Management Accounting and Costing Method Assignment

Management Accounting
Part 2

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Calculation of cost by using various methods.......................................................................1
1.2 Range of management accounting techniques.......................................................................3
1.3: Analysis of data collected from income statement...............................................................3
TASK 2............................................................................................................................................4
2.1 Advantage and disadvantage of using planning tools............................................................4
2.2 Analysis of expenses of July and August.............................................................................5
2.3: Objective and cash budget....................................................................................................6
TASK 3............................................................................................................................................8
3.1: Use of accounting system to determine financial issues.......................................................8
3.2: Evaluating financial issues faced by UCK furniture............................................................9
3.3: Analysis of planning tools that is used in management accounting.....................................9
CONCUSION .................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In present era, every company wants their operation and system to be manage in
appropriate manner. So management accounting is defined as one of the valuable aspect of
company that help internal manager to analyse the financial performance and improve them in
required (Amoako, 2013).
In this report, costing method are discussed to calculate the net profit for company. There
are number of tools that help to overcome different issues. Report shows their advantage and
disadvantage and how they support in budgetary process. Management accounting system also
helpful in resolving different financial problem and comparison of two com0pnaies are discussed
in this report.
TASK 1
1.1 Calculation of cost by using various methods.
In recent management tools and techniques has been updated that help to calculate the net
profit by analysing the cost for a given period of time. In general cost is defined as the amount
paid by buyer of to seller in order to purchase a particular product. Thus cost are involved by
companies in their production and other process to make their operation work effectively. So
costing is consider to be a systematic procedure of calculating actual and complete expenses or
cost incurred by UCK furniture in producing furniture with the present cost of capital. It is
observed that cost is either directly and indirectly related to the production process that support
in completing a task (Brewer, Sorensen and Stout, 2014). So there are different types of costing
method that are linked with UCK furniture business activities. Some of these are discussed
below:
Absorption costing: This type of cost are applicable on manufacturing a product for
company over a period of time. Absorption costing includes fixed and variable cost as it is
knows as full costing method of calculation profit. This method is consider to be one of the most
effective method as it help in making crucial decision. But at the same time there are certain
limitation to absorption costing method as it affect the net profitability of company and decrease
its market position (Absorption costing, 2018.).
Marginal costing: This is related to calculation of cost incurred by companies on
producing an additional unit of output. It consider only variable factor while calculating

complete contribution per unit at a particular time and this is knows and period costing method.
This is taken into account for making effective future decision and increasing the profitability of
business.
NET INCOME AS PER ABSORPTION COSTING:
January February
Sales (35per units) 315000 402500
Opening Stock 0 54000
Direct material (12*11000) 132000
114000
(12*9500)
Direct labour (8*11000) 88000
76000
(8*9500)
Overheads (5*11000) 55000
47500
(5*9500)
Overhead absorbed (2*11000) 22000
19000
(2*9500)
Under / Over charged -2000 -1000
Closing stock (2000*27) -54000 -
Total cost of production 241000 309500
Gross profit : 74000 91000
Fixed and variable cost:
variable sales overheads (1 per unit) - 9000 - 11500
Fixed selling cost -2000 - 2000
Total costs - 11000 - 13500
NET INCOME AS PER ABSORPTION
COSTING: 63000 77500
Computing net profit by using marginal costing (January)
Particular Amount Total
Sales (35*9000) 315000
Variable cost: