Report Imda Tech (UK) - Management Accounting

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
a) Functions of management accounting ....................................................................................3
b) Types of management accounting system..............................................................................5
TASK 2............................................................................................................................................7
Calculating net profit through adoption of marginal as well as absorption costing tools...........7
TASK 3............................................................................................................................................9
(a) Different types of budget and their advantages and disadvantages.......................................9
(b) Process for preparing budget ..............................................................................................10
(c) Pricing strategies..................................................................................................................11
TASK 4..........................................................................................................................................13
a) Balance score card approach.................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
It is significant for every firm to recording the transactions that are taking place on daily
basis. Therefore in this regard firm needs to carry out concept of management accounting and
offer financial information to several stakeholders (Otley and Emmanuel, 2013). The
organization makes appointment of accountant for recording the financial transactions in order to
record the information within time. However this proves to be effective and leads to directing as
well as controlling the business actions. In the present study management accounting has been
discussed in context of Imda Tech (UK). The report makes analysis of the income statement that
is devised based upon the marginal as well as absorption costing tool.
TASK 1
a) Functions of management accounting
i) Definition of management accounting and distinguish management and financial
accounting
Management accounting is the concept that helps in recording all the financial
information upon which management of firm aims to take crucial decision. Here, top
management analyses, measures and interpret the information related to finance in regard to
obtain significant data (Fullerton, Kennedy and Widener, 2013). Here, manager of Imda Tech
Limited maintain proper management accounting in regard to record daily transactions occurred
within business. Therefore, its main purpose is to prepare accounts and thus identify the areas
where firm is lacking so that crucial decisions could be taken in terms of improving the
performance of firm in market. With the help of management accounting it aids business to look
forwards and attain future goals. Also, it is considered as the crucial part within firm and finance
manager requires to carry out deep study so that they could identify the loopholes and make
appropriate decision in relation to enhance financial performance of firm in market. Imda faces
tough competition in market therefore firm aims to prepare good budget and thus make financial
decisions in relation to attain desired success (Bhimani and et. al., 2013). Management
accounting involves income and cost incurred within business in an accounting year. It also helps
in increasing the sales volume and income of Imda and make proper financial decision in terms
of achieving success. Managers of cited firm requires to allocate resources using Zero based
Budgeting and thus make assumptions regarding set targets could be attained. Below described is
the difference between financial and management accounting which are as follows-

Financial Accounting Management Accounting
Financial accounting is prepared in terms of
recording the transactions and tracks the
previous performance of firm. Through
preparing the financial account, manager of
Imda requires to use proper accounting
standards and guidelines so that transactions
could be recorded appropriately (Chan, Wang
and Raffoni, 2014).
On the other hand, management accounting
helps in recording the information related to
business and help managers to take crucial
decision in terms of carrying out effective
functioning (Dobroszek and Szychta, 2015).
Financial accounting requires to record all the
type of information i.e. financial or non
financial.
Further, accountants records only financial
information within management accounting.
It possesses the main objective of preparing
financial reports and thus it could be used by
external stakeholders and make crucial
investment decisions (Schaltegger, Gibassier and
Zvezdov, 2013).
While, preparing management accounting helps
business to provide accounting related
information to internal stakeholders such as
employees so that they make crucial decision
(Cleary, 2015).
Financial accounting is being prepared through
using historic data obtained in past.
Management accounting helps in recording the
data which is useful for firm to be used in
future and make the decisions accordingly
(Fayard and et. al., 2014).
Accountants recording financial information
needs to undertake effective accounting
standards (Gibassier, 2017).
On the other hand, management accounting
undertakes management information system
which helps them to execute the information
and attain success.
With the help of financial accounting it assists
in generating the reports that are related to
prepare appropriate financial reports.
While, in order to prepare management
accounting it aids in recording accurate and
reliable information so that performance could
be improved of Imda (Klychova, Faskhutdinova
and Sadrieva, 2014).
Financial accounting helps in preparing annual Management report aims to generate monthly