Assignment.docx - ACC2200 Assignment Name Yue Sun ID...

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ACC2200 AssignmentName: Yue SunID: 29623693Tutor: Xuan (Joyce) Zhang | Tutorial time: Monday 1 p.m.Word count: 1193Table of ContentsCost classifications:............................................................................................................2Cost techniques:.................................................................................................................2Beneficial of cost techniques:.............................................................................................3Diagrams and table:..........................................................................................................3Reference list:....................................................................................................................5
Cost classifications: Innovation Ltd is a manufacturer of producing tea-based drinks and desserts in Australia. Tea-flavoured chillers and tea-flavoured ice cream are IL’s new products. During production, costs are made when plants have a comprehensive range of processing, packaging and storage facilities. For example, manufacturer needs to pay rent to making products, and so on. Since different costs are made, cost classification would be useful to assist Tom Cat to understand of costs to make decisions. Different costs for different purpose (Smith, Andon, Hilton & Thorne, 2018). Costs can be classified as manufactured or non-manufactured, variable or fixed, direct or indirect. There is some advantage of costs classification. Sanaya R. states that classifying of costs could make profit planning, effective cost control and decision-making. For profit planning, the owner may compare all the costs and selling price to see the current net profit and make a budget for next financial year. In order to increase the profit, the owner would also arrange fixed or variable costs to make a control. Therefore,cost classification is really important and helpful for IL. Also, it may assist Tom Cat to evaluate decision effectively and make or buy decision. Owners may depend on the costs to determine the purchase price of product material, labour costs, quantity of equipment etc. Cost techniques: Process costing method and activity-based costing techniques might be useful to IL company. Conventional product costing involves process costing and job costing. Process costing is calculating for large quantity of products and it details with homogenous and continuous products. The reason for choosing process costing method is that IL company’s manufacture operates in different departments and it produces a range of products. Next,

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