Management Accounting Assignment ( MA )

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A). Explanation of management accounting and its essential requirements:.........................1
B). Presenting financial information:.....................................................................................3
M1...........................................................................................................................................4
D1...........................................................................................................................................4
TASK 2............................................................................................................................................4
M2...........................................................................................................................................6
D2...........................................................................................................................................7
TASK 3............................................................................................................................................7
P4: Advantages and disadvantages of planning tools............................................................7
M3...........................................................................................................................................8
D3...........................................................................................................................................8
TASK 4............................................................................................................................................9
P5. Balance score card approach:...........................................................................................9
M4.........................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management is the major branch in any organisation as this helps the firm to make their
process sustainable so that the firm can attain their pre-set targets effectively. Management
accounting is the major task which is used by the finance in tech company in order to make their
operations so smooth and transparent (Parker, 2012). Under this report, various management
accounting tools are discussed, reporting methods are also determined, various types of
budgetary tools are used within the firm so that the management can get the competitive
advantages.
TASK 1
A). Explanation of management accounting and its essential requirements:
1. Distinguishing Management accounting from Financial Accounting:
Management accounting is the tool that are used by the finance in tech in order to
provides the financial and non-financial information to the managers so that they can make
decisions accordingly. Various business decisions enables the firm to be better equipped in their
management and control functions. Management accounting system is mainly forward looking
rather than based on the historical and this is framed after keeping in mind the managers of the
firm. This system is confidential and applied by the management, rather than publicly reported.
Financial accounting and management accounting is the part of accounting process as these are
the two different branches. Financial accounting emphasis on providing the fair view of the
financial position on the firm to various stakeholders so that the they can make their investment
related strategies. While on the other hand, management accounting is the one which main
purpose to provides qualitative and quantitative information to the managers of the firm which
would assist the firm to take various strategies and also able to maximize the profits.
2. Importance of management accounting information as a decision making tools for
department managers:
There are so many decisions needed to take by the managers in a day. MA information
renders the data driven input to these decisions, that could enhance decision making over the
long term. Management accounting is used by the company's manager in order to have various
under-mentioned analysis:
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Relevant cost analysis: MA reports are implemented by the firm to identify the selling
process (Qian, Burritt and Monroe, 2011). To evaluate such decisions, management accountant
assess the costs which differentiate between advertising alternatives for each product, avoiding
common costs. Such process is known as relevant cost analysis and is taught in basic managerial
accounting courses.
Make or Buy Analysis: The main aim of such MA information is to renders information
implemented in the production. With the help of this analysis, manager will get to know about
whether they need to produce the product or to buy form the outsiders. By analysing,
management can identify the choice that are more profitable for the firm.
Activity- based costing method: This is the method that company has identified about
the goods that are required to sell, business requires to identify about whom they can sell the
products. With the help of ABC techniques, management could identify the activities which are
needed to be produced and service a product line.
These are the above-mentioned things that are required to be done by the management in
order to get the sustainability.
3. Cost accounting system:
It is the accounting system which is used by the firm in order to identify the cost of
production and also makes efforts in order to lower the price of the products by eliminating
waste from the cost of production. There are basically three methods that are used by the firm I.e
Actual costing, Normal costing and the Standard costing.
 Actual costing is recording of products costs after considering following factors:Actual
cost of materials, actual cost of labour, actual overhead costs incurred. Henceforth, the
main point under an actual costing system is that this only implement actual costs
covered and allocation bases experienced. This does not form any kind of budgeted
amount. This is the most convenient method which does not require pre-plan of the
standard cost.
 Normal costing: It is the one which is used by the manager to identify the cost of a
product. This covers: Actual cost of materials, labour and standard overheads. But there
is difference in the actual and standard overheads cost. By this, firm can either charge the
difference to cost of sales or prorate difference between COGS and inventory.
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