Management Accounting: Techniques and Tools for Financial Problem Solving

Management Accounting
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Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
(covered in ppt).......................................................................................................................3
TASK 2............................................................................................................................................3
P3 Calculation of cost using appropriate cost analysis techniques........................................3
TASK 3............................................................................................................................................5
P4 Management accounting tools...........................................................................................5
TASK 4............................................................................................................................................7
P5 Different MAS to solve financial problems......................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Management Accounting is a form of accounting whose users are only internal
management of the company. Information extracted by these accounts are used for strategic
decision making (Ahmad, 2017). It includes both financial as well as non financial factors into
its consideration. It considers that as much as financial information is important, non financial
information also has a huge affect on business operations which is not recognised anywhere else.
Several techniques are applied on a range of information and the best alternative is observed.
These information are then developed in reports which help management in identifying course of
financial problems and their possible solutions. Corrective action plans are then developed and
executed.
This report is prepared in context of London based furniture company, Prime Furnitures.
Initially, management accounting and its importance is discussed in the decision making process.
Several techniques and planning tools used used by management such as budgets, pricing
strategies, cost accounting, etc. are explained for a brief understanding. Financial governance and
usage of accounting techniques in maintaining financial health of the organisation are also
highlighted.
TASK 1
(covered in ppt)
TASK 2
P3 Calculation of cost using appropriate cost analysis techniques
Cost is defined as monetary value that an organization spends to create or produce some
product or service. It is calculated sans profit mark up. Cost can be classified into various types
such direct and indirect cost, variable and fixed cost, controllable and uncontrollable costs,
operating and opportunity cost, sunk cost, etc.
Cost analysis refers to determination of relationship between cost and output. In other
words, it is determining money value of input factors such material, labor, etc in deciding
optimum level of production (Rozhkova, Blinova and Rozhkova, 2017). Method of determining
impact of varying level of costs and volume on operational profit of the company is called cost-
volume-profit analysis. Companies prepare cost budget which is used to find variance in actual
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