Managerial Accounting Assignment Example | Topics and Well Written Essays - 1250 words

Managerial Accounting - date Example5. Machine requirements Man hour costs 1,000*15=$15,000 1,000*12.50=12,500 2,500 Man hour costs forms ruin of aspire get costs since it must be met for the process to take place. 6. Engineers charges periodic salary= 42,000/12=$3,500 This forms part of the indirect labour cost since it is not primary for the initial award of the ejection. (ii) The valuation in the context of the proposed tender is valid hence need to be considered by the company. The direct costs being considered on the basis of absorption cost are lower than the overall revenues anticipate from the entire project. Direct material A is the direct material A operational in trite and awaiting to be used in the manufacturing process. Direct material B is the direct material B available in stock and awaiting to be used in the manufacturing process. Direct grate is the amount of direct labour that exit be used in the production process to generate initial revenue. (iii) Revi sed memorandum Engineering specification 2,000 Direct material A 72,000 Direct Material B 3,000 Components 9,000 Direct Labour 15,000 Supervision four hundred Machine hire 3,000 Overhead costs 6,500 Total 110,900 (b) . Total revenue from the project $100,000 Direct material A 72,000 Direct Material B 3,000 Direct Labour 15,000 Supervision 400 Machine hire 3,000 Overhead costs 6,500 (99,900) Profits $100 The expected profits is higher than the veritable profits which will lead into conflicts. Absorption costing basis tends to inflate the profits thus do them higher than the actual. (c) Non financial matters for consideration Effects on creditors The firm must adequately consider the blow its operation will have on its creditors. Labour relations. This is not financially related but it by and large affects how a firm can manage to achieve its goal. 2. Althepal Ticket sales earnings (500*5) ?2,500 Food & drinks (500*3) ?1,500 Althepals hiring cost ?375 Special licence- ?25 (?1,900) Expected Profits ?600 McBoy Ticket sales earnings (250*5) ?1,250 McBoy hiring cost and beguile (?150) Expected Profits ? 1,100 Break even point Althepal X= 400/(5-3)=200 units McBoy=150/(5-3)=75units leeway of safety Althepal 400-200=200 McBoy 150-75=75 Analysis By considering the expected profits from each of the two options, McBoy will result in higher profits than Althepal hence it should be undertaken. The expected profit of Althepal is greatly reduced due to the cost of providing the drinks and food as well as the cost of special licence supercharged for the sale of drinks. Both the margin of safety and break even point for both options are the equal indicating that there are no external costs incurred. 3. Internal Rate of Return Definition there are basically many methods used in capital budgeting to determine the viability of investments such as fire Present Value (NPV), Payback Period (PP), Modified Internal Rate of Return (MIRR), Profitability business leader (PI) an d the internal Rate of Return (IRR). All these proficiencys aim at guiding a firm on the right choice to make when deciding on the best project to undertake. However the decisions on which technique to rely on depend on the