Management Accounting: Calculation of Costs and Budgetary Control

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 2............................................................................................................................................1
P3) Calculation of costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs......................................................................1
TASK 3............................................................................................................................................5
P4) Advantages and disadvantages of different types of planning tools used for budgetary
control.....................................................................................................................................5
TASK 4............................................................................................................................................8
P5) Effectiveness of management accounting systems to respond on financial problems....8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is the analysis of budgets and expenses that administrators
inside the company need to be available. The main aim of this study to collect all the relevant
information in regard of business. This is the method of the identification, classification and
analysis of the records and details (Arroyo, 2012). This report based on the Prime furniture
which is situated in UK and provides their services to design effective furniture. It provides
facility to people to design their furniture according to their interest. In this report consist of
various techniques to calculate numerical problems and analysis the importance of management
accounting in regard of decision making procedure. Additionally, use different budgets as
planning tools to forecast future results that help in gain good return on capital. There are
identifying various problems that can sort out through accounting systems and tools use to
identify these problems.
TASK 2
P3) Calculation of costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs
Different types of techniques
Cost: It indicates the large amount of money that is produced company interest for the
development of goods and services. This is important in all companies because it helps to
determine the costs of production operations.
Absorption technique: It is a costing approach that assigned fixed and variable costs to
the cost center whereby consumption patterns are compensated for. It means the reasonable
expenses can be recovered from quality of service sale rates. It helps to measure the exact cost of
company operations to improve competitiveness. Such as, Prime furniture select this method to
calculate the both quarter net profit after that reconcile them effectively (Grabner and Moers,
2013).
Quarter 1
Particulars Amount
Sales 66000
Less: Cost of sales
Production Cost (78000* 50700
1

0.65)
Semi variable (78000 *
0.20) 15600
Total variable cost 66300
Less: Closing stock 10200 56100
Gross Profit 9900
Less: Expenses 400
9500
Selling and distribution as
fixed 5200
Net Profit 4300
Interpretation: As per the calculation it is getting that from the absorption costing get result of
4300 net profit and 9900 gross profit.
Quarter 2
Particular Amount
Sales 74000
Less: Cost of sales
Opening stock 10200
COGS (66000*.20) 13200
Production cost
(66000*0.20) 42900
Total variable cost 66300
Less: Closing stock 3400 62900
Gross Profit 11100
Less: Selling expenses 2800
8300
Fixed expenses 5200
2