Cost of Goods Manufactured - Ethical Issues in Accounting - Accounting and Finance Assignment Help

Assignment Task :

Assignment Question  

IHM Corporation is one of the fast growing corporations. In the year 2018, Peter took over as the new  president of the corporation and appoints You as its Head for the department of accounts. 

The assignment requires knowledge, skills and the application of Income statement and schedule of cost  of goods manufactured and Costing, Use of cost information for decision making, Ethical issues in  reporting.

Required 

As a going concern, he wishes to evaluate and strengthen the corporation’s financial position in  light of growing competition and in lag of the world economy. 

(a) Peter, the President is asking you to prepare the following two reports based on the above  available account balances. 

(i) An income statement for the company for the years ended December 31, 2018.

(ii) A supporting  schedule of cost of goods manufactured for the year ended December 31, 2018. 

(b) Peter, who is not very familiar with the financial matters, somehow find it difficult to interpret  the performances of the company’s results, in terms of cost allocations and therefore, the President  is seeking your expertise advice and clarifications for the following issues.

(i) Would the sales manager’s salary (included in marketing, distribution, and customer-service  costs) be accounted for any differently if the IHM Corporation were a merchandising- sector  company instead of a manufacturing- sector company? Justify your position.

(ii) Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might  some of these costs be regarded as direct manufacturing costs? Justify your position with a suitable  example. 

(iii)Suppose that both the direct materials used and the plant and equipment depreciation are  related to the manufacture of 1 million units of product. What is the unit cost for the direct  materials assigned to those units? What is the unit cost for plant and equipment depreciation?  Assume that yearly plant and equipment depreciation is computed on a straight-line basis. 

(c) Although you are new to IHM Corporation but highly skilled in Management Accounting. The  President of the company is seeking your critical expertise advice on the following areas.

(i) Critically evaluate and Support your stand as to why the unit costs differed in requirements  (refer to your above answer in (b). 

(ii) Critically provide your reasons as to why do managers consider direct costs to be more  accurate than indirect costs? 

(d) The President wants to enhance the manufacturing system by improvising without  compromising with the ethical issues in accounting.

(i) Based on your knowledge and skills, develop an ideal Job costing system for IHM corporation  that should work well to increase the performance of the corporation. 

(ii) Recommend the President on the Ethical issues required for a company on the whole. 

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