You have been hired as a managerial accountant by Mr. Smith of Wilson-West Manufacturing, a start-up company that produces several different product lines. He would like you to set-up the cost accounting system for the cabinet division. Listed below are your new job requirements and at least 1 task for each.
Compile a 2-3 page document with all of the following task requirements:
- Your role as an accountant
- Prepare a job description that includes the typical duties of a managerial accountant.
- Types of Costs
- Explain what type of costs you plan on using to distinguish the different types of cabinets that will be produced. Examples should include direct costs items, indirect costs items, as well as variable costing. In other words, what types of expenses are associated with manufacturing the cabinets?
- Cost Accounting Methods
- Explain how product costing is used for a cabinet division.
- Give 2 examples of how you will use product costing
- Which costing method will you use for the cabinet division: ABC, job order, or process costing? Validate your answer with reasons for and against the other types of costing. Also, include examples of how you plan to use your chosen costs.
- Analysis for Contribution Margin, Absorption, Variable, Throughput, and Joint Product Costing
- Using examples, discuss how each will be used in the cabinet department.
- Include a formula where necessary (contribution margin).
- Explain in detail where you will find the appropriate information or calculation.
- Fixed, Variable, Mixed Costs
- Based on the cabinet division, give an explanation and 2 examples for each type of cost: fixed, variable, and mixed.
- Budget
- Explain why setting up a budget is so important for this new start-up division.
- Explain how you plan to gather budget information. Do you plan on including other department heads in the budget process? Why or why not?
- Explain what type of information will be found on each type of budget: master, flexible, and capital. Explain how you will ensure that the budget's estimates are as accurate as possible.