Management Accounting Scenarios and Applications Assignment

Management Accounting Scenarios and Applications - date ExampleIn this way, a proper mechanism gutter be developed which can tardily assist the departmental head regarding the cost patterns (Drury, 2006). Variance Analysis Variance Analysis is the next cock which can be used by the departmental heads later the incurrence of actual costs (Drury, 2006). This tool supports the departmental managers as to identify the cost which is actually representing more deviations from the estimated/budgeted/standard cost. Once the cost is identified to necessitate shown deviations, proper investigations should be conducted as to find out the causes of the deviations of that cost. The variance can be either tender or adverse however, the departmental heads should investigate both types of variances because at times the favorable variances occur out-of-pocket to using substandard raw materials or other similar issues. By utilizing the above mentioned tools, the departmental heads can easily t race as well as monitor and control the cost patterns of their department. Email 2 The following response is generated to guide Brenda in respect of the equipment to be included in the great(p) budgeting make for Identification of Cash Flows For any equipment to be included in the chief city budgeting process, the first and foremost stride of including the particular item is the identification of all possible interchange inflows and outflows along with their evaluation (Garrison, 2009). All the equipments nourish a particular initial outlay followed by the benefits (cash inflows in monitory terms) over its remaining recyclable life. However, the exact amount of cash inflows to be received is a bit judgmental task and necessarily cargonful estimation and forecast. The scenario mentioned in the case, needs a little adjustment as the printing mould to be purchased has a useful life of less than a year. Generally, equipments which are included in the capital budgeting process h ave a useful life of more than a year and their cash flows are estimated on yearly basis. In this scenario, the authority is a bit different. Here, an adjustment can be make such that a discount factor on monthly basis should be used by Brenda, and the Net Present Value of the printing elevator car should be calculated on monthly cash flow basis. If the NPV of the printing machine comes in positive figures, past the printing machines should be recommended for the final capital budgeting process. However, in case if the negative figure comes up for NPV, then plan for acquiring the printing machine should be discarded as it is no more feasible for Brenda to exploit the machine in trump possible manner (Gupta, 2001). Email 3 Breakeven Quantities This response is presented for Carls inquiry regarding the breakeven criterion. Under the existing situation when fuel changes are not added in the cost of the product, the contribution earned is $1.87. However, if the cost of fuel is adde d, then contribution is decreased to around $1.72. As a result of this change in the cost of the product, the breakeven quantity to be sold is likewise changed such that before the increase in the cost, the breakeven quantity is around 445,283 units. However, after the increase in the cost, the breakeven quantity is increased to around 484,116 units. Target Profits Assuming if the society is also interested in earning some profits of lets say $100,000 then in that case, the company needs to sell some more units so that they can earn this much profit. It can be