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Module 3 Discussion Forum Write an analytical summary of your learning outcomes from chapters 5 and 6

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Module 3 Discussion Forum

Write an analytical summary of your learning outcomes from chapters 5 and 6. In addition to your analytical summary, address the following:

Chapter 5 Resource: https://saylordotorg.github.io/text_managerial-accounting/s09-how-do-organizations-identify-.html

Chapter 6 Resource:

https://saylordotorg.github.io/text_managerial-accounting/s10-how-is-cost-volume-profit-anal.html

As a manager, discuss how you would use or have used the concepts presented in chapters 5 and 6. Provide numerical examples to support your discussion.

Required:

1. Post your original discussion no later than day Sunday. Read and respond to at least 3 of your classmates’ posts. See class syllabus for posting requirements.

2. Be sure to support your work with specific citations using APA format

3. Read a selection of your colleagues' postings using one or more of the following ways:

· Share an insight from having read your colleagues' postings, synthesizing the information to provide new perspectives.

· Offer and support an alternative perspective using readings from the class materials or from your own research.

· Validate an idea with your own experience and additional research.

· Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.

· Expand on your colleagues' postings by providing additional insights or contrasting perspectives based on readings and evidence.

· Return to this Discussion several times to read the responses to your initial posting. Note what you have learned and/or any insights you have gained as a result of the comments your colleagues made.

Reply to Post 1: 160 Words

Through chapter 5 and chapter 6, we learn how the organizations identify a different kind of cost behaviour patterns and how the following methods are helping to reduce the financial problems and successfully running the organization. Each business or organizations choose one out of three of the cost behaviour patterns. It explains the three different kinds of basic cost behaviour patterns such as Variable cost, Fixed cost, and Mixed cost. These three cost behaviour patterns help to identify the future earnings and cost changes occurred by the different kind of factors. It helps to understand the variable cost analysis, the example of bikes unlimited was helping to increase the understanding levels of cost behaviour patterns. This chapter provides each value of production cost for bikes unlimited are in the tabular form, the graphical representation helps easy to analyse and understand the present situation of the organization.

The fixed cost analysis is the second cost behaviour pattern, in chapter 5 explains the total production of bikes unlimited and its cost in the graphical representation. The example of United Airlines, by using the fixed cost analysis how the United Airlines overcome their struggles to control the cost. I learn the sub-factors of the fixed cost that are committed fixed cost and discretionary fixed cost. The main differences between these two costs are short changes and significant impacts. The committed fixed cost cannot impact on the short-run changes and it doesn’t show any significant changes in the organization but the discretionary fixed cost is quite opposite for the committed fixed cost. The third cost pattern is mixed cost and it gives the combined result of variable cost and fixed cost based on the organization current situation(Lunsky & et al., 2019).

Chapter 6 explains how the cost volume profit analysis helps the managers, how these three factors help to simplify the decision making to managers. I observe that the single product companies and multi-product companies are having a minimal difference even they are using the same procedure of cost volume profit analysis. The profit equation and contribution margin income statement of single product companies are always initiated with the sales. The management chooses the variable cost analysis for short term production because it observes the company current situation, production capability, time is taken to change the capacity of the production are changes overall cost behaviour of the organization. As a manager, I prefer to use the break-even analysis which helps to identify the sales, cost, marketing, and profits easily(Hoque & et al., 2019).

As a manager, I take the first step for the total expenses of the organization and at the same time, I was parallel managing the volume axis. I hope the below numerical example it helps to understand the break-even analysis here I take the total fixed expense of the organization is $24,000 then after we need to choose the activity level. It helps to track the selected volume of sales plot and the point represents the total expenses whether it is fixed or variable.

In this case, we will use the sales level of 4,000 units and the fixed expense is $24,000.

The variable expense that is (4,000 units* $48 per unit)= 1,92,000

So, as we need to know that the total expense is $1,20,000

The next step is to choose some volume of sales and draw the plot based on the activity, and the marked point is our desire data that means it represents the total sales in dollars.

Moreover, we will use the sales of the sales level of 4,000 units again.

At last, the total sales revenue(4,000 units*$ 36 per unit) is $ 1,44,000.

I hope the above numerical example helps to understand the cost volume profit analysis and breakeven analysis whether they use any kind of cost patterns(Hoque & et al., 2019).

Reply to Post 2: 160 Words

Process costing and cost behavior

Process costing systems are typical to businesses that create alike or analogous units of products in batches that employ a consistent procedure. Process costing describes the methods for assigning and collecting manufacturing costs to the products created when almost identical units are mass-produced. For instance, when a manufacturing company makes a large quantity of a similar product, the products produced will require to undergo various processing operations. Each of these operations takes place in different departments and incur a given cost at each phase, such as direct material cost or conversion cost. Irrespective of the number of units produced, watch item is assigned a cost per unit for conversion cost and direct material cost. These costs are having to be transferred to the next department for an additional cost on the unit price (Cheung, Kim, Kim & Huang, 2018). Cost behavior indicates how the cost varies in total when some changes are incorporated in the manufacturing processes. There are three types of cost behavior in managerial accounting and cost accounting.

Application in management

As a manager, I would use the three types of cost behavior in planning and controlling my organization’s costs. For instance, in variable cost, would help me manage finances in case of variable cost. Variable cost comprises the total amount of proportions used to create an item such that the number of items determines the overall cost of the material used to make one unit. Fixed costs do not change even with changes in activities; thus, they would determine financial management in production processes; the mixed costs aspect can be either fixed or variable costs (Shah, 2020). Supposing the process costing of direct material is 150000 dollars, and that of conversion cost is 225,000 dollars when producing 100000 units in a given month, the costs will be 1.50 dollars for direct material, and 2.25 dollars for the conversion cost.

Reply to Post 3: 160 Words

Managerial Accounting

Introduction

In this course, I learn about the concepts of managerial accounting and another important concept such as process costing and cost behaviour. Managerial accounting is used by managers for managing the business activities and finance of an organization. Process costing and cost behavioural so have a great range of applications for business managers as it helps the managers to keep the tract of money investments in the organization and also help to control the expenditures. Here I am going to summarize my learnings of module 3 and also explain how I will be going to use these concepts as a manager (Garrison, Noreen, & Brewer, 2012).

Concept of Process Costing

It is the term used in the cost accounting and used as a method to determine costing of manufacturing where the products manufactured in mass or by using one or more process. For example, manufacturing pf stationary material like pencils, food, toys and scales. So it can be said that the process costing concept is used when there is the mass production of identical units. Unlike job costing this concept is used to determine the costing of a process. It is the method used to determine process total cost and take its average over the production units, as shown below:

Cost per unit = cost of inputs/ expected output in units

There are five steps need to follow for the implementation of the process costing. These are inventory analysis, inventory cost conversion, calculation of applicable cost, calculating cost per unit and designating cost for the complete and incomplete products. There are numerous advantages and applications a business organization can gain because of the process costing. By using the process costing, one can determine the process cost even at the short intervals. By using this concept of process costing, it becomes simple and easy for the business managers to find the process cost, and it is also less expensive. By evaluating the performance and cost of each process by using the process cost, it is easy to achieve the managerial control. It also helps in easy allocation of various process expenses and also helps to achieve accurate costs (Saylordotorg, 2019).

Concept of Cost Behavior

Cost behavior is also an accounting tool that is used to analyze the change in total cost when there is a change in any activity of a process. It helps the managers to understand how the operating cost of a process change in relation to the change in any activity at the organizational level. These costs comprise of cost of material, labor cost and overhead cost which are experienced due to product development. The mathematical cost function is used to perform cost behavior analysis. It helps the business managers to control the cost and other expenses. There are three types of cost behaviors which are usually analyses by the mangers, which are variable cost, fixed cost and mixed cost. To analyze the cost behavior charts based on different cost are created, which also based on the various functions performance (Zweeni, 2019).

Use of cost behavior and process costing for a manager

For a manager, managerial accounting always plays an important as it helps in the critical decision-making process. By being a manager, I will use the concept of proses costing and cost behavior to analyze the process costa and also determining the expenses of the organization which get affected due to any activity in the organization. The numerical example will help to understand te application of process costing in a better way. For example, a company manufacture product X is a product which company manufacture in large identical units. in identical large quantities. There is a requirement of several process operations, and every operation occurs in separate departments. The process cost in the first department for 1 month is $180,000 for direct materials and $250,000 for the conversion cost. It means that if the mass production is of 100,000 units, then there is $1.80 cost per unit for the direct material and the conversion cost per unit will be $2.50. After that, these costs will be conveyed to other departments, and further processing cost is added. On the basis of this analysis, the mangers will analyze the cost per unit.