You have just established a retail company. You are trying to choose an appropriate method for...

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You have just established a retail company. You are trying to choose an appropriate method for inventory costing for the accounting policy. Describe and compare the methods of FIFO and AVCO. How does profit change with the application of different methods? What will the inventory valuation task be at the end of each year and why? PART A/2 You have just been recruited as an expert of cost accounting by a manufacturing company. Your employer is uncertain which cost allocation method (absorption costing, variable costing, ABC) to be applied to measure the cost of a Product. As a specialist, you write a proposal, in which you have to address at least the following issues: choose a Product (it is up to you) that the company manufactures identify typical costs that incur while manufacturing the Product, and present their cost classification (definition of basic accounting terms is not required) arguments for the method you suggest, including details how you would determine the cost of the Product mentioning the disadvantages of the two you would not suggest is also welcome. The essay has to end up with a straightforward suggestion. Avoid too much of generalization. PART A/3 You have just recruited a new colleague for the field of management accounting. Explain him the difference between a 'standard' and 'budget', and add also the advantages of adopting a standard costing system from the management's perspective (mention concrete problems that a standard costing system - through analysing variances - could reveal within the company, hint: consider material and labour variances) You have just established a retail company. You are trying to choose an appropriate method for inventory costing for the accounting policy. Describe and compare the methods of FIFO and AVCO. How does profit change with the application of different methods? What will the inventory valuation task be at the end of each year and why? PART A/2 You have just been recruited as an expert of cost accounting by a manufacturing company. Your employer is uncertain which cost allocation method (absorption costing, variable costing, ABC) to be applied to measure the cost of a Product. As a specialist, you write a proposal, in which you have to address at least the following issues: choose a Product (it is up to you) that the company manufactures identify typical costs that incur while manufacturing the Product, and present their cost classification (definition of basic accounting terms is not required) arguments for the method you suggest, including details how you would determine the cost of the Product mentioning the disadvantages of the two you would not suggest is also welcome. The essay has to end up with a straightforward suggestion. Avoid too much of generalization. PART A/3 You have just recruited a new colleague for the field of management accounting. Explain him the difference between a 'standard' and 'budget', and add also the advantages of adopting a standard costing system from the management's perspective (mention concrete problems that a standard costing system - through analysing variances - could reveal within the company, hint: consider material and labour variances)

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part 1 answer FIFO Firstin Firstout and AVCO Average Cost are two methods of inventory costing used in accounting to determine the value of a companys inventory FIFO as the name suggests assumes that ... View the full answer