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Importance of Management Accounting

   

Added on  2023-01-03

8 Pages1039 Words86 Views
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MANAGEMENT
ACCOUNTING
Importance of Management Accounting_1

TABLE OF CONTENTS
Question 1....................................................................................................................................3
Question 2....................................................................................................................................5
Importance of Management Accounting.....................................................................................5
Techniques of Management Accounting.....................................................................................6
REFERENCES................................................................................................................................1
Importance of Management Accounting_2

Question 1
Break even analysis calculates the margin of safety, representing the level of sales required to
cover the costs of the organisation. It reflects the revenues generated and the associated costs for
a particular product. It discloses a selling point where there is no profit no loss situation and it is
very important for a company to attain at least such point to survive in the market (Pelz, 2019).
Break even analysis is used for internal purpose only and the information serves the management
and employees, it is of no use to outsiders. This analysis helps in finding break even at different
levels of operations.
Calculation of Walk About Ltd. Selling product A:-
a) CALCULATION OF BREAK EVEN POINT
PRODUCT A (75000 UNITS)
Particulars RATE UNITS PRICE
SALES 11 75000 825000
(VARIABLE COST) 6 75000 450000
CONTRIBUTION 5 375000
(FIXED COST) 350000
PROFIT 25000
BREAK EVEN ( in units)
Fixed cost 350000
Contribution per unit 5
Fixed cost/ Contribution per
unit 70000
The break even point of Walk About Ltd is at 70000 units where the company at current selling
price is at no profit situation. It says that it is necessary for the company to sell these many units
Importance of Management Accounting_3

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