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MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION

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Importance of management accounting as a decision making tool for department managers 4 (b) Different management accounting systems and their use byother departments 5 TASK 27 Income statement under the marginal costing method 7 TASK 39 (a) Different budgets and their advantages as well as disadvantages 9 (b) Process of preparing budget10 (c) Pricing strategies 11 TASK 412 (a) Management accounting systems and their use by firms12 CONCLUSION 12 REFERENCES 13 INTRODUCTION Management accounting (MA) is

MANAGEMENT ACCOUNTING TABLE OF CONTENTS INTRODUCTION

   Added on 2020-07-22

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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3(a) Function of MA......................................................................................................................31. Definition of management accounting and difference of it with financial accounting..........32. Importance of management accounting as a decision making tool for department managers4(b) Different management accounting systems and their use by other departments...................5TASK 2............................................................................................................................................7Income statement under the marginal costing method................................................................7TASK 3............................................................................................................................................9(a) Different budgets and their advantages as well as disadvantages .........................................9(b) Process of preparing budget.................................................................................................10(c) Pricing strategies..................................................................................................................11TASK 4 .........................................................................................................................................12(a) Management accounting systems and their use by firms ....................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
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INTRODUCTIONManagement accounting (MA) is the discipline that is widely used by firms to improvetheir performance. Under management accounting, there are number of tools used by firms toidentify the weak areas. In order to prepare the present report, Imda Tech Limited business entitytaken into account which operates in the electronic sector within UK. Proper strategy is used toconvert weak points into strong one. In the current report, different functions of managementaccounting are explained. Along with this, varied management accounting systems are discussedin detail. In the middle part of report, income statement is prepared by using marginal andabsorption costing methods. Apart from this, in the report, various budgets are explained andtheir advantages disadvantages are discussed briefly. At the end of report, discussion aboutbalanced scorecard is to be done which one of the very important tool to measure businessperformance of Imda Tech.TASK 1(a) Function of MA1. Definition of management accounting and difference of it with financial accountingManagement accounting is one of the main domains that is used to do cost relatedcomputations. There are number of methods of management accounting that are used to controlcost and to monitor the same. Over the past years, it has been observed that use of managementaccounting is increasing at a rapid pace as it is very important to maintain a strict control over thecost in business (Bellah and et. al., 2013). It is observed that in case of many firms, costincreased to a great extent especially when economic condition of the nation is not good. Thus,profit has declined but the cost increased. Due to this reason, most of the business firms arelaying down stress on costs that are incurred in business. Some of the methods that are usuallyused in management accounting are budget and variance analysis. By using these methods, strictmonitoring of expenses is done in business and actions are taken on time to control the cost.Variance analysis is another method under which whether expenses increased or decreased incomparison to cost is identified. It can be said that there is significant importance of managementaccounting methods for the business firms (Kaplan and Atkinson, 2015). There is differencebetween management and financial accounting in number of ways. Management accountingrefers to the discipline that is used to perform cost related computations with respect to different
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expenses like direct, indirect and fixed. In the management accounting, varied calculations areperformed on available cost related data. On the other hand, in case of financial accounting,different expenses are recorded with respect to its final value. It means that in case ofmanagement accounting, all costs related calculations in terms of aggregate value of specificexpenses is done. On the contrary, in financial accounting, only value of expenses is taken intoaccount to compute profit or loss in business (Gesimba, Alvar and Mante, 2014). Thus, it can besaid that there is difference between the financial and management accounting in terms of theiruse.The other difference between financial and management accounting is that use of boththe tools of accounting are different from each other. In case of management accounting,performance of the firm is measured solely in terms of cost but while in the financial accountingit measured through cash flows, expense and profitability as well as assets and liability. It can besaid that there is difference between financial and management accounting in terms of area ofapplication. Another difference between management and financial accounting is in terms of use bythe users. Management accounting is used only by the internal users like managers oforganization. Managers take into consideration cost related data in order to measure theperformance of business firm internally. On the other hand, in case of financial accounting bothinternal and external stakeholders make use of accounting statements (Brigham. and Houston,2011). Thus, it can be said that there is huge difference between financial and managementaccounting in terms of use of accounting statements by different stakeholders.2. Importance of management accounting as a decision making tool for department managersManagement accounting is one of the main tools that is used for decision making bydepartment managers. Under this, varied tools of management accounting are used by themanagers for decision making. Variance analysis is commonly used by the production managerin order to identify the extent to which cost increased in business. Relevant tools are used toidentify whether expenses that are made in business are higher than determined range. Thus,production department receives an input about the direction in which it needs to work. Costcontrol strategy is formulated by production department on the basis of results of varianceanalysis. Thus, it can be said that there is huge importance of decision making tools for themanagers of business firm. Management accounting tools are also used by the other department
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