Management Accounting Sample Assignment (Doc)

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..............................................................................................................................3
LO 2.................................................................................................................................................3
1. Producing financial report along with interpretation of the budgeted and actual profit.........3
LO 3.................................................................................................................................................6
1. Evaluating the advantages and the disadvantages of various planning tools of budgetary
control.........................................................................................................................................6
2. Explaining the uses and the application of the different planning tools.................................9
LO 4...............................................................................................................................................10
1. Adaption of management accounting system for responding to financial problems............10
2. Planning tools helps in resolving financial problems faced by the business organisation....12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is defined as method of preparing and presenting all the information of
accounting, statistics and financial nature. It helps in managing and formulating of policies, plans
and strategies which assist in day to day management of company. Management accounting thus
supports manager of the company in making crucial business decision related to business
operations for earning more profit margins. Thus, it is related with methods, systems, concepts and
techniques which are used by the management for achieving the set defined aims of the business in
an effectively and efficient way. This report is related to Beigel Bake, a 24-hour bakery and shop in
Shoreditch, London, England founded in 1974. This manufacturing firm is engaged in the business
of baking beigels, a jewish style bread filled with stuffing such as hot salt beef, mustard, chopped
herring, salmon and also cream cheese. It also provides other bakery products such as Danish rolls,
Eccles cakes, Cheesecakes etc. The report will provide cost analysis calculated with the help of
marginal and absorption costing technique. Also, it is going to discuss about different types of
planning tools which can be used by Beigel Bake for the management accounting process. At last, it
will streamline about manner in which the business firm can overcome its financial nature issues
with the help of management accounting system.
MAIN BODY
LO 2
1. Producing financial report along with explanation of the forecasted and actual profit.
Marginal Costing – The term Marginal costing is known as the system of accounting in
which all the costs amount of variable nature are charged against cost units. Whereas in case of
fixed costs incurred in carrying on business operations of the definite time period are written off in
full against all the contribution made on aggregate basis. This method of costing is applied only to
those business cost to inventory which was incurred at the time of production of each individual
unit.
Absorption Costing – This technique of costing depicts that all the cost amount related to
the manufacturing operations had been assigned to all the units produced. The cost of producing a
finished product includes all the costs such as direct materials, direct labor etc.
A. Budgeted Profit and Loss Statement of Beigel Bake
Absorption Costing
Particulars Amount in £
Sales (16000*50) 800000

Cost of sales:
Opening inventory 0
Direct Material (18000*10) 180000
Direct Labour (18000*20) 360000
Fixed Overhead (18000*5) 90000
Variable Overhead (18000*5) 90000
720000
-Closing inventory (2000*15) -30000
620000
GP 180000
-Selling expenses of
Fixed nature 0
-Selling cost of
Variable nature 0
Actual NP 180000
Marginal Costing
(MC)
Cost per unit
(in £)
Material 10
Labour 20
Variable O/h 5
Marginal cost per
unit 35
SP 50
Marginal cost per
unit 35
Variable selling price 0
Contribution (per
unit) 15
Particulars Amount in £
Sales (16000*50) 800000
COGS:
Inventory at
beginning 0
Material (18000*10) 180000
Labour (18000*20) 360000
Variable O/h (18000*5) 90000
630000
-Closing inventory (2000*15) -30000
600000
GP 200000
-Variable selling cost 0
Contribution (16000*15) 240000
-Fixed costs 100000
-Fixed selling 0