Costing and Budgeting

Topics: Cost accounting, Costs, Management accounting Pages: 8 (1570 words) Published: July 3, 2013
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BTEC EDEXCEL HND DIPLOMA IN BUSINESS MANAGEMENT & HUMAN RESOURCES

MANAGEMENT ACCOUNTING: COSTING AND BUDGETING

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Amaya Gamage
BM/C/43/32

SUBMITTED TO: Mr. Anuruddha Yapa
30.07.2012

Acknowledgement

I would like to express my sincere gratitude to those who helped me to finish this project on Costing and Budgeting. I have taken a lot of effort in finishing this assignment successfully. I express my heartfelt gratitude especially to our lecturer of Management Accounting: Costing and Budgeting module Mr. Anuruddha Yapa who gave me wealth of knowledge about businesses and the environment in which it operates, spending his valuable time with us, which helped me to complete the assignment successfully. My deepest sense of gratitude goes out to my friends and family who were with me helping in many ways to make this a success. I would also like to thank ICBT Campus for conducting a HND program for Business Management.

Executive Summary

Contents

Introduction5
Learning Outcome 16
1.0Different Types of Costs that organizations bear6
1.1 Different Types of Costing Methods6
Learning Outcome 39
1.Purpose of Budgeting9
1.1Advantages of Budgeting9
1.2Disadvantages of budgeting9
2.Fixed Budgets9
2.1Flexible Budgets9
2.2Zero- base Budgets10
2.Learning Outcome 2&411
Conclusion12
References13

List of Tables

Table 1: FIFO Store Ledger8
Table 2: LIFO Store Ledger8
Table 3: Receivables10
Table 4: Payables10
Table 5: Cash Budget11

Introduction

Management accounting costing and budgeting is looking at the cost information, both present and future, of businesses and gather, compile, evaluate and process cost data into information which helps for business managers. Cost accounting is the establishment of the budgets, standard costs and actual costs of operations, process, activities or products; and the analysis of variances, profitability, or the social use of funds. Through cost accounting information regarding financial aspects can be gathered, using information planning, controlling and short and long term decision making can be done. By the information provided through costing systems managers can use it as a factor in pricing decisions, production planning, cost control, wages of control, material cost control. Budget is a quantitative statement, for a define period of time that may include planned revenues, expenses, assets, liabilities and cash flow. Budgets are prepared a business as a whole or as departments in advance of the period. Budgeting helps to control, motivate, plan, coordinate, communicate and classify authority and responsibility.

Learning Outcome 1

1.0 Different Types of Costs that organizations bear

1.1 Different Types of Costing Methods

* Job Costing
In job costing costs are determined for each job. Information is collected for each job for pricing purposes. Such as product designing, testing samples, development of a product and consultancy.

* Batch Costing
If the units produced in a batch are identical in nature and design batch costing is used treating each batch as a job or separate unit. Industries like bakeries and pharmacies use batch costing.

* Process Costing
Process costing is used for the products that go through different processes. Output of each process is treated as a finished good and consumed as a raw material for the next process so it is evaluated separately. To discover the cost at each stage of production process costing is used in these kinds of industries such as Oil refining, Paper making, Drug manufacturing. Process costing contains, * Clearly defined process cost Centre and the accumulation of all cost by the cost center. * Maintain of accurate records of units and part units produced and cost incurred by each process. * Averaging of the TC of each process over...

References: * Class notes 2012
* (no Date) About: Methods of costing and types of costing. (Online) Available at :< http://iamsam.hubpages.com/hub/Methods-of-Costing > [Assessed 03rd October 2012]
* Accounting Tools. (no date) About: What is a flexible budget (online) Available at: <http://www.accountingtools.com/questions-and-answers/what-is-a-flexible-budget.html > [Assessed 3rd October 2012]
* tutor2u. (no date) About: zero based budgeting (online) Available at: <http://www.tutor2u.net/business/accounts/zero-based-budgeting.htm > [Assessed 3rd October 2012]
*
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