275 - UNIT 5 MNG ACC

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................7
TASK 3............................................................................................................................................8
TASK.4 .........................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFRENCES.................................................................................................................................12

INTRODUCTION
Following report is prepared to understand the importance of management and leadership in the
organisation. Although both are almost similar concepts there are various grounds on which they
are differentiated from each other. The report will help the user in understanding their different
roles and functions which they perform under the same roof (Baldvinsdottir and Nørreklit,2010).
Also different budgets that are prepared in the Imda tech will be discussed in details with their
advantages and disadvantages. Apart from this what is score card and how it is important for the
cited company will be discussed in detail in the following report.
TASK 1
1.1 Definition of Management Accounting and to distinguish Management
Management accounting is a method use by the management of the Imda tech in order to carry
out its various functions smoothly in the organisation. It is a continuous process of planning
organising staffing directing coordinating and controlling the various activities of the business. It
is a very wide concept making financial accounting a part of it. It helps the management in
collecting and interpreting the information gathered so that it can be used in effective decision
making. Financial accounting is entirely a different concept. It gives the management
quantitative data which is used in analysing the financial status of the company at a particular
point of time (Bodie,2013). The data provided by management accounting is for the internal
users of the organisation like the different managers and other operating officials. On the other
hand financial reports are prepared for the external users of the business like government, banks,
investors or other interested parties. Therefore financial accounting can be separated from
management accounting on various grounds like:
1. Management accounting provide the information to the internal users of the company
who use the provided data in taking the various decisions for the concern department. On
the other hand financial accounting focuses on preparing data for the external users like
potential investors as they get to know about the status of the company through these
reports.
2. Theoretical data is provided by the management accounting system which help in
evaluating the performance of different departments with their performance of preceding
years. Financial accounting on the other hand provide the management with the

quantitative data which shows the change in the performance of the business in numerical
terms.
3. Management accounting does not require special skills like knowledge of numericals and
accounting but financial accounting needs to be done by a person having complete
knowledge of how to use different accounting concepts while calculating the different
accounts (Burritt,2011).
4. Management accounting is a system which helps the management in taking better
decisions for the different departments like what should be the adequate time given to
each department to complete the given task. In contrast to this financial accounting help
in taking the monitory decisions like how much amount to be invested in different
options after analysing the previous experiences.
Importance of management accounting:
There are various importance of management accounting. Imda tech. Use the different
management accounting options in its management to take various decisions. Importance of
management accounting as a decision making tool are as follows:
1.Relevant cost analysis- the system of management accounting helps the company in
putting the right price for its products. As there are many companies which are producing
different chargers for different gadgets it is important for Imda tech to set the right process so
that it is accepted by all. This system help the management in deciding how much expense
should be done in different product related activities like advertising, packaging etc. as all these
cost are ultimately added to the final price of the product (Garrison,2010).
2.Activity-based costing- Once the company decides the price of the product it is important for it
to target its customer. The company should be clear to whom it wants to sell its products after
doing the study that which all are the potential buyers of the concern product.
3.Make or buy analysis- The concept of management accounting also helps the management of
Imda tech to take the decision regarding choosing between one either to make or to outsource.
Company has both the options with it. They need to compare the profit margin they receive on
using these different techniques. Whichever gives the company better results should be adopted
and implemented in the business.
4. Utilising the data- Information provided by management accounting helps the business to
understand that how it can grow or expand in future. Budgets, financial systematists, balanced