Concepts of Management Accounting : Report

Added on - 06 Jan 2020

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MANAGEMENTACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3(1) Importance of management accounting and difference between management and financialaccounting...................................................................................................................................3(2) Classification of cost at Inmarsat ltd.....................................................................................4(3) Variance analysis and type of variance.................................................................................5(4) Different operational budgets and advantages of preparing them.........................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONManagement accounting is an important discipline of management and it is also animportant branch of accounting. In this report an attempt is made to understand various conceptsof management accounting. In this regard variance analysis is discussed in the report and itsdifferent types are also explained. Along with this cost classifications are also explained in detailin the report. At the end of the report, different type of budgets are explained and theiradvantages are also described in the report.(1) Importance of management accounting and difference between management and financialaccountingInmarsat plc is a UK based service provider of global mobile satellite communicationservices. It provide mobile connectivity services on water, land and air. It has five operatingsegments namely maritime segment, enterprise segment, which focused on energy, media andother services. Its aviation segment focus on commercial aviation services. The last segment isUS civil segment which focused on civil and military services.There is great importance ofmanagement accounting because it is a discipline that is used to measure company performanceregarding use of an available resources.Management accounting is used to evaluate firm costingin terms of services it make available to clients which are government and others. Means that byusing management accounting costing of all components of firm product cost of production isdone. Hence, it can be said that by using management accounting concepts accurate calculationof service cost done in systematic way. Without applying concept of management accounting itis not possible to compute cost accurately. In management accounting there is a concept ofvariance analysis under which different type of variance are computed (Kaplan and Atkinson,2015). These variances help managers in identifying areas where company is not performingwell. Hence, management accounting help managers in identification of areas where they needsto pay special attention in order to improve company performance.Difference between management accounting and financial managementThere is huge difference between management accounting and financial accounting. Inmanagement accounting entire calculations are done related to company production units andlabors as well as materials. But in financial accounting calculation related to production is notdone and instead of this entry of all business transactions are done in company books of
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