. Budgeting is all about making decisions.The decisions

are to help the organization. Improving budgeting does not always imply making better
decisions. Budgets, on the other hand, can be improved by making better decisions and
presentable.  

performance measurement it's not a difficult thing to do and budgeting is important it helps
us to cut down costs and to provide a better product in affordable price to the people who are
in need.

performance budgeting should target our audience like who are the people why are the
following this matter and what kind of benefit are they getting it from following. one should
understand the objective and they should analyze the data on involvement of individuals and
organizations and how it could benefit them all their organizations. basically it's actually
understanding the needs and providing them with a good product the budget process problem
should be dealt individually according to their relevance of importancy and how to tackle it.

one should not confuse of using one method to another problem and it might lead to more
confusion. should not confuse with a lot of performance measure and budget cutting plans
they should stick to a minimal plan and follow it and it will get them both internally and
externally as an organization performance measures hurt to make better decisions on where to
reduce costs. some people might find it hard to adapt to this part of the job. performance
measures actually guide in decision making. budget cuts will be official on deciding which
type of action plan to be followed
Q3a)

1)

Point A(2500,22000)

Point B(1100,15000)

Therefore slope =5

Variable cost per unit is 5

2)

The intercept is at 5000

Total fixed cost is 5000.

3)

5 X 1900 =9500

9500+5000=14500

Projected total cost is 14500.

4)

Q=(5000+0)/12-7

=714.28

Breakeven quatity is 715.(3sig.fig)

5)

10000=2000p-15000

2000p=25000

P=12.50

Revised selling price will be $12.50

Q3b)

Revenue Budget

2022 Q4 2023 Q1 2023 Q2 2023 Q3 2024 Q4

Expected Sales Unit 1,000 1,100 1,130 1,160 1,200

Unit Selling Price $162 $172 $175 $175 $180

Total Sales 162000 189200 197750 203000 216000

Expected Sales Unit X Unit Selling Price = Total Sales

Sales Collection Budget(60% this Quarter:35% next Quarter)

Sales for Quarter 2023Q1 2023Q2 2023Q3 2024Q4

2022Q4 162000 56700

2023Q1 189200 113520 66220

2023Q2 197750 118650 69212.50

2023Q3 203000 121980 71155

2023Q4 216000 129600

Total Collection Budget 170220 184870 191192.50 200755

(Sales for Quarter X 60%) + Sales for Quarter X 35%)= Total Collection Budget

Production Budget

2023Q1 2023Q2 2023Q3 2024Q4

Planned sales 1,100 1,130 1,160 1,200

Desired ending inventory 56.5 58 60 61

Total units needed 1156.50 1188 1220 1261

Less beginning inventory 55 56.5 58 60

Units to be produced 1101.5 1131.5 1162 1201

Direct-Labour Budget

2023Q1 2023Q2 2023Q3 2024Q4

Units to be produced 1101.5 1131.5 1162 1201

Direct Labour Hrs 8 8 8 8

Total Hours Needed 8812 9052 9296 9608

Direct Labour Cost(Hourly) 8 8 8 8

Total Direct Labour Cost 70496 72416 74368 76864

Manufacturing Overhead Budget

2023Q1 2023Q2 2023Q3 2024Q4

Variable Overhead Cost 44060 45260 46480 48040

Fixed Cost 2500 2500 2500 2500

Total Overhead Cost 46560 47760 48980 50540

Cashflow Budget

2023Q1 2023Q2 2023Q3 2024Q4

Opening Balance 25000 33782.60 91680.20 (4535.5)

Cash collections from Sale 170220 184870 191012.50 200650

Cash payment for Materials 27381.40 26796.50 27530.20 28338.20

Other Cash Payments

Direct Labour 70496 72416 74368 76864

Manufacturing Overhead 51560 52760 53980 55540

Other Expenses 12000 15000 70000 25000

Capital Expenditure 0 60000 60000 0

Shortage payment collection 33782.60 8319.80 3185.50 10372.30

Bank Overdraft 0 100000 0 0

Interest Payable 0 0 1350 0

Closing Balance 33782.60 91680.20 4535.50 10372.30

3bii)No.I don’t think that the management would approve.The cash flow is huge.The profit
the company will see after all these effort will be not sufffiecient,and the effort done for this
seems a lot .its like working so hard and reaching a small milestone.They should come up
with a better proposal

Reference