LEARNER ASSESSMENT SUBMISSION AND DECLARATION

When submitting evidence for assessment, each learner must sign a declaration
confirming that the work is their own.

Learner name: Rakib Ahmed Assessor name: Yaw Sarpong

Issue date: 25/01/2024 Submission date: Submitted on:

Programme: Level 3 BTEC Extended Diploma in Business

Unit 13: Cost and Management Accounting
Assignment reference and title: Assignment 1:
A: Explore absorption and marginal costing techniques for decision making.
B: Carry out standard costing and variance analysis statements.
C: Explore budgets for financial planning and control.

Please list the evidence submitted for each task. Indicate the page numbers where the
evidence can be found or describe the nature of the evidence (e.g. video, illustration).

Task ref. Evidence Page numbers or

submitted description
13/BC.D2 Written report Evaluate the usefulness of costing and budgetary control
systems to the business.
13/A.D1 Written report Make justified recommendations to improve the financial
performance of the business in the given scenarios.
13/C.M3 Calculations/Table Assess the viability of the completed budgets in a given
scenario.
13/B.M2 Calculations/Table Analyse the reasons for the variances in given scenarios.

13/A.M1 Written report Assess the appropriateness of absorption and marginal

costing techniques used for decision making, in given
scenarios.
13/C.P5 Calculations Prepare accurate subsidiary and master budgets in a
given scenario.
13/C.P4 Calculation Explain how budgeting is used in a selected business for
financial planning and control.
13/B.P3 Calculations/Table Calculate sub and overall variances in given scenarios
using standard costing.
13/A.P2 Calculations/Table Produce accurate absorption and marginal cost
statements for given scenarios.
13/A.P1 Calculations/Table Categorise and explain different types of costs and
costing methods in given scenarios.
Additional comments to the Assessor:

Learner declaration

I certify that the work submitted for this assignment is my own. I have clearly
referenced any sources used in the work. I understand that false declaration is a form
of malpractice.

Learner signature: Date:

Difference between cost accounting and management accounting.

Accounting: Accounting is like keeping score in business. It's the way people track all the
money that comes in and goes out. It helps to know if the business is making money or
losing it, and it makes sure that all the numbers add up right for paying taxes and making
decisions.
Financial branches: Financial branches are different ways to look after money. Corporate
Finance is about managing a company's money. Personal Finance is about how you handle
your own savings and spending. Public Finance is about how the government uses and gets
money. Investment Finance is about making money grow by buying things like stocks or
property. Banking is where banks help people save, borrow, and take care of their money.
Management Accounting: Management accounting is a type of accounting focused on
helping managers within an organization make informed business decisions. It involves
creating reports and analyses that are not necessarily required by law—like financial
accounting is—but are useful for internal review. These reports can include detailed
information on costs of operations, budgets, and performance against previous periods or
forecasts. The goal is to provide managers with timely data to understand the financial
implications of their decisions and improve efficiency and profitability.
Cost Accounting: Cost accounting is the process of tracking, recording, and analysing all the
costs associated with producing a product or providing a service. It's like a detailed financial
map that shows businesses exactly where their money is going in the production process. By
understanding these costs, a company can figure out how much it needs to charge for its
products, identify areas where it can save money, and make sure it's pricing things in a way
that will cover costs and also make a profit. It's a crucial tool for businesses to stay
competitive and manage their finances effectively.
Taxation: Taxation is the process by which a government collects money from individuals,
businesses, and other organizations to fund public services and infrastructure. It involves
setting and enforcing rules for how much people need to pay based on things like their
income, the value of their property, or the goods and services they buy and sell. Taxes help
pay for things like schools, roads, healthcare, and security. It's a way for the community to
pool resources for the benefit of everyone.
Forensic Accounting: Forensic accounting is like being a financial detective. It involves
looking closely at financial records to find if there's been any wrongdoing, like fraud,
embezzlement, or money laundering. Forensic accountants use their skills to dig through
complex financial transactions and track where money has come from and gone to. They
often work with law enforcement or lawyers, especially when their findings are used as
evidence in court cases. They also help businesses prevent and detect any financial
misbehaviour.
Auditing: Auditing is the process of examining financial records and transactions to ensure
that they are accurate and comply with laws and regulations. Auditors act as independent
checkers who review a company or organization's financial statements to make sure
everything is reported correctly and there's no fraud or mismanagement. They're like
proofreaders for money matters, providing assurance that the financial information
presented to the public, shareholders, or authorities is true and trustworthy.
Cost accounting focuses on calculating and managing production costs to aid in cost control
and efficiency, primarily used for internal decision-making related to production.
Management accounting, on the other hand, uses accounting data, including cost
information, to help managers make broader strategic decisions, plan, budget, and evaluate
business performance. While cost accounting is centred on operational costs, management
accounting has a wider scope that encompasses financial and strategic planning.
Fixed Cost: Fixed costs are business expenses that remain constant regardless of the level of
production or sales activity. These costs do not fluctuate with changes in production volume
or business activity levels. Examples of fixed costs include rent, salaries, insurance
premiums, and property taxes. These costs are incurred regularly and must be paid
regardless of the company's performance or market demand, making them predictable and
stable components of a business's budget.
Semi variable cost: Semi-variable costs are expenses that partly stay the same and partly
change when a business makes more or sells more.
Stepped cost: Stepped costs are expenses that remain constant for certain levels of activity
but jump to a higher amount once a threshold is crossed. This is like a staircase, where costs
stay flat as production increases, but if you go up a step (or surpass a certain level of
production), costs increase to a new fixed level. This pattern continues as higher levels of
activity are reached, resulting in a series of "steps" in the total cost. Examples include hiring
additional supervisors or leasing more space when production volume exceeds current
capacity.
Unit cost: Unit cost is the total expense incurred to produce, store, and sell one unit of a
product or service. It represents the cost of creating a single unit and is a crucial figure in
pricing and profitability analysis. Suppose a company has fixed costs of £500 for expenses
such as rent and salaries, and variable costs of £300 for materials and labour directly
associated with production. The company produces 100 products. To find the unit cost, we
first calculate the total costs by adding the fixed and variable costs together, which gives us
£800 (£500 fixed + £300 variable). Then, we divide the total costs by the number of products
produced, resulting in a unit cost of £8 per widget (£800 total costs / 100 products) it costs
the company £8 to produce one product.
Total cost: Total cost is the sum of all expenses a company incurs to produce goods or
services, combining both constant fixed costs and fluctuating variable costs associated with
production levels.
A bakery has £2,000 in fixed costs and variable costs of £0.50 per loaf of bread. Producing
5,000 loaves in a month, the total cost is calculated as £2,000 plus (£0.50 times 5,000),
resulting in a total cost of £4,500 for that month.
Cost Centre: A cost centre is like a part of a company that spends money to do its job but
doesn't sell anything. Think of it as the background teams that help a company run
smoothly. For example, the team that hires and trains people, the computer tech team, the
folks who help customers with their problems, the team that comes up with new ideas for
products, and the crew that keeps the building and machines in good shape are all cost
centres. They are important because they keep things going inside the company, but they're
not the ones selling the products or services that make money. The company keeps track of
the money these teams spend to make sure they're not spending too much, and to figure
out if they can spend less and work better.

Profit Centres: A profit centre is a part of a company that brings in money by selling things
or services. It's like a mini company inside the bigger company that has to make sure it earns
more money than it spends. For example, the team that sells the company's products, each
individual store if the company has many shops, a factory that makes things to sell, or a
team that does special jobs like giving advice or fixing things, can all be profit centres. These
parts of the company try to make as much money as they can from what they sell and keep
their spending low. This way, they help the whole company make money by adding to the
profits.
Job: Job costing is a way to figure out how much it costs to make one specific item or
provide a particular service. It adds up the cost of the materials used, the money paid to
workers to make the item, and other costs of running a business, like electricity and rent.
This method is helpful for businesses that make unique things or do special work for
customers because it shows exactly how much each job costs to make sure they sell it for
more than it costs to make a profit.

Batch: Batch costing is a way to track costs for a group of similar products made together.
Instead of calculating the cost for one item, it figures out the cost for a whole set, or
"batch," of items. This includes the cost of the materials for all items in the batch, the
money paid to the workers who made the items, and other general costs like keeping the
lights on in the factory. After the batch is made, these costs are added up and then divided
by the number of items in the batch to find out how much each individual item costs to
make. This is helpful for companies that make lots of the same thing at once because it
shows how much they need to spend on each batch and helps them set the right prices.

Service and Process: Service costing is when you figure out how much it costs to give a
service to someone. It adds up the time workers spend, any materials used, and other
general costs like office space or bills. You end up knowing how much you spend for each
hour of service or each customer you help. It's used by businesses like bus companies,
hotels, or law firms. Process costing, though, is for making lots of the same thing
continuously, like in a factory making paint or snacks. It finds out the cost of each part of
making the product. So instead of looking at each snack or can of paint, you look at what
each step of the making process costs and then spread that cost over all the products made.
This helps factories know how much they spend on each step and if they're making money.
SALES REVENUE (6500X54) £351,00
0
OPENING INVENTORY 0
production cost (28x8000) £224,00
0
Closing Inventory (28x1500) £42,000
Marginal Cost of sales £182,00
0
CONTRIBUTION £169,00
0
FIXED PRODUCTION OVER- £16,000
HEADS
NON-PRODUCTION OVER- £4,200
HEADS
PROFIT FOR THE YEAR £148,80
0

Absorption costing statement of profit or loss

Sales revenue (6500x54) £351,000

Opening Inventory 0

Production cost (30x £240,000

8000)

Closing £45,000
Inventory(30x1500)

Absorption cost of sales £195,000

Gross Profit £156,000

Non-production £4,200
overheads

Profit for the period £151,800