HOW COST ACCOUNTING DISTORTS PRODUCT COSTS WA rating Producer line ve The traditional cost system that defines variable costs as varying in the short term with production will misclassify these costs as fixed. BY ROBIN COOPERANG The cumulative effect of desi ROBERTS KANAN er ale production som en product design. Introduc Similarly, a diferentiated pro tion, support discontinuare and durer chin compte od te maken ble deck prieinte define a firm's rate tage by O concerning the products they market managers need to o rite produse cont information er ned with product whose datorted, the firm can follow what their products cont couts of differentiation are lower inappropriate and than the pri che for special gert hen chines ont duction feature the countem fails to measured mar avantage by writing abroad ferentiation coste properly, then arcuteries This traing the fem mich show to compete of the exceed the additional cost, in that are actually product the dance of profitability Name dere product line the cost Product conta al tem del correctly attribute the FULL VS. VARIABLE COST an important role in ting additional cost to the product Doctombrie that cause them, then the form particularly for customed prod information, disagreement still exists about whether ct with low se volume and might end up competing in : product cate showed without readily available market ments where the scope related by full by varierat In a full con la escued the benefit from larg cost system, fed produto are alated to procesare ported producto manfacturing cols arrible The extract above is a journal article entitled "How cost accounting distorts product costs" published by Robin Cooper and Robert S. Kaplan. As the course instructor of the course of Managerial Accounting, you discussed the issues related to cost accounting with your students. After the first class, your students raised the following questions, in the producto . by gauge Required: a) Companies implements cost accounting, particularly from the perspectives of the value (supply) in improving their customer profitability. We do not agree with the statement that cost accounting distorts product costs. Discuss TWO (2) factors that result in successful delivery from the initial acquisitions of materials, labor and factor overhead to the sales of products and/or services to customers. (3 marks) b) After discussing introduction to cost accounting with your students, one of them asked you about electrical costs (utilities expensos). Explain in TWO (2) points regarding electrical costs (utilities expenses), which is an example that you gave them about factory overhead, from the perspective of cost behavior. (2 marks) c) Your students submitted a group project with the following information related to revenues and expenses for a period of three months. July August September Sales in units 3,000 3,750 4,500 Sales revenue Dh 420,000 Dh 525,000 Dh 630,000 Cost of goods sold 168,000 210,000 252,000 Gross margin 252,000 315,000 378,000 Selling and administrative expenses: Shipping expense 44,000 50,000 56,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 107,000 125,000 143,000 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total selling and administrative expense 272,000 296,000 320,000 Net operating income (loss) (20,000) 58,000 19,000 Determine which expense(s) are mixed and separate each mixed expense into variable and fixed elements. (Show your workings) (2 marks) HOW COST ACCOUNTING DISTORTS PRODUCT COSTS WA rating Producer line ve The traditional cost system that defines variable costs as varying in the short term with production will misclassify these costs as fixed. BY ROBIN COOPERANG The cumulative effect of desi ROBERTS KANAN er ale production som en product design. Introduc Similarly, a diferentiated pro tion, support discontinuare and durer chin compte od te maken ble deck prieinte define a firm's rate tage by O concerning the products they market managers need to o rite produse cont information er ned with product whose datorted, the firm can follow what their products cont couts of differentiation are lower inappropriate and than the pri che for special gert hen chines ont duction feature the countem fails to measured mar avantage by writing abroad ferentiation coste properly, then arcuteries This traing the fem mich show to compete of the exceed the additional cost, in that are actually product the dance of profitability Name dere product line the cost Product conta al tem del correctly attribute the FULL VS. VARIABLE COST an important role in ting additional cost to the product Doctombrie that cause them, then the form particularly for customed prod information, disagreement still exists about whether ct with low se volume and might end up competing in : product cate showed without readily available market ments where the scope related by full by varierat In a full con la escued the benefit from larg cost system, fed produto are alated to procesare ported producto manfacturing cols arrible The extract above is a journal article entitled "How cost accounting distorts product costs" published by Robin Cooper and Robert S. Kaplan. As the course instructor of the course of Managerial Accounting, you discussed the issues related to cost accounting with your students. After the first class, your students raised the following questions, in the producto . by gauge Required: a) Companies implements cost accounting, particularly from the perspectives of the value (supply) in improving their customer profitability. We do not agree with the statement that cost accounting distorts product costs. Discuss TWO (2) factors that result in successful delivery from the initial acquisitions of materials, labor and factor overhead to the sales of products and/or services to customers. (3 marks) b) After discussing introduction to cost accounting with your students, one of them asked you about electrical costs (utilities expensos). Explain in TWO (2) points regarding electrical costs (utilities expenses), which is an example that you gave them about factory overhead, from the perspective of cost behavior. (2 marks) c) Your students submitted a group project with the following information related to revenues and expenses for a period of three months. July August September Sales in units 3,000 3,750 4,500 Sales revenue Dh 420,000 Dh 525,000 Dh 630,000 Cost of goods sold 168,000 210,000 252,000 Gross margin 252,000 315,000 378,000 Selling and administrative expenses: Shipping expense 44,000 50,000 56,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 107,000 125,000 143,000 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total selling and administrative expense 272,000 296,000 320,000 Net operating income (loss) (20,000) 58,000 19,000 Determine which expense(s) are mixed and separate each mixed expense into variable and fixed elements. (Show your workings) (2 marks)