Management Accounting : Assignment (Solved)

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Management Accounting
Table of ContentsINTRODUCTION......................................................................................................................2a). Management accounting and the essential requirements of management accounting system....................................................................................................................................................3B). Presenting financial information:.........................................................................................7M1 Benefits of management systems under the TECH (UK) LTD...........................................9TASK 2.......................................................................................................................................9Calculation of net profit under marginal and absorption costing:-...........................................9M2. Application of techniques:................................................................................................13D2. Data interpretation:............................................................................................................13TASK 3.....................................................................................................................................13A). Budget and its advantage and disadvantage.......................................................................13b).Different types of common costing systems which can be used for budgetary control:.....14c) Importance of budget as a method for planning and controlling purpose:..........................15M3. Use of various planning tools for making budget:...........................................................15M4 How financial tools are used for evaluating the financial problems:................................15TASK 4.....................................................................................................................................16D3 How planning tools for accounting respond for solving financial problems:....................16CONCLUSION........................................................................................................................16REFERENCES.........................................................................................................................18·
·INTRODUCTIONAccording to this report a system of Accounting for management, which providenecessary and important information to the management for discharge of its function. Thisfunction includes planning, directing, controlling and decision making it assist managementto carry out these function more effectively and efficiently in a systematic manner forcompany in brief. Under this report, TECH (UK) Ltd. Produce a special Headphone and itconsider that, this accounting for management introduce betterment in communicationbetween various department about level of acknowledgement about which it is available toall departments for the improvement in discussion (Wickramasinghe and Alawattage, 2012).in this accounting report company will create the management accounting reports for makingdecision in a manner that is appropriate for company. There are various type of andtechniques which are use to evaluate overall performance of company to achieve businessgoals in efficient and effective way.TASK 1la). Management accounting and the essential requirements of management accountingsystemThis is a process of determination, intimation and demonstrate of information aboutaccounting that is incurred with the method of financial accounting method and costaccounting method (Lavia López and Hiebl, 2014). Management accounting is use inregulating policies of company and making decision and also provides appropriate discussionabout operation of company to the manager and accountant of organization.Useful and essential factor of management accounting system are:Financial analysis and planningInvestment decisionAllocation and management of financial resourcesProtecting managementFinancial and structure decision for raising goals in favourable terms1. Differences between management accounting and financial accounting:-
No.BaseManagement accountingFinancial accountingobjectiveManagement accounting isa system of giving proper knowledge about the execution of its function for managementIt isrecording of transaction and event or evaluate business results and financial position inappropriate manner.Set of rules and regulationThere is no any Application of accountingprinciples and convention are imply in this accounting system (Christ, 2014).This system isconcerned with a various type of rules and regulations or prescribed manner as applicable tothe organizationPeriodReports and financial statement for management accounting can beprepared in intervals or periodically throughout the yearIn financial accounting accounts aremade at end of financial yearResourcesManagement accounting use financing data as wellas non-financial data both for the purpose of overall performance of companyFinancialaccounting use the financial data for preparation of final accounts.CriteriaIn thisaccounting system criteria of allocation is separate for every departmentCriteria forallocation is only the organization as complete for accounting.2. Importance of management accounting information as a decision- making techniquefor the department managers which are given below:-Activity based costing:- (ABC)is an accounting function that identifies and assimilatecosts to overhead activity and assimilate those costs to product. An activity based costingsystem recognises the relation among costs, overhead activity and manufacturing producewith this relationship, it assigns indirect cost to product less arbitrarily than traditionalmethods (Moser, 2012). (ABC) helps to reduce overhead cost which is targeted by thecompany and also this costing system is used in targeting costing, process costing, productline profitability analysis customer, profitability analysis in the company. Activity basedcosting enhance the costing process in three ways. First, it expands the number of cost poolsthat can be used to be assemble overhead cost. It also create new bases for assigningoverhead cost to such that cost allocated based on the activities that generate cost instead ofon volumes measure, such as machine hours or direct labour cost .Relevant costing analysis:-Relevant costing is analysis of managerial accounting term thatrefer avoidable costs that are incurred when making business decision.It is useful in shortterm cause any decision should be approached by using relevant costing principles. Relevantcost for company means that cost or charges which do not reflect additional cash spending(such as depreciation and notional cost) should be ignore for the purpose of decision making.Relevant cost are also incremental cost for the company which increase in cost and revenues.
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