Cost and Management Accounting Study of D

Question: Discuss about the Calculation of exact cost of collecting and disposing of rubbish from a residential address for one year. Answer: Calculation of exact cost of collecting and disposing of rubbish from a residential address, depend majorly on two factors i.e. volume and content of the trash. Study of D'Onza (2016) shows that generally costs are determined on the basis of free market competition by considering services provided by competing for waste removal businesses (D'Onza, Greco Allegrini, 2016). Further, there are areas where the cap is enforced by local government on profit margins for these services so that consumers are not required to pay unreasonable costs for these services. By considering this description, it can be said that service charge of junk removal will be based first on type and size of the junk and second on a number of truckloads otherwise the total time consumed to haul the junk. This cost will be increased by supplementary charges which will comprise fees for transporting waste to the appropriate place. This cost is added as delivery needs of trash requires some chemical and proper arrangements that cannot be left in landfills. The cost of trash removal will also be inclusive of labour charges particularly in a situation where this job consumes time more than one hour or more. Homeowners in the residential area required to pay for this service will: Get a team that will remove their all of the rubbishes Items of the collected trash will be sorted and delivered to a landfill or other proper delivery area. Have their home and other related spaces properly cleaned following the removal Table 1: Statement showing cost of collecting trash in Australia in residential area Particular Amount Labour charges $7,200.00 Rental cost of vehicle $10,800.00 Amount paid for disposal of waste $5,000.00 Fuel charges $9,000.00 Chemical charges $2,500.00 Landfills $5,000.00 Other related costs $1,000.00 Total cost $40,500.00 Number of houses 100 Average annual cost $405.00 The assumption of cost has been made by considering annual parameters of expenses in the medium city of Australia. By this cost structure, residents will not be in doubt that payment taken by them is for unfair aspects. Further, this cost will be charged by adding 10% margin in order to kept surplus for unseen circumstances related to waste management. For fair pricing, ABC City Council should not charge the same rate from all residential as it is totally unfair. Charges can be imposed in residential areas on the basis of following measures: Table 2: Statement showing measures on which charges can be imposed for trash collection and disposal Charges On the basis of load factor On the basis of area $70-$100 for a minimum load ( $90-$130 for ? load (10 sq. ft.) $130-$180 for ? load (13.3 sq. ft.) $240-$280 for - ? load (20 - 26.6 sq. ft.) $330-$360 for ? - load (30 - 40 sq. ft.) $410-$450 for ? - load (50 - 60 sq. ft.) $490-$520 for ? - ? load (66.6 - 70 sq. ft.) $550-$570 for a maximum load (80 sq. ft.) Difficulties encountered in making calculations Various difficulties were encountered for calculation of the cost of collecting trash in Australia in a residential area in actual practice with regard to process cost accounting procedures. Description of these problems is enumerated as below: Determining production quantity At the time of computation of cost there were significant issues in determining production quantities as well as their completion stages. These figures influence all other calculations. As the figures are usually received by the cost department from operation employees who work under conditions which make an accurate count challenging, a specific quantity of duplication, inaccurate estimates and double counts are likely to exist (Weygandt, Kimmel Kieso, 2015). However, the data submitted by the council still forms the basis for determining inventory costs. The council also faced problem in solid waste management cost computation because of the distinction between what residents were paying for the services and what it really cost. The distinction between the actual cost and price represented the quantum the service was subsidised. For this survey has been taken by considering past figures to determine production quantity of waste in residential area. Estimating cost of labour and material charges The calculations of labour and material cost usually demand meticulous scrutiny in the present case. Labour costs are normally regarded as the cost of the first department. In fact, in some sectors, this cost is not even included in production reports. When the prices of labour are impacted by dynamic market conditions, the cost of labour could be recorded separately in a report specifically designed to support management decisions pertaining to material and labour markets (Hiller, Mahlendorf Weber, 2014).To resolve this issue, I had asked the labour charges from the workers and make increment in this cost by considering market factors. Considering feasible assumptions: The discussion of units lost due to evaporation, shrinkage or spoilage shows that the time during which the loss happens impacts the final computing of cost. Several assumptions are pertaining the loss of units resulted in departmental unit costs, which in turn affected the inventory costs, the completed unit cost and the cost of transferred units. Other consideration entails the likelihood of the treatment of cost attributable to the loss which could have been avoided as an expense of the existing period (Ho et al., 2014). Cost principles for different product types: The Council used process cost methods due to the multiple types of products. Joint processing cost was apportioned to the products resultant from the process (Weygandt, Kimmel Kieso, 2015). Weighted unit average cost and other methods were used for prorating the joint cost to the different products. Additional clerical expenses are imperative when units produced were used as the base for cost apportionment, and also because the machine hour and labour hour basis was used to charge overhead in Work-in-Process (D'Onza, Greco Allegrini, 2016). The Council had to decide whether low operational cost and economy were compatible with greater information based on extra cost calculations and methods. Evaluation of proposal Yes, I had absolutely agreed on the proposal of charging annual rubbish and collection fee determined by considering the cost of providing this service. It is because; this approach enhances transparency through which public will be satisfied they are paying for the services actually consumed by them. Furthermore, if I had any objection from this charge, then I can co consider the cost statement to clarify my doubt instead of blaming city council without having appropriate proof of discrepancy in cost. Management accountants have a responsibility to several groups and managing these responsibilities is not always easy, and it can lead to ethical conflicts. The management accountant is an individual responsible for cost accounting functions of an organisation. The management accountant is also called controller and considered being part of the managerial authorities as he is accountable for the collection of important information by considering both internal and external sources of the company. He plays the main role in the process of analysing operating activity and making decisions of an organisation. However, their accountability varies in business concern depending upon the blueprint of the management system (Hiller, Mahlendorf Weber, 2014). The management accountant engages a key position in the organisation as they work as an executive and a member of the board of directors. In the large concern of the company, the management accountant is accountable for the setting up, efficient implementation and development of the systems of management accounting. The accountant is engaged in designing the framework of the financial as well as cost control reports that provides with the valuable information in a timely manner (Weygandt, Kimmel Kieso, 2015). The management accountant are also considered as chief intelligence officer because except top management, no one in the organisation possibly is aware about various functions and strategies of the organisation. The crucial duty of the management accountant is to assist managerial authorities in selection of correct policy and decision in order to make improvement in the efficiency of the business. The management accountant should point out the facts and concerned with the management of course, with discretion, patience, inflexibility and politeness. The accountant must remain impartial with the company where he works. However, the burden for public companies to succeed at a high level may place undue stress and the pressure on an accountant for the formation of financial statements (DesJardins McCall, 2014). The ethical issues for these accountants ascend while maintenance of true reports by considering assets, liabilities and profits of the company without getting affected by the undue influence placed on them by corporate officers of organisation. In such situation, unscrupulous accountants will make alterations in financial records and contrive numbers of the company in order to showcas e false pictures of success of corporate entity. This may provide them benefit for short-term prosperities, but this unethical acts will eventually spell the downfall of the companies at the time when this fraud is traced by the Securities and Exchange Commission. An accountant frequently comes upon the ethical issues regardless of the industry. On the other hand, in situation where decision was taken by the accountant that happens to be the misleading or not viable on the account of erroneousness, biasness or due to fabricated data furnished then they will be personally accountable on the behalf of management controllers (Weiss, 2014). The organisation must remain continually vigilant to reduce the chance of outside forces and to manipulate the financial records though could lead to both ethical and criminal violence. For example; companies frequently need to replace the assets at some points when they have to produce more product in less time for finishing the order they have to change the equipment and other assets also for the better production (Chawla and et.al., 2015). Ethical issues arise since new assets will cover the higher cost, however it will make reduction in the ROI. Management accountant who does not make a recommendation based on ROI will significantly affect the profitability of business. As per the above-described responsibilities the management accountant have a compulsion to abide by ethical conduct towards the organisation, their profession, the public and themselves to preserve the highest standards of right conduct. They are required to be competent to serve best of their belief. For this, they are required to maintain an appropriate level of specialised knowledge by continually increasing the knowledge and skills. They should perform professional duties in agreement with related laws, regulations, and technical standards. They are required to provide decision support information and recommendations which are perfect, obvious, concise, and timely (Hiller, Mahlendorf Weber, 2014). They are responsible for recognising and communicating professional limitations or other restriction that would prevent the responsible judgment or do well presentation of the activity. However, management accountant may face the ethical dilemma of reporting discovered accounting viola tions to the financial accounting standards board. While it is a duty of an accountant to report such violations, in ramifications of the reporting the dilemma arises. The executives and another corporate officer could also face the criminal prosecution, leading to heavy fines and prison time. Management accountants should keep information confidential except when is authorised or legally required. Further, they should inform the all applicable parties regarding the appropriate use of confidential information and monitor secondary activities to ensure compliance. They must refrain from using the classified in sequence for the unethical and illegal advantages (Chawla and et.al., 2015). Although, pressure from top management makes them whistleblower in the effect of greed. The financial world leads to shaving ethical boundaries. For example, an accountant can never let the desire to earn a better living and acquire more possession get in the way of ensuring that they follow ethical guidelines for financial reporting. They are responsible for integrity by ensuring moderate actual disagreement of concentration regularly communicated with the business associates for prevention of apparent conflicts of interest repeatedly and advice all the parties of any prospective disagreement. Further, they should refrain from engaging in any of the performance that would discrimination caring out duties morally (Weygandt, Kimmel Kieso, 2015). They should disclose delays or deficiencies in sequence, appropriateness, dispensation, or internal controls in conformance with association policy and applicable law. However, in various cases when accountant prepares the balance sheet, and at that time they are forced by the corporate officer or executive to omit or leave out the certain financial figures which lead the commercial entity in a bad light to the public and investors. In most of the organisation the management accountants have the most hectic schedule, and also they dont have enough time to interact with their subordinate. It is not possible to implement performance management system into the association if there are no recurrent meetings of the employee with their managers (Crane Matten, 2016). Therefore, the consistent feedbacks are given by managers to their junior, and that does not improve the presentation, but it is good for all in the organisation. In this aspect, overproduction is a major factor of ethical issues. It occurs when management accountant is working profligate with operational managers. Another major aspect in this is an issue of conflicting interest. It is because; accountant normally works for the unsurpassed attention for the corporate entity not being at a position of individual manager or supervisor. An inconsistency of interest rises at a point of time where a management accountant can take benefit at his individual position by making violation of ethical norms (DesJardins McCall, 2014). For example, the cost-plus contract is common areas where these individuals are entailed to shift overhead costs from the profit and loss account to customer contract. Due to this factor, clients are forced to pay higher prices for the same product. This inappropriate allocation of cost can lead to distortion in the accounting statement of the company and potential damages client relationships due to reducing ethics. By considering the above description, it can be concluded that management accountant is crucial part of corporate entity. Thus they are required to comply with the ethical code of conduct while working in the business environment. Though they have to face various ethical dilemmas in a commercial environment, but they can be prevented by operating giving priority to an ethical code of conduct. References Books and Journals Chawla, S. K., Khan, Z. U., Jackson, R. E., Gray, A. W. (2015). Evaluating Ethics Education for Accounting Students. Management Accounting Quarterly, 16(2), 16. Crane, A., Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalisation. Oxford University Press. DesJardins, J. R., McCall, J. J. (2014). Contemporary issues in business ethics. Cengage Learning. D'Onza, G., Greco, G., Allegrini, M. (2016). Full cost accounting in the analysis of separated waste collection efficiency: A methodological proposal. Journal of environmental management, 167, 59-65. Hiller, K., Mahlendorf, M. D., Weber, J. (2014). Management accountants occupational prestige within the company: A social identity theory perspective.European Accounting Review,23(4), 671-691. Ho, W., Koseoglu, A., Lu, D., Yu, K. (2014). An investigation into solid waste accounting. Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers. Weygandt, J. J., Kimmel, P. D., Kieso, D. E. (2015). Financial Managerial Accounting. John Wiley Sons. Weygandt, J.J., Kimmel, P.D., Kieso, D.E. (2015). Managerial accounting: Tools for business decision making (7th ed.). Hoboken, New Jersey: John Wiley Sons.