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Management Accounting Benefits and Applications

   

Added on  2020-06-04

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Management Accounting
Management Accounting Benefits and Applications_1

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................11. Preparation of cost card......................................................................................................12. Calculation of selling price.................................................................................................23. Preparation of various budgets...........................................................................................24. Variance analysis and its importance.................................................................................45. Advantages of management accounting.............................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
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INTRODUCTIONIn the business, there are various aspects which are to be taken into consideration and it isrequired that management accounting shall be used to deal with them (Banerjee, 2010). In thisreport, several elements of it are discussed. Cost card is made and also, budget is prepared.Further, procedure that is involved in variance analysis and how it helps in controlling of financeare explained here as well. TASK1. Preparation of cost cardIn the production of any product there are various costs which are incurred and they allwill be considered in making of cost card. By the help of this total cost in respect of anyparticular product will be determined. The main purpose for which it is prepared is to determinethe cost involved in any item and also this can be used for the variance analysis.Cost card per unit:Particular AmountDirect material£3Direct labour£5Variable overheads£2.5Fixed overheads£5Total cost per unit£15.5It can be seen that in the total cost there are various elements which are involved and theyare as follows:Direct material: It is the amount that is spend on raw material which is used in theproduct and in given case it is determined to be £3.Direct Labour: For making of any item workers will be required and in return of thatpayment is to be made to them which is known as labour cost which is determined to be£5.Variable overheads: In addition to direct expenses there are some indirect expenses alsowhich are incurred (Giovannoni, Maraghini and Riccaboni, 2011). The amount whichwill be deviating with the change in total units is known as variable part and it affectsprofit earned by company.1
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