Portfolio Activity Unit-2

Managerial Accounting

In this chapter we covered and understand the following topics with the real life example like

financial statement from one of the big companies of the world Bata Shoes Company which is

clear the details manufacturing costs including general, and administrative (SG&A) costs. This

will help me in future in case I work for any manufacturing company in the finance or

accounting department in a managerial or AGM role then I can control and manage production/

manufacturing costs efficiently and effectively. But currently I am working for development

sector where we ususally spent grant money so this knowledge may not be applicable for me at

time but in future for sure.

From the discussion my take away is that same topics we presented here in such a diversified

way that I can clearly understand what my understanding gap is and what I need to be improved.

According to our learning objective now able to explain the main three types of manufacturing

costs (direct, indirect, and overhead) and their cost behaviors (variable, fixed, or mixed). Also

able to determine how business costs would be categorized under each cost behavior and type.

Not only that but also can explain the three cost methods and the types of businesses that would

likely utilize each method as a results can compare and contrast different cost methods and

recommend an appropriate method for a company.

1. Direct materials cost: Imported, Local Purchase

2. Direct labor: Direct wages

3. Manufacturing overhead: Remuneration to employees, Gas, water and electricity

etc
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Managerial Accounting

Other than manufacturing costs this specific types of SG&A costs would the company incur

which is also part of the manufacturing costs. Because to run the company need employees and

then need to maintain the benefits of the employee as well. Namely all the following expenses is

the mandatory part of the manufacturing company which is included with each of the product

price so that they can run the company smoothly.

Administration, selling and distribution expenses:

Remuneration to employees, Health and other welfare expenses, Travelling expenses, Bank

charges, Repairs and maintenance, Stationery, Postage, telegram and telephone, Entertainment

expenses, Subscription and donation, Advertisement, Selling expenses, Rent, rates and taxes,

General charges, Directors' fees, Auditors' fees, Legal and other professional fees, Insurance,

Land revenue Freight and transport, Packing expenses Commission, Royalty on Hush Puppies

Brand, Royalty on Dr. Scholl Brand, Royalty on Naturalizer Brand, Royalty on Ben10 and,

Powerpuff Girls, Global Footwear Services fees, Trade mark license fees, IT fees, Electricity,

Depreciation.

 A mixed cost is a cost that contains both a fixed cost component and a

variable cost component.

 A fixed cost is defined as expenses that do not change as a function of the activity of a

business, within the relevant period. For example, a retailer must pay rent and utility bills

irrespective of sales.

 A Variable cost increase or decrease depending on a company's production volume;

 Manufacturing costs are the costs incurred during the production of a product.

 The costs are typically presented in the income statement as separate line items.

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Managerial Accounting

 Job order costing or job costing is a system for assigning and

accumulating manufacturing costs of an individual unit of output. The job order costing

system is used when the various items produced are sufficiently different from each other

and each has a significant cost. (When a company's output consists of continuous flows

of identical, low-cost units, the process costing system is more appropriate.)

 Time to use: A job order cost system is appropriate when products manufactured or

services rendered are tailored to customers' needs. Due to customized services, the

resources used for different customers will differ in variety and quantity.

 Process costing is a term used in cost accounting to describe one method for collecting

and assigning manufacturing costs to the units produced.

 Time to use: A processing cost system is used when nearly identical units are mass

produced. Process costing is the optimal system for a company to use when the

production process results in many similar units. It is used when production is continuous

or occurs in large batches and it is difficult to trace a particular input cost to a specific

individual product.

 Activity-based costing (ABC) is a method of assigning overhead and indirect costs such

as salaries and utilities to products and services. 

The ABC system of cost accounting is based on activities, which are considered any

event, unit of work, or task with a specific goal.

 Time to use: ABC is used to get a better grasp on costs, allowing companies to form a

more appropriate pricing strategy. 

Portfolio Activity Unit-2
Managerial Accounting

References
https://www.batabd.com/pages/financial-info

https://opentextbc.ca/principlesofaccountingv2openstax/chapter/compare-and-contrast-

traditional-and-activity-based-costing-systems/

https://www.investopedia.com/terms/a/abc.asp

https://www.accountingcoach.com/terms/J/job-order-costing

https://www.chegg.com/homework-help/job-order-costing-appropriate-types-businesses-use-

chapter-1-problem-32q-solution-9781133712701-exc

https://opentextbc.ca/principlesofaccountingv2openstax/chapter/compare-and-contrast-job-order-

costing-and-process-costing-2/