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(Doc) Management Accounting - Assignment

   

Added on  2020-09-17

13 Pages2925 Words39 Views
MANAGEMENTACCOUNTING (PART 2)

Table of ContentsINTRODUCTION...........................................................................................................................3PROJECT 2......................................................................................................................................3TASK 1............................................................................................................................................31.1 Few costing methods considered in management accounting..............................................31.2 Application of various techniques of management accounting............................................61.3 Advantages and disadvantages of Marginal and Absorption costing...................................6TASK 2............................................................................................................................................72.1 Advantages and disadvantages of different type of planning tools......................................72.2 Estimation of expenses if change in number of hours..........................................................82.3 Preparation of cash budget....................................................................................................9TASK 3............................................................................................................................................93.1 Enterprises are adapting management accounting systems to respond financial problems..93.2 Contribution of management accounting to improve financial performance.....................103.3 Planning tools for accounting respond to solve financial issues.........................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONManagement accounting can be defined as a procedure which is being carried out incompanies so as to efficiently manage all the finances of the company. It is very important forevery company to implement these kinds of processes inside the company so that their work canbe effectively managed and company can find various options to increase their funds as well(Kotas, 2014). The company referred in this report is UCK Furniture who is starting a newtraining course in order to train their employees. This part of the project will discuss aboutvarious techniques of analysing the cost implemented by the company, advantages anddisadvantages of various types of planning tools and along with this various ways of adapting themanagement accounting system in their financial statements. PROJECT 2TASK 11.1 Few costing methods considered in management accountingIt is very important for every company to analyse their cost time to time so that they cancome to know that whether they are selling their products at correct price or not. It is really needto be taken care of while manufacturing the products and services. So companies have to choosea technique of management accounting while preparing their income statements. The maintechniques involved in this type of accounting is Marginal costing and absorption costing. Boththese are very effective but the latter one is more used. These methods are discussed as under:-Marginal Costing – In this type of costing , cost of manufacturing and productionprocess is being used. Here both fixed as well as variable cost is being used together so asto calculate the cost correctly. This technique will be used to calculate the cost ofproducts and services by taking in concern direct cost and overheads as well (Laudon andLaudon, 2016). Absorption Costing – It is called as the cost of one extra unit of production and it isbeing used by companies like UCK Furniture. If the company will charge extra per unitof the product then this will be very effective for the company as they will be able tomanufacture the units more. Comparison of Marginal Costing and Absorption Costing is done as follows:-

Absorption costingMarginal costingHere, managers at UCK will measure their costthrough gross cost for proper production oftime.In this, cost is being calculated by consideringthe cost of margins during the process ofmanufacturing.Through this they can reduce their per unit incost of products they are selling to theircustomers.Since extra units is involved here so there is nochanges in per unit cost.It is having a link with long term planning andcosting. Here, short term planning is done in order toachieve the goals and objectives.It is considered effective for decision-makingpurposes.This method is mostly used by the companieswhile taking any important decisions. Calculation as per Absorption costing.Working notes:Absorption costing Working 1: Calculate full production cost Direct material £6Direct labour £5Variable cost £2Fixed cost £3Total £16Working 2: calculate value of inventory and productionOpening inventory Production Closing inventory0 700*19 = £13300 100*16 = £1600 Working 3: under/ over absorbed fixed production overheadActual fixed production: £2100Fixed overhead: £2000Total £100(over absorbed)Administration Cost: In this budgeted cost is £800 and Actual cost is £700Selling cost: In this budgeted cost is £400 and Actual cost is £600

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