Management Accounting: A Comprehensive Analysis of Costing, Planning, and Financial Problem Solving

Management accounting
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Part A...............................................................................................................................................4
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs...........................................................................4
Part B...............................................................................................................................................7
P1 Explain management accounting and give the essential requirements for different types of
management accounting systems.................................................................................................7
P2 Explain different methods used for management accounting reporting.................................8
Task 2.............................................................................................................................................11
P4 Explain the advantages and disadvantages of different types of planning tools that can be
used for budgetary control.........................................................................................................11
P5 Compare how organizations such as yours should adopt management accounting systems
to respond to financial problems................................................................................................13
Conclusion.....................................................................................................................................15
Bibliography..................................................................................................................................16
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Introduction
Management accounting is that technique which is needed in all types of organizations as by the
help of them it will be possible to ascertain all the required information. That will be taken into
consideration by the managers and other officials on the decision making process. In this
assignment, there will be a discussion in respect of the manner in which cost is to be calculated
and all the systems which are to be taken into account so that data which is needed is acquired.
With the help of them, their company will be able to make all the reports and all of this will be
performed in the first task of this assignment. Then in later part, all the planning will be made
with the use of the tools which are present such as budgets and in this section the techniques to
be used for resolving of all the financial problems will also be taken into consideration.
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Task 1
Part A
P3 Calculate costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs.
Income statements are required to be prepared in order to identify the profits which are made and
for this, the methods which are present include marginal and absorption costing which is
discussed below.
Absorption costing: there is the need to use various types of cost in the production of the unit
and on this, they are classified as direct and indirect and also as the variable and fixed cost.
While the calculation of the total cost it is required that they are taken into account in a proper
manner. This is the method which is also known as the full cost method as in this all the cots
which are incurred will be included in the total cost (Aurora, 2013). There are various methods
which can be used for the allocation of the cost in an appropriate amount and one of them is
activity-based costing and in this, all the distribution is made by taking activities as the base and
in this cost pools and drivers are identified. There will also be an allocation of the fixed cost
which has been made in the particular period.
Marginal costing: There is certain cost which will be changing in direct proportion to the
change in the volume and they all are known as a variable cost which is to be taken into
consideration in the marginal costing. In this, they will be used and by that, the contribution
which has been earned is ascertained which then helps in calculation of the final amount which
has been earned by the business. Under this, the apportionment of fixed expenses is not made.
In the making of these reports there is the need for the various types of information and also the
methods are to be used so that correct amount is included in the cost sheet. The one tool which
can be used is budget in which standards of all the costs are determined. By the use of them the
best cost will be determined and then they will have to be compared with the actuals so that the
deviations which are present can be calculated and for this variance analysis will have to be used.
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