Management Accounting and Costing Methods

Management
Accounting
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1) Management accounting and different essential requirements of its systems.......................3
P2) Methods used for management accounting reporting...........................................................5
TASK 2............................................................................................................................................7
P3) Costing methods and differences between marginal and absorption pricing........................7
TASK 3..........................................................................................................................................11
P4) Characteristics and drawbacks of budgetary control system...............................................11
P5) Different management accounting to solve out financial problems....................................12
CONCLUSION..............................................................................................................................12
REFERENCE.................................................................................................................................13
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INTRODUCTION
Management accounting is provision of decision making process to carrying on business
organization effectively. It includes analysis of entity's performance and further preparing
strategies for implementation and proper management of activities. The present report is based
on understanding different management accounting tools of Big Swing. It is small scale dance
class and event organizer of UK. Several kinds of management accounting tools and methods are
to be understood. In this regard, costing methods for price determination and preparing income
statement is to be expressed. Moreover, through this assignment, learners are able to understand
critical evaluation of budgetary control system to forecasting and decision making to implement
action plans efficiently. Hence, significance of management accounting systems are to be
presented through this study.
TASK 1
P1) Management accounting and different essential requirements of its systems
It is composition of entire accounting related to business operations including costing,
budgeting and ratio analysis to present organizational structure and remains helpful for
enlargement of small business business unit. Under this system, management accountant of
organization analyzes entire business activities and further prepares budget through forecasting
and decision making tool (Amdee and et.al., 2014). Therefore, adequate management of
organization is gained including financial, inventory and performance bases. In this regard,
several tools and techniques are used for expansion of entity as well considered as decision
making process for further years. However, by applying management accounting components
balance of production and distribution of products as well efficiency related to enhancing service
qualities is achieved. In addition to this, positive environment of firm is created for getting
contribution of employees in performing their job effectively. In this process, large number of
ideas are generated for expansion of entity and improving service qualities of organization.
However, risks occur at workplace also get reduced by preparing systematic planning procedure.
It is interrelated with cost effectiveness and effectiveness of small business enterprise to achieve
positive attitude of customers towards services provided by Big Swing Ltd. Hence, management
accounting plays crucial role to gain effective fund allocation and systematic supplement of
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services to meet customer satisfaction (Carlton and et.al., 2015). Along with this, optimum
utilization of resources and fund is obtained through management accounting to gain
effectiveness of entity and its good position in market that impacts on business and competitive
strategies of firm at high level.
Thus, management accounting is crucial for Big Swing Ltd to carrying on enterprise
value in market as well proper management of entire business operations. It impacts on market
position and strategies of business organization to make place in market for long term
sustainability. In this process, management accountant of small business unit makes decision for
further business operations and also entity's implementation can be achieved. It is interrelated
with performance of organization and employees regarding coordination for working in group to
create positive environment of firm. In addition to this, management accounting is beneficial for
keeping inventories safe and preparing strategies for its effectiveness (Chenhall and Moers,
2015). Therefore, production and distribution of goods of entity can be effective for long term
sustainability. It influences costing and different financial tools such as income statement, cost
analysis, budgeting and identifying various ratio related to profitability and liquidity position of
firm. Apart from this, management accounting is required for enlargement of small business unit
and increasing efficiency of entity at large scale. Thus, management accounting is
interdisciplinary approach that includes different systems therefore their requirements can be
described as below:- Costing:- It includes different costing for manufacturing, producing and distributing
products such as job order, processing and throughput methods. In this process, job order
involves expenses incurred for manufacturing of products including purchasing raw
materials, labor cost and so on. Furthermore, processing costing covers pricing related to
production and distribution of goods that impacts on price determination to meet
customer expectations effectively. It including expenditure spent for launching products
in market. Moreover, throughput costing includes price determination for advertisement
and promoting products that affects competitive strategy of small business unit for long
term effectiveness of organization efficiently (Chhatwal and et.al., 2015). Therefore,
management accounting tool as costing is useful for adequate price determination to
maintain market value of entity effectively.
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