Management Accounting and Planning Tools for Financial Success

Management
Accounting

Table of Contents
Table of Contents
INTRODUCTION...........................................................................................................................2
MAINBODY....................................................................................................................................3
TASK 2............................................................................................................................................3
P.3. Calculate costs using appropriate technique of cost analysis to prepare an income
statement using marginal and absorption cost?......................................................................3
M.2. Apply management accounting techniques also generate appropriate documents relating
to financial reporting?.............................................................................................................5
D.2.Produce reports of finance and interpret data for wide range of business activities?.....6
P.4.Explain different advantage as well as disadvantage of types of planning tools used e in
budgetary control?..................................................................................................................6
M.3. Different planning tool uses and their application to serve the purpose of budget prepare
and forecast?...........................................................................................................................7
D.3. Explain how planning tools used to solve financial issue to lead firm towards sustainable
success?..................................................................................................................................7
P5 Comparison of the way in which organisations are adapting management accounting
systems...................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Cost accounting is the process of maintaining records of all important internal
information of enterprise so it becomes easy to take strategic decision for the purpose of
betterment of company. With the help of such technique it become easy to outsider like creditors,
merchant bankers, debenture holders, QIB's, shareholders to understand whether company is
performing in profitable manner or not. As it tends to reflect true and fair position of business in
context to financial position. As it reflects actual position of business so it helps investor to take
decisions whether to deploy their money in the relevant project tor not. The organisation that was
selected in this project are Prime Furniture Ltd, it has large variety of furniture with latest,
modular designs. The topics which are discussed in this assignment are cost and management
accounting and important requirement of these system, its reporting system, use of various
costing methods to ascertain cost, merits & demerits of different tools of planning used in
budgetary control techniques and which management system is use to solve financial issue that
exist in business (Alexander, 2019)
MAINBODY
TASK 2
P.3. Calculate costs using appropriate technique of cost analysis to prepare an income statement
using marginal and absorption cost?
Fixed and variable costs- variable cost are those cost which varies as per change in the
quantity whereas fixed cost remain constant even there is alteration in number of unit produced.
Direct and indirect costs- Direct cost are those which are directly tied with production
on the other hand indirect cost are those that are not directly accountable to cost. Prime furniture
incurs both of them.
Product and period costs- Product costs are type of costing totally linked with
manufacturing item. Period costs are associated with a particular period of accounting.
Cost analysis- On apportionment basis costing of product is to be analysed. It is
performing by to calculate actual cost price of product.

Cost-volume-profit analysis- Cost-volume-profit analysis is commonly associated with
analysis of break-even point in a company. It is a point where it does not earn profit nor does it
incurs a loss. Prime furniture can use it to find out break-even point.
Flexible budgeting- it is such type of budget which is adjusted as per the changes in the
production volume. As this budget is contrast to static budget.
Cost variances- It’s another name is budget variance. The formula of such variance is
difference amount of actual & budgeted cost.
Absorption costing- The direct as well as indirect cost like insurance, rent, labour. Fir
external report it is most suitable method of costing.
Marginal costing- It is a method in which not only variable and fixed cost are included
or charge but it also involves overhead costing.