Management Accounting: A Comprehensive Guide for General Engineers Ltd

Accounting
1

Contents
Introduction:..........................................................................................................................3
a) Management accounting and types of management accounting (P1, P2)......4
b) Cost based pricing (P3):..........................................................................................5
c) Marginal costing as a management technique and when it should be
avoided (P3):........................................................................................................................6
d) Budgeting and its advantage and disadvantage (P4):........................................8
e) Use of benchmark and key performance to respond the financial problem (P5)
..............................................................................................................................................10
f) Benefits of management accounting system (M1):...............................................11
g) Strategic planning tools by management (M3):.................................................12
h) Characteristics of good governance and effects on management accounting
(M4): 13
Conclusion:.........................................................................................................................14
References:........................................................................................................................15
2

Introduction:
As a management consultant appointed by the company General Engineers Ltd, the
company has to fulfil the management accounting requirements. In this report there
is an explanation of the management accounting that the manager advise the firm to
comply with the provisions of the financial data for the better development of the
company. In this report the manger has also explained about the types of
management accounting and also explained the cost based pricing strategy.
Marginal cost is the additional cost of per unit of volume or output. Budget is the plan
data for the future and also explained its advantages and disadvantages. Overall we
have explained the benefits of management accounting and strategy planning tools
and budgetary targets.
3

a) Management accounting and types of management accounting (P1, P2)
Management accounting is the process of achieving the goals of the business by
preparing the financial report of the company, records and accounts of the business.
The management accounting is basically concerned with the classification,
interpretation, accumulation, analysing of the data or the financial information to fulfil
the objectives of the organisation.
Types of management accounting system:
1 There is different types of management accounting which is based on financial
information such as ratio analysis, trend analysis, financial statement through
comparative statement, fund flow, return on capital employed techniques.
2 Another important accounting is cost based accounting which also includes the
marginal costing, standard costing, absorption costing, and analysis of cost variance,
direct costing and differential coasting.
3 Management accounting is also based on future information such as budget in
which we make plan for future analysis. It also includes the method such as
budgetary control which means to analysis the budget and revenue variance. It also
includes the forecasting of the business and evaluation of the project appraisal.
4 There is different type of tools and techniques which is used in managerial
accounting for the proper decision making and to achieve the goals of the business
such as financial planning, reporting of the manager, integrated accounting,
revaluation accounting, decision making accounting, MIS, historical cost accounting,
etc.
5 The reports available to manager in accounting system is reports related to
inventory and manufacturing, the reports which shows the expenses of a project
such as job cost reports, the reports which manage the cash flow of the company
when we give the credit to customers, etc.
4