Managerial accounting is a process of identifying, measuring, analysing, interpreting, and communicating information in pursuit of an organization’s goals. Owners or the management team seeks to create value for the organization by managing resources, activities and people to achieve the organization’s goals effectively. Their day to day work comprises four major activities: decision making, planning, directing operational activities and controlling.
a) Note that the fundamental principles and concepts of running a business remain the same irrespective of the nature and/or size of the business. Assume you already running a business.
1. Complete the assignment as follow:
a) Name the business formed (eg: ABC resturant, XYZ hypermarket) and provide a brief description of the business as the nature of the business and organizational strcuture.
b) Explain the reasons why you running the business.
2. Identify and list FIVE (5) key cost objects of the business and its cost components. Classify the various costs in accordance with the following table. For “justification”, you are expected to justify/explain why the item is classified as such. Your justification must be specific and precise.
3. Estimate and calculate the total of (i) Prime cost, (ii) Manufacturing cost, (iii) Non Manufacturing costs, (iv) Total cost, (v) Profit and (vi) Revenue of the company. The number of units sold, produce and figures are based on your assumption.
4. Describe, discuss and/or explain the importance of identifying and classifying the various costs to the business. Your discussion must be specific and precise covering the areas in: (i) Planning (ii) Controlling (iii) Decision making (iv) How to improve profit and (v) How to reduce costs.