Importance of Management Accounting

The provided report discusses the application of various provisions of management accounting, including budgetary control systems, Key Performance Indicators (KPIs), and financial governance. It also delves into the importance of cost techniques such as marginal and absorption costing for inventory valuation and decision-making. The assignment aims to emphasize the significance of management accounting in achieving organizational standards and improving profitability.

Management Accounting

Table of Contents
PROJECT 1......................................................................................................................................3
INTRODUCTION...........................................................................................................................3
TASK ..............................................................................................................................................3
1.1 Concept of management accounting and their requirement in organisation....................3
1.2 Different management accounting reports.......................................................................5
1.3 Benefits of management accounting systems...................................................................6
1.4 Integration of management accounting reports with organisational process...................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Project 2 ........................................................................................................................................10
INTRODUCTION.........................................................................................................................10
TASK 1..........................................................................................................................................10
1.1 Application of cost analysis techniques for formulation of income statement..............10
1.2 Application of management accounting techniques regarding financial reporting .......12
1.3 Merits and Demerits of Marginal and Absorption costing.............................................12
TASK 2..........................................................................................................................................13
2.1 Advantages and disadvantages of different planning tools used for budgetary control.13
2.2 Estimation of expenses if change in number of hours....................................................14
2.3 Preparation of cash budget.............................................................................................14
TASK 3..........................................................................................................................................15
3.1 Application of different management accounting systems to respond financial issues 15
3.2 Contribution of management accounting to improve financial performance.................16
3.3 Application of planning tools to reduce financial issues to achieve success.................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19
.......................................................................................................................................................19

PROJECT 1
INTRODUCTION
Management accounting includes different kind of tools and techniques like budgeting,
marginal costing, risk analysis, standard costing, value analysis, cost volume profit analysis etc.
All such techniques provides statistical and functional information to the executives of
organisation for planning, decision-making and selection of most profitable project which
provides higher return. Through application of such systems, management of organisation
become expert in financial reporting and managing working capital requirements to perform day
to day functions. UCK Furniture deals in table and drawer division (Christ and Burritt, 2013).
In the present report explain about, essential requirements of different management
accounting systems and methods which are used by UCK Furniture for reporting. Also,
application of accounting systems in organisation and benefits of individual management
accounting systems and integration of reports with organisational functions.
TASK
1.1 Concept of management accounting and their requirement in organisation
UCK furniture is manufacturing organisation which deals in two products Table and
Drawer. It is understand by the management of organisation that large number of benefits are
gathered through implementation of management accounting systems. Accounting officer of
UCK decided to prepare training programmes for their interns which helps them to gather
knowledge about different accounting systems and their important in organisational respect.
Concept of management accounting: It is wide concept which includes the provisions
of different costing and managerial techniques. Different tools which are used regarding
collection and interpretation of information are named as responsibility accounting, value
analysis, marginal costing, standard costing, marginal costing, budgetary control etc. Through
use of all such tools accounting officer of UCK Furniture gather financial and statistical
information which helps in forecasting and preparation of effective strategies. Each and every
accounting system have their different role and benefits in organisation. It enhance the decision
making power of manager which helps in short and long term decision-making. The main
objectives for which the management of UCK Furniture adopts such different accounting
systems are defined below:

 Improvement of communication and effective disbursement of roles and responsibilities
 Improved decision-making
 Higher coordination among different departmental functions
 Helps in evaluation of the effectiveness of strategies and policies
 Evaluation and the interpretation of financial statements
 Contributes in planning and formulation of policies
Essential requirements of different management accounting systems
 Presentation of financial position: Application of different accounting systems provides
the data which depicts the financial position of organisation. Collection of such costing
and financial data helps in preparation of effective financial reports which improves
decision making of internal parties (Macintosh and Quattrone, 2010).
 Allocation of resources: Effective implementation of inventory systems helps in
maintenance of stocks within organisation. EOQ model provides the information
regarding the time period about reordering of their stocks. It provides the opportunity to
the manger of UCK Furniture about effective allocation of resources to different
departments for their optimum utilisation. It contributes in accomplishment
organisational objectives for attainment of long term sustainability.
 Assessment of risk: Budgetary control in one of the important process which helps in
identification of the future risks which are associated with project. Such early
identification of uncertainties helps in preparation of contingency provisions and risk is
minimised through effective management.
Different types of management accounting systems
 Job costing system: It helps in assigning manufacturing cost to each products which are
produced by UCK Furniture. It is considered as one of the important cost controlling
method. This method helps in tracking of their actual expenses. This method is used only
when different types of goods are manufactured by organisation. The procedure which is
followed during use of this accounting system is mentioned below:
- Receiving enquiry: It includes the process of receiving the views of customers about quality,
price and time period of completion.
- Estimation of price: It can be done on the basis of tastes and preferences of customers.
- Order receiving: Orders are placed after assurance of customer about prices.

- Production order: It is placed in the beginning of production process.
- Cost recording: Recording each and every cost which is incurred during production process.
- Completion of job: Report is provided to accountant for final costing and its comparison with
estimated.
 Price optimisation system: It is considered as mathematical analysis done by the
management of company for determination of the change in the behaviour of customers
at different levels of price of their products and services. It helps in formulation of
effective pricing strategies and improve their sales figure.
 Inventory management system: This system helps in supervision of the stocks and
assets of organisation. It ensures the effective floe of the raw material to the production
department for development of their efficiency. This system includes the adoption of
effective software's for tracking level of inventories, orders, sales and deliveries (Nandan,
2010).
1.2 Different management accounting reports
UCK Furniture is manufacturing organisation. To attain sustainability in their operations
management of organisation need to implement organised reporting system. It contributes to
keep record of different transactions performed by departments in systematic manner. Manager
of UCK Furniture has the duty to analyse such facts and issues which present in reports to make
their decisions more accurate and reliable. Different kind of reports which are prepared by
organisation are known as job costing, inventory, performance, budgeting etc. Different reports
includes different financial and non financial information to attain proper control over the
functions of different departments.
Different benefits are gathered by UCK Furniture like better understanding between the
employees, reduction in duplication of functions, better coordination, effective communication
channels, appraisal of performance of employees etc. The overall impact of reporting system is
upon organisational capabilities which provides the opportunity to accomplish their targets
within stipulated period of time. These reports not only beneficial for internal parties of
organisation but also used by the external stakeholder to enhance their decision making about
their investments in organisation. It fulfils dual concept regarding ascertainment of the trust and
loyalty of employees and external parties.
Different types of management accounting reports

 Operational budget reports: This report contains the plan which helps in analysis of the
actual performance of different departments by comparison with such set standards. This
report also assist the manger of organisation to pay adequate incentives to their
employees as per their actual performance. Such incentives will proved as motivating
factor for other employees to work hard and get appreciation from their superiors.
 Accounts receivable ageing report: This report helps in segregation of accounts
receivable of organisation on the basis of the time an invoice has been outstanding.
According to this report management of UCK Furniture identifies the financial health of
their customers. If collection process of an outstanding amount is slower than normal
then need to change their credit policies. It provides the opportunity to organisation to
establish effective system which helps in collection of debts within stipulated period of
time and effectively run their day to day activities.
 Inventory and manufacturing reports: Accounting officer of UCK Furniture uses this
report to improve their manufacturing and inventory process more efficient. Information
which is provided by this reports includes actual wastages in their stocks, labour cost,
overhead cost. Such information is compared by organisation with different assembly
lines to grab opportunities (Burritt and et. al., 2011).
 Job cost report: This report is used by the management of UCK Furniture to track the
cost and revenue which they achieved from production of their two division products
Table and Drawer. It provides opportunity to earn large number of profits through
controlling of their unnecessary expenses. Through application of this costing system
profitable jobs are identified so, they can give more emphasis on jobs to earn large
number of profits.
1.3 Benefits of management accounting systems
Management accounting system enable in taking beneficial judgement on the basis of
short period consideration. It is really important to understand such facts and things which reflect
by the MAS so that effectiveness and efficiency could be maintain. Every management
accounting system have several benefits which need to evaluate in appropriate and suitable
frame. Following are several benefits which need to underpin by UKC Furnitures so that better
and appropriate working could be promoted:

 Job costing system: A major benefit which could be gain through implementing
appropriate job costing system is that individual and separately profit margin could be
assess with high frequency accuracy in various operations of business. It also support in
crafting employees benchmarking so that better and effective outcome could be drawn in
working towards effective manufacturing. It is flexible in nature which derive another
benefit which further suppose to enable in evaluating particular indirect cost or
manufacturing process cost. Hence, effective production and manufacturing will lead to
take place under such stances.
 Inventory management system: Inventory and stock need to manage at manufacturing
place properly so that efficacy in operations could be manage and maintain properly. One
of a most appropriate benefits which could be drawn by managing inventory is that it will
support an association to become successful by minimising the cost and wastage as well.
Along with this, this section will lead to improved cash flow of a company so that profit
could be generated in better associated manner. This benefits in manufacturing such
products and services only which highly demanded so that appropriate and optimal level
of inventory could be manage and maintain in order to gain better suited results.
These benefits required to underpin and estimated by UKC Furnitures so that better and
suitable working get promoted which further assist in deriving appropriate and suitable outcome.
As it will also reflect to generate and enhance profit and revenue of a company so that
appropriate and sufficient working operations get done (Chen and et. al., 2011).
1.4 Integration of management accounting reports with organisational process
Integration and combination of two aspects make things correct and appropriate in nature
so that better and suitable outcome could be enforce in gaining effective and absolute results.
Management accounting reports provide regular basis consideration of operations which assist in
gaining and making better results. Such reports need to merge with organisational process and
operations so that beneficial results options could be estimated in better frame. Following are the
management accounting reporting whose relationship with organisational process is essential for
facilitating better and supported working. UKC Furniture required to integrate their management
accounting report with organisational process for assigning suitable outcome and better
productivity:

 Inventory and manufacturing reports enable in preparing such records of production
which need to take place on regular basis. It is really important to maintain appropriate
relationship with such aspects. This could be interlinked with organisational process of
production department whom need to produce only such quantity which demanded from
market world. This will assist in utilising all resources properly so that effective gains
and beneficial outcome possibility get enhance in order to maximise appropriateness in
working and operations with target accomplishment (Goyal, 2014).
 Another integration of organisational process and management accounting report concern
with operational budget report under which there is a need to set some benchmark related
with performance of various employees so that better and suitable operation and target
accomplishment get done. This will enable in gaining better outcome as well as better
associated frame could be sustain. Hence, with meeting of budget requirement
association become able to sustain into keen competitive world for more and better way.
Integration such process with reports is essential so that effective operations could take
place. This will assist them to grow and move towards positive direction in order to gain
effectiveness.
CONCLUSION
It has been concluded from the above report that, large number of benefits are gathered
by the management of UCK Furniture through adopting accounting systems. It helps them to
create more understanding among their different departments. Price optimisation system helps in
influencing the behaviour of customers through fixing of effective prices of their different
products. Ultimately, it helps in improvement of their productivity and profitability. Through
application of accounting and reporting systems essential requirements like determination of
goals, risk assessment, improved judgement, better coordination among functions etc. are
fulfilled which contributes in accomplishment of organisational common goals.

REFERENCES
Books and Journals
Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of
contingent variables for adoption. Journal of Cleaner Production. 41. pp.163-173.
Macintosh, N.B. and Quattrone, P., 2010. Management accounting and control systems: An
organizational and sociological approach. John Wiley & Sons.
Nandan, R., 2010. Management accounting needs of SMEs and the role of professional
accountants: A renewed research agenda. Journal of applied management accounting
research. 8(1). p.65.
Burritt, R.L., and et. al., 2011. Environmental MA and supply chain management (Vol. 27).
Springer Science & Business Media.
Chen, H., and et. al., 2011. Effects of audit quality on earnings management and cost of equity
capital: Evidence from China. Contemporary Accounting Research. 28(3). pp.892-925.
Goyal, D.P., 2014. Management Information Systems: Managerial Perspectives. Vikas
Publishing House.
Van der Stede, W.A., 2011. Management accounting research in the wake of the crisis: some
reflections. European Accounting Review. 20(4). pp.605-623.
Baldvinsdottir, G., Mitchell, F. and Nørreklit, H., 2010. Issues in the relationship between theory
and practice in management accounting. Management Accounting Research. 21(2).
pp.79-82.
Ward, K., 2012. Strategic management accounting. Routledge.
Albelda, E., 2011. The role of management accounting practices as facilitators of the
environmental management: Evidence from EMAS organisations. Sustainability
Accounting, Management and Policy Journal. 2(1). pp.76-100.
Zang, A.Y., 2011. Evidence on the trade-off between real activities manipulation and accrual-
based earnings management. The Accounting Review. 87(2). pp.675-703.
Qian, W., Burritt, R. and Monroe, G., 2011. Environmental management accounting in local
government: A case of waste management. Accounting, Auditing & Accountability
Journal.24(1). pp.93-128.
Online
Management Accounting. 2017.[Online]. Available Through: <https://www.imanet.org/insights-
and-trends/management-accounting-quarterly?ssopc=1>.

Project 2
INTRODUCTION
Principles of management accounting are used by the manager of organisation to drive
success in their business operations. This data which is gathered from different accounting
systems assists manager in business decision making and control. Different benefits which are
achieved through implementation of accounting systems are analysis of cost and revenue,
provides insight into business performance, work of cost reduction projects, helps in variance
analysis and strategic planning. This system consists different planning tools which is used for
forecasting future actions and accomplishment of desired targets. UCK Furniture is
manufacturing organisation provides tables and drawers (Christ and Burritt, 2013).
In the present report explain about, application of different cost analysis techniques,
merits and demerits of marginal and absorption costing, advantages and disadvantage of
planning tools. Also, adaptation of management accounting systems to respond financial issues
and use of planning tools to achieve success.
TASK 1
1.1 Application of cost analysis techniques for formulation of income statement
Cost: It is the monetary value which is paid by the management of UCK Furniture
regarding production of tables and drawers. While calculating the actual cost different aspects
which are considered includes efforts, resources, time and utilities, opportunity foregone etc.
There are different types of cost which are defined below:
Fixed and variable cost: Fixed cost remains constant and not fluctuated with the change
in production units. This cost will decrease with the increase in the number of units of
production. On other hand, variable cost means which is incurred by organisation regarding
production of products. This cost is directly related to production of number of units.
Opportunity and outlay costs: Outlay costs are considered as actual expenses which is
incurred by organisation on plant and machinery, labour, material etc. On the other hand,
opportunity cost means the cost in terms of earning which is foregone due to selection of next
alternative.
Difference between marginal and absorption costing

Marginal costing: This method is used by UCK Furniture to enhance their short term
decision making. This method is used to ascertain increase or decrease in total cost due to
production of one extra unit. It is calculated in the situation of no profit and loss. It considers
only variable cost which is incurred on labour and material (Macintosh and Quattrone, 2010).
Absorption costing: It is also known as full costing method because component of fixed
cost is also included while calculating total cost of product. It also used by the organisation for
valuation of their inventories. This method helps in long term decision making.
Marginal costing Absorption costing
This can be done for the purpose of internal
reporting
It is calculated for the use of external parties
Fixed manufacturing overhead is considered as
period cost
Fixed manufacturing overhead is considered as
product cost
PARTICULARS January February
Sales (35 per unit) 315000 402500
less:
Cost of Production (12+8+5) 275000 237500
variable selling overheads (1 per unit) 11000 9500
variable cost 286000 247000
Contribution 29000 155500
less:
fixed manufacturing overheads 20000 20000
Fixed Admin & selling cost 2000 2000
total fixed costs 22000 22000
NET INCOME AS PER MARGINAL COST 7000 133500
NET INCOME AS PER ABSORPTION COSTING:
Sales (35per units) 315000 402500
less:
Cost of Production (12+8+5+1.82) 295020 254790

Gross Profit 19980 147710
LESS:
Fixed and variable cost:
variable sales overheads (1 per unit) 9000 11500
Fixed selling cost 2000 2000
Total costs 11000 13500
NET INCOME AS PER ABSORPTION COSTING: 8980 134210
1.2 Application of management accounting techniques regarding financial reporting
The two different cost techniques are used regarding production of financial reports. As
per marginal costing method, it is observed that in month of January and February the net
income which is earned by UCK Furniture is 7000 and 133500. On other hand, by use of
Absorption costing method, the net income of January and February month is ascertained as
8980 and 134210 (Nandan, 2010).
1.3 Merits and Demerits of Marginal and Absorption costing
Marginal costing
Merits
 It provides the information about relationship between cost, price and volume.
 The valuation of stock is not get affected due to present year fixed costs
 Impact of production and sales policies is clearly visible and understood with the helps of
marginal costing technique
Demerits
 The major limitation of this method that it uses past data and decisions are taken for
future period of time
 It is not effective method for long term decision making
 It ignores the component of fixed cost
Absorption costing
Merits
 It fulfils the requirements of GAAP Compliant and helps in reporting to internal revenue
services
 It considers all cost which are incurred during production means both fixed and variable
Demerits

 It shows the profitability of organisation more better from actual
 This information mislead management and investors
TASK 2
2.1 Advantages and disadvantages of different planning tools used for budgetary control
Budget: It is being considered for financial plan and has to be developed for particular
period of time too. This concept is that which include various theories like assets, liabilities and
income with expenditure with cash flow etc. Budget is that which is divided according to the
different department in company and analyse which division is taking more fund and how they
are using such, if any wastage is seen then Budget has to be adjusted according to that only
(Burritt and et. al., 2011).
Budgetary control: This is that which specifically make a comparison in between the
actual budget used with budget prepared. It is be like which help in determining the problems
and deviation is being faced by organisation. Moreover, entity work hard toward minimising the
wastage made of resources and convert them to attain the sustainability in their different
operations as well. Although, it provide the direction to employees as in which direction they
have to perform in right context which help in improving skills and knowledge which is related
with performance and of various functions in organisation.
Several steps used to control the budget.
Manager of UCK furniture has many responsibility and they even work hard to control
their budget as well and for such few steps needs to be followed and here they as:
 Establishment of plan: First step, it is such which include the forecasting of future with
event and somehow it is required and necessary to have achievement by company. This is
such which help in coordination among various actions of employees in great manner.
 Actual performance: Moreover, it is required to analyse the actual performance of
employees in regards to set standard and thus record it to bring effectiveness in their
working too (Chen and et. al., 2011).
 Comparison with budget: A comparison is required at such stage so that is any
discrepancies found then they can make proper policy and working can be done in right
context too.

 Identification of variances: Step is too collect information related to variance received
in performance of employees. UCK furniture will bring method to improve such scenario
and make powerful come back with effective performance.
 Solution to everything: Last step is to provide better solution to issues in company as
this help in bringing effective work in different activity and manipulate firm to earn
higher profit as well (Goyal, 2014).
Planning tools
They are of various kind and provide better working in organisation as because this help
in having systematic working in company.
Contingency tool: Such concept is being used to monitor the different functions which
somewhere help in making plans. It help in dealing with external factors in proper way.
 Advantage: It is such which help in reduction of risk and expenditure with having
achievement in control too.
 Disadvantage: Many hurdles are there which come in between the working and thus it
also affect the productivity of organisation.
Forecasting tools: This is being used to identify the issues with external factor. It is
something which aid in planning for future purposes in effective manner and execution of
business operation are also there too.
 Advantages: Organisation make themselves to face hindrances and although also expand
their actions in company to have perfect working. Disadvantages: Moreover, decision and strategies are such which is mainly made on the
base of assumption in right format (Van der Stede, 2011).
PEST Analysis:
Political: There are various political factors such as tax rates, interest rates, political
instability etc. that put negative impact on operations and activities of company. So, firm
requires to consider these in order to perform its operations in better way.
Economical: Inflation, deflation, exchange rates, imports, exports etc. are the economic
variables that affects function of business. In order to perform activities appropriately, manager
requires to consider these.

Social: Tastes and preferences of customers are changing on regular basis or very
frequently. So, firms are require to understand these and develop their product and services
accordingly so that their needs can be meet.
Legal: Firms are require to follow all the laws and regulations made by government so
that operations and activities of business can be run in proper way. Compliance with all laws and
legislations of respective country helps in effective expansion of business.
SWOT: This tool is use by manager to ascertain strengths, weakness, opportunities and threats
of firm. One of the main benefit of this is that it helps in take better decision and
Porter's five force analysis:
This is useful, because, when you understand the forces in your environment or industry
that can affect your profitability, you'll be able to adjust your strategy accordingly. For example,
you could take fair advantage of a strong position or improve a weak one, and avoid taking
wrong steps in future.
Competition in the Industry
The importance of this force is the number of competitors and their ability to threaten a
company. The larger the number of competitors, along with the number of equivalent products
and services they offer, the lesser the power of a company. Suppliers and buyers seek out a
company's competition if they are unable to receive a suitable deal.
Potential of New Entrants Into an Industry
A company's power is also affected by the force of new entrants into its market. The less time
and money it costs for a competitor to enter a company's market and be an effective competitor,
the more a company's position may be significantly weakened.
Power of Suppliers
This force addresses how easily suppliers can drive up the price of goods and services. It is
affected by the number of suppliers of key aspects of a good or service, how unique these aspects
are, and how much it would cost a company to switch from one supplier to another.
Power of Customers
This specifically deals with the ability customers have to drive prices down. It is affected by how
many buyers or customers a company has, how significant each customer is, and how much it
would cost a customer to switch from one company to another.
Threat of Substitutes

Competitor substitutes that can be used in place of a company's products or services pose a
threat. For example, if customers rely on a company to provide a tool or service that can be
substituted with another tool or service or by performing the task manually, and if this
substitution is fairly easy and of low cost, a company's power can be weakened.
2.2 Estimation of expenses if change in number of hours
Calculation of variable cost per unit using identified high and low activity level:
Total cost= (Expenses of high activity- expenses of low activity)/(Highest activity hours spent -
lowest hours spent)
Total expense per units = (9820-7410)/(795-505)=8.31
Total expenses for July:
650*8.31=5401.5
For August:
750*8.31= 6232.5
2.3 Preparation of cash budget
Cash budget Amount
Particulars September
Opening balance 9000
Cash sales 39000
Sale on account 5648
Total Cash collected 53648
Purchase -16800
Selling and administration
expenses -13000
Equipment cost -18000
Dividend paid -4000
1848
Add: minimum cash balance 5000

Expected cash in the end of
September month 6848
TASK 3
3.1 Application of different management accounting systems to respond financial issues
UCK Furniture is manufacturing organisation. Through arising of many discrepancies at
the time of production, organisation is not able to maintain the quality of their products. This will
creates financial issues. Management accounting is important system which contains different
tools which helps to respond such issues (Baldvinsdottir, Mitchell and Nørreklit, 2010).
Tools to overcome from financial issues
 KPI: These are indicators which provides the information regarding performance of
organisation. Financial KPI provides the information about financial strength of
organisation.
 Financial governance: This tools improves the understanding of the management of
UCK Furniture regarding different regulation provide by government. It helps regarding
prevention from penalties.
UCK Furniture UCK Woodwork's
Return on capital employed is ascertained as
17.24%.
ROCE gathered by organisation as 8.56%.
Assets turnover ratio is 0.68 times Assets turnover ratios of this organisation is
0.100 times
Operating profit margin is 25.03% The margin of profit is ascertained as 8.56%.
Ratios Formula UCK furnitures UCK woodwork's
ROCE(Return on
capital employed):
Operating profit/Capital
employed*100
5890+3600/23100+
31930*100
6955/81230*100
=8.56%

=9490/55030*100
=17.24%
Assets turnover Revenue / Net assets 13000+24900/2310
6+31930
=0.68 times
8150/81230
=0.100 times
Operating profit
margin
Operating profit / sales *100 9490/13000+24900
*100
=25.03%
6955/81230*100
=8.56%
3.2 Contribution of management accounting to improve financial performance
Management accounting is important concept which includes various provisions and
principles which improves strength of internal parties of organisation. Its contribution regarding
improving financial performance of UCK Furniture is understood with the helps of following
points which are mentioned below:
 Job costing method helps in determination of most profitable and waste area of project. It
provides the opportunity regarding reduction of their expenses and provide more
emphasis on profitable areas to improves their earning (Ward, 2012).
 Application of inventory management system helps in management of level of stock and
effective allocation resources to different departments. This helps in elimination of waste
of materials.
3.3 Application of planning tools to reduce financial issues to achieve success
There are many planning tools are present which helps to overcome from financial
problems and attain success in future (Albelda, 2011). Such different tools and techniques are
known as budgeting, budgetary control, project appraisal or evaluation, standard costing, ratio
analysis etc. The techniques which are used by UCK Furniture are mentioned below:
 Budgetary control: This technique helps in determination of the deviations in actual
performance. It also guides the employees to adhere such standards which are provided
by organisation while performing their tasks. It helps in improvement of overall business
performance (Zang, 2011).

 Ratio analysis: This cab be used by the organisation to understand about their
profitability and liquidity. It makes the comparison work more easier with other similar
organisation. It helps in preparation of effective strategies which improves their internal
strength (Qian, Burritt and Monroe, 2011).
CONCLUSION
It has been concluded from the above report that, application of the different provisions
of management accounting helps in collection of different informations which is used further for
carrying out their day to day operations effectively. Evaluation and appraisal of the actual
performance of employee with the help of budgetary control system helps in achievement of
standards. Different tools like KPI and financial governance plays an important role to respond
financial issues and improves their profitability. Marginal and absorption are two effective cost
techniques which are used for valuation of inventories and improves decision making.