Management Accounting Assignment - AB limited

Added on - 22 Nov 2020

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1CONCLUSION................................................................................................................................3REFERENCES...............................................................................................................................4
INTRODUCTIONManagement accounting is refers to method of collecting financial and non-financialinformation and preparing reports on the basis of this information. These reports assists tomanagement in taking decisions on daily basis. AB limited has been taken to explain concepts ofmanagement accounting which is formed ten years ago. It is involved in providing businessequipment solutions to local businesses.In this report, analysis of balance scorecard, standard costing, benchmarking andfinancial reports have been done for performance evaluation.MAIN BODYStandard costing(a) It is a technique in which actual costs are compared with standard or estimated coststo find variances and then corrective actions are taken to reduce them. Uses of standard costingfor AB limited are:It helps in utilising budgetary control system in business operations.Standard costing assists in evaluation of performance as well as motivating employees forimproving it (Standard costing, 2018).Various decisions are taken on the basis of this system such as price fixation, decisions ofmake-or-buy etc.Improving cost control systemSimplifying stock valuation techniquesIt is flexible in nature as it is easily adjust with changing conditionsStandards are need to be reviewed periodically because standards are established bytaking reference from past performance (Parker, 2012). Standards are close approximation ofactual costs. Also variances will be accurate if standards will be accurate. Standards can be alsobe changed if needed to get better results and to change them, review is needed.(b) AB limited is engaged in providing solutions and services to other businesses. Butnow it also manufacturing business equipments. According to this context, standard costing canbe applied to both service and manufacturing business. In a manufacturing business it is moreuseful as compared to service business. This is because standard costs is generally related tomanufacturer's budget of direct material, direct labour and manufacturing overhead costs1
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