Marginal and Absorption Costing for Financial Statements

Marginal and Absorption Costing for Financial Statements This paper aims at looking at how income statements are prepared using marginal and absorption costing. The absorption costing method charges all direct costs to the product costs as well as a share of indirect costs. The indirect costs are charged to products using a single overhead absorption rate which is calculated by dividing the total cost centre overhead to the total volume of budgeted production. (ACCA, 2006; Drury, 2006; Blocker et al., 2005). On the other hand under marginal costing, only variable costs are charged to cost units. Fixed costs are written off the profit and loss account as period costs. (Drury, 2006; Blocker et al., 2005). Sections a) and b) below show the marginal and absorption costing income statements respectively for H Ltd that manufactures and sells a single product during the years ending 2006 and 2007. It is assumed that the company uses the first-in-first-out (FIFO) method for valuing inventories. In addition it is assumed that the company employs a single overhead absorption rate each year based on budgeted units and actual units exactly equalled budgeted units for both years. Workings are shown the attached excel file. Marginal Costing Absorption costing. Reconciliation of net income under absorption and Marginal Costing. Under marginal costing inventory of finished goods as well as work in progress is valued at variable costs only. On the contrary, absorption costing values stocks of inventory of finished goods and work in progress at both variable costs and an absorbed amount for fixed production overheads. (ACCA, 2006; Lucy, 2002). In the case of H Ltd, under marginal costing, only variable costs are included in the ending inventory figure. This results in a profit figure of  £400,000. On the other hand absorption costing includes additional  £200,000 as fixed overhead in the ending inventory for 2006. As a result absorption operating profit is overstated by  £200,000 in 2006. In like manner, the absorption profit under absorption costing is overstated by  £140,000 due to an inclusion of  £140,000 of fixed overhead cost in the ending inventory figure for 2007. To reconcile the profit under absorption costing and marginal costing, we may either subtract the fixed overhead included in endin g inventory from the absorption cost operating profit to arrive at the marginal cost operating profit or add the fixed overhead costs in ending inventory to the marginal cost operating profit to arrive at the absorption cost operating profit. Stock Build-ups Stock build-ups may result from using absorption costing for performance measurement purposes because inventory is valued at both fixed and variable costs. Firstly, profit is overstated. In fact absorption costing enables income manipulation because when inventory increases fixed costs in the current year can be deferred to latter years and as such current net income is overstated which in effect results in financial statements that do not present fairly and as such affect users’ decisions on the financial statements. Secondly, maintaining high levels of inventory may result in obsolescence and as such declines in future profitability resulting from the loss in value of the inventory. (Blocher et al., 2005; Storey, 2002). Advantages of Absorption Costing and Marginal Costing According to ACCA (2006) the following arguments have been advanced for using absorption costing: It is necessary to include fixed overhead in stock values for financial statements. This is because routine cost accounting using absorption costing produces stock values which include a share of fixed overhead. Based on this argument, financial statements prepared using absorption costing present a true and faithful representation of the actual results of operation of the company. For a small jobbing business, overhead allotment is the only practicable way of obtaining job costs for estimating and profit analysis. Analysis of under/over-absorbed overhead is useful to identify inefficient utilisation of production resources. ACCA (2006) also identifies a number of arguments in favour of marginal costing. Preparation of routine cost accounting statements using marginal costing is considered more informative to management for the following reasons: Contribution per unit represents a direct measure of how profit and volume relate. Profit per unit is a misleading figure. Build-up or run-down of stocks of finished goods will distort comparison of operating profit statements. In the case of closing inventory, the inventory is valued only at the variable cost per unit. This makes the profit under a situation where there is closing inventory to be the same as the case when there is no closing inventory thereby enabling the comparison of operating profit statements over time. Unlike under absorption costing, marginal costing avoids the arbitrary apportionment of fixed costs, which in turn result in misleading product cost comparisons. Bibliography ACCA (2006). Paper 2.4 Financial Management and Control: Study Text 2006/2007. www.kaplanfoulslynch.com Blocher, E., Chen, K., Cokins, G., Lin, T. (2005). Cost Management A Strategic Emphasis. 3rd Edition McGraw Hill. Drury, C. (2004). Management and Cost Accounting. 6th Edition. Thomson Learning, London. Lucy, T (2002), Costing, 6th ed., Continuum. Storey, P (2002), Introduction to Cost and Management Accounting, Palgrave Macmillan

Assembly language vs. Mechanical language Essay

Assembly language can execute the same commands as machine language; however, the commands have names instead of numbers. Assembly language, unlike machine language, is a symbolic representation of operation codes, symbolic memory addresses and pseudo codes, which makes the virtual environment user friendly. Machine language, on the other hand, is represented as binary bits consisting of a string of 0s and 1s, which makes the virtual world challenging since the lingo is only comprehended primarily by computers. Therefore, assembly language is considered more user friendly than machine language. Assembly language enables programmers to relate op codes using symbolic names in place of numbers to perform an instruction or input a piece of data. Programmers can inscribe op codes using purposeful words like JUMP, CLEAR, and ADD as an alternative to cryptic binary codes consisting of series of 0s and 1s. An example of assembly language, machine language and its meaning are listed in the book called, â€Å"Invitation to Computer Science† (Schneider & Gersting, 2013, pp. 285, fig. 6.5). In figure 6.5, assembly language is clearly easier to comprehend than machine language, which makes assembly language user friendly. In addition, assembly language allows programmers to utilize symbolic addresses to replace numeric memory addresses in binary bits to execute a command or input data. Computer specialist can link symbolic labels to an instruction or piece of data in the program. In other words, the symbolic label turns into a permanent tag for the instruction or piece of data disregarding where it populates in the program or where it relocates in the memory. However, machine language is more complicated. To perform an instruction or input data in the memory in a specific location, the computer specialist must specify the direct address. For example, â€Å"In machine language, to jump to the instruction stored in memory location 18, you must specify directly to address 18 (write JUMP 18 in binary code). The programming is complicated if a new instruction or data is introduced anywhere within the 18 lines of the program, the jump location 18 shifted to 19. According to Schneider and Gersting, â€Å"This makes modifying programs very difficult, and even small changes become big efforts† (2013, pp. 285). Assembly language use symbolic address is proven to be more user friendly than a numeric address for programmers. Moreover, pseudo code allows the programmer to use a special type of assembly language to be converted into op code referred to as pseudo op. Unlike other operation codes, a pseudo –op does not develop a machine language for instructions or data. In order to execute such task, pseudo-op implores the service of the assembler. One of the many services provided by the assembler is the ability to generate instructions or data into the suitable binary likeness for the system. A brief summary of the conversion is documented in the publication â€Å"Invitation to Computer Science† (Schneider & Gersting, 2013, pp. 287). The summary breaks down how the pseudo-op commands the assembler to generate a binary representation for the integer, and so on. If a programmer had to manually construct the conversion, this would prove to be a very cumbersome task. Therefore the application of assembly language pseudo-op makes the task more favorable for the user. Consequently, assembly language symbolic representation of op codes, addresses, and pseudo codes all makes the virtual environmental experience for users more appealing than that of machine language. Assembly language is developed with the human factor in mind and with that, the experience for the programmer is uncomplicated. Advancement in the virtual world deemed assembly language more appropriate named low-level programming language. Where machine language in the virtual world was once considered primitive, assembly language to, now resides in the same era. In the land of programming, the assembly language created for a specific task or data input must be converted into machine language. The conversion is executed by an assembler. Therefore, low-level programming language, in the same manner, has to convert into machine language the same. More specifically, â€Å"Each symbolic assembly language instruction is translated into exactly one binary machine language instruction† (Schneider & Gersting, 2013, pp. 282). The translation into binary machine language means that instructions or data is represented by a series of 0s and 1s in order for the computer to execute the instruction or store the data information given. Schneider and Gersting said it best when they stated, â€Å"†¦it is the language of the hardware itself† (2013, pp. 282). Since programmers are not hardware the process could prove to very cumbersome for users. The silver lining in this storm is the creation of high-level programming language. Unlike low-level programming language, high-level programming language is more maneuverable by the programmer. High-level programming language is created to use both natural language and mathematical notation. In other words, Schneider and Gersting states, â€Å"A single high-level language instruction is typically translated into many machine language instructions, and the virtual environment created by a high-level language is much more powerful than the one produced by an assembly language† (2013, pp. 282). In short, high-level programming language differs from low-level programming language in that the translation into many machine languages versus translation into one machine language is more powerful. Moreover, high-level programming language is user friendly rather than low-level programming language which is computer friendly. Since the general idea is making the virtual world friendlier for its users, if Internet did not exist, I would not be so friendly. I access the internet on a daily basis for a variety of tasks like; paying bills, scheduling and canceling appointments, recipes, purchases, banking, and the list could go on and on. However, the most important area of internet use is paying bills. Prior to the internet, paying bill required physically visiting the establishment where the bill is to be paid, purchasing a money order in some cases, writing a check or even more archaic, paying with cash. Somehow, a bill or two slipped through the cracks. Now that the primitive days are over and technology has advanced the human nation, auto pay makes life much easier. The merchants that are due payment for services rendered receive payment automatically and all that is required, is manually setting the date, amount and merchant to be paid. Auto pay is convenient, one less tree is destroyed and gas is saved for another day. Simple as my reasons may be, it works for me. Advance in virtual technology make life easier for internet user, however, piracy can present itself as a problem if certain protocols are not put in place. When communicating with others over the internet, there are many ways to safeguard your computer, here are five protocols used as protection while communicating over the internet, authentication, authorization, encryption, system administrator, and firewalls. A combination of all these protocol could safeguard users while communicating over the internet. Authentication is a way of verify the individual right to access a computer. The individual accessing the computer usually has a unique username and password that allows the computer to recognize the individual to allow access to the system. For example, most employers allow their employees access to computers on the job for various duties. However, some user have restrictions where as others do not. In, â€Å"Invitation to Computer science†, a passage on authentication reads, â€Å"When a user attempts to log on to the machine, the operating system reads the user ID and checks that the password matches the password for that user in the password file† (Schneider & Gersting, 2013, pp. 391). Piracy can still occur if this is the only protocol used. However, if authentication is partnered with encryption, communication may not be compromised over the internet. Encryption allows users to create a message in plain text but before it is send to its destination the message is encrypted also known as ciphertext. When the message is obtained by the receiver the content is decoded so it is able to be read. However, if the message is hijacked by the incorrect receiver, the plain text remains encrypted. Encryption according to Schneider & Gersting, â€Å"is the process of using an algorithm to convert information into a representation that cannot be understood or utilized by anyone without the proper decryption algorithm;†¦Ã¢â‚¬  (2013, pp. 401). Moving along in safe communication over the internet is authorization. Authorization dictates what an authenticated user has permission to do. Contingent on whom the authorized individual may be, they possess the ability to read, write, execute or delete files. The text, â€Å"Invitation to Computer Science† states, â€Å"The system administrator or superuser has access to everything, and is the person who sets up the authorization privileges for all other users† (Schneider & Gersting, 2013, pp. 395). A more tangible explanation is, I am the system administrator for my personal laptop and I delegate authorization to other users. Next in safety is firewall software. Firewall software blocks access points to a users’ computer. It inhibits communication to or from sites you the user do not allow. In addition to safety while communicating over the internet, safeguarding your computer against viruses is vital. One measure a user can utilize to safeguard their computer against viruses is antivirus software. There is much antivirus software available on the market but the main two that comes to mind is Norton and McAfee antivirus software. Both seem to be popular amongst consumers of today. Antivirus software recognizes viruses, worms and Trojan horses by unique signature these programs transmit. The software wipes out the tainted program being transmitted which safeguards your computer from any threats. In the last 12 months, the following three computer viruses have had a significant impact on business are Shamoon which attacked Saudi Aramco oil company computer, St. Barnabas Healthcare System e-mails were infiltrated by Melissa and a Chinese hacker infiltrated the Times computer system through malware which granted them access to any computer on the Times network. The morning of August 15, 2012 a virus was unleashed to execute the destruction of a company called Aramco’s, corporate PCs documents, spreadsheets, e-mails, files putting in place of all the items demolished, an image of a burning American flag. The person responsible for such destruction is unknown but the article states, â€Å"†¦a person with privileged access to the Saudi state-owned oil company’s computers†¦Ã¢â‚¬  is the villain (Perlroth 2012). The name of the virus that collapsed Aramco’s computers is called Shamoon. The virus compelled the company to terminate the company’s internal network in efforts to hinder the virus from spreading like wildfire. In another article, St. Barnabas Health Care System e-mails were sabotaged by the horrendous e-mail virus Melissa. The virus surfer the information highway and infected E-mail systems worldwide, hindering networks and hard drives and to add insult to injury destroyed data. In efforts to save the St. Barnabas Health Care System immediate shut down of the system and networks was in order to rid the organization of the problem. In the same manner, Chinese hackers installed malware to infiltrate Times computer system to obtain passwords for personnel employed by Times. The Chinese hacker had a four month running spree of consistently attacking Times systems. The article states, â€Å"The timing of the attacks coincided with the reporting for a Times investigation, published online on Oct. 25, that found that the relatives of Wen Jiabao, China’s prime minister, had accumulated a fortune worth several billion dollars through business dealings† (Perlroth 2013). In efforts to intercept the Chinese hackers attacks, Times employed security guru to detect and block the attacks. Perlroth reports, â€Å"Computer security experts found no evidence that sensitive e-mails or files from the reporting of our articles about the Wen family were accessed, downloaded or copied,† said Jill Abramson, executive editor of The Times† (2013) References Larson, A. (1999, July 12). Global Security Servey: Virus Attack. Information Week, http://www.informationweek.com/743/security.htm Perlroth, N. (2012, October 23). In Cyberattack on Saudi Firm, U.S. Sees Iran Firing Back. New York Times, http://www.nytimes.com/2012/10/24/business/global/cyberattack-on-saudi-oil-firm-disquiets-us.html?pagewanted=all&_r=0 Perlroth, N. (2013, January 30). Hackers in China Attacked The Times for Last 4 Months. New York Times, http://www.nytimes.com/2013/01/31/technology/chinese-hackers-infiltrate-new-york-times-computers.html?pagewanted=all Schneider, G.M. & Gersting, J.L., (2013). Invitation to Computer Science. (6th ed.). Boston, Ma: press

King Oedipus Essay

* In one of the early Greek tragedies written by Sophocles in 470 BC, ‘Oedipus the King’ demonstrates the arrogance portrayed by human nature which he therefore turns away the obvious truth. This early Greek Myth shows the way in which Oedipus, the King of Thebes, is so arrogant in wanting the truth in regards to the mishaps that shroud his land and so persistent that he is ultimately leading himself into his own demise. * Oedipus’ arrogance is demonstrated very early on in the play, when his uncle ‘unknown at this time’, Creon, returns with news from the Gods. On his arrival at the palace of Thebes, Oedipus demands the news. Creon is reluctant though as he brings only bad news, â€Å"If you want my report in the presence of these people†¦I’m ready now or we might go inside†. Oedipus in reply say’s, â€Å"Speak out, speak to us all. I grieve for these my people, far more than I fear for my own life†. This ignorance to accept advice from Creon, led the problem to become public to the people of Thebes, which later results in Oedipus’ own demise as he had the potential to deal with it privately. * When Oedipus calls upon the Oracle Tiresias to prove this theory of banishing the murderer of Laius from his land, he is confident in himself that he can discover and devastate the curse which clenches his city state in its grasp. He is however mistaken in his views as when he calls upon the oracle, a new truth is revealed. The refusal of the oracle to relay the truthful message of the god’s to Oedipus infuriates him. â€Å"I will never reveal my dreadful secrets†, from the Oracle’s refusal comes Oedipus’ bewilderment as to the refusal of his command. â€Å"You’re bent on betraying us, destroying Thebes?† Due to Oedipus’ constant taunts towards the Oracle, the truth is finally revealed and shock and bewilderment fill him up and untold stories and cobwebs within Oedipus’ life are revealed, much to his shock and disbelief. * As Oedipus rose to the thrown through his bravest of actions his demise was the result of his only weak links, his arrogance and self confidence. As the truth unfolds in regards to the murder of King Laius, so does the unfolding of the hidden secrets in Oedipus’ life creating shock and horror among his nation’s people as to the darker side of their hero. He is so determined to provide his people with another act of heroism that he is blinded to the obvious truth that he could of learned through himself when hearing the words of the Oracle, telling him to drop the matter. It is through his own thoughtless actions that undermine the power in which King Oedipus once held firmly in his grasp, confirming his own responsibility in his destiny.

Essay on Cosmetic Surgery - 1370 Words

Cosmetic Surgery Cosmetic surgery has been a growing fascination for many people over the last couple of decades. The public eye has been watching movie stars and rock stars enhance their looks by getting breast implants, nose jobs, lip jobs etc. In Gary Schaefer’s article, â€Å"Emerging From Stigma, Cosmetic Surgery Remaking Face of Japan† from the Edmonton Journal, we hear the story of a nineteen year old woman named Risa Arato. She had a makeover done on the prime time Japanese television show, â€Å"Beauty Colosseum.† People of today are being offered this life altering surgery in a less expensive and more convenient way then ever before. What once was considered â€Å"disrespectful† to parents is now being supported by them. High risks†¦show more content†¦While there is little risk involved to you physically, the question is how it will affect you mentally and I believe ultimately this life altering surgery will change people’s lives in a good way. All though some would disagree, many people are being tormented while growing up for their appearances. They say it is what is on the inner surface or a person’s personality that really matters, yet the childish ridiculing of others does not stop. Risa Arato had to take such verbal abuse from her own â€Å"estranged father.† He told her after not seeing her since she was very young that â€Å"she hadn’t turned out very cute.† This would crush anyone after not seeing their father for years, only to be hurt by him when they do. How can anyone grow up with a healthy self esteem after going through such torture? The nineteen year old decided to take action after going through all of this and this action was made possible by â€Å"Beauty Colosseum.† The television show has helped many people, not only Risa, in ridding of their â€Å"social stigma.† It is, in fact, very shallow to judge people by their looks, yet a lot of people are still doing it. 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