Management Accounting: Tools and Techniques for Financial Problem Solving

Management Accounting
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Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1...........................................................................................................................................4
P1Brief description regarding the term management accounting and needs of various types of
management accounting system.............................................................................................4
P2Explanation regarding use of different types of reports use in management accounting
approach.................................................................................................................................4
M1Benefits of management accounting system....................................................................4
D1Evaluation of benefits of integration of management accounting reports with systems.. .4
TASK 2............................................................................................................................................4
P3 Preparation of income statement by using marginal as well as absorption costing method..4
M2 Use of management accounting technique for the purpose of formulating financial reports.
................................................................................................................................................8
D2 Explanation of reverence of financial reports for interpretation of data..........................8
TASK 3............................................................................................................................................8
P4 Brief explanation regarding benefits and drawbacks of different types of planing tools. 8
M3 Brief description regarding use of planning tools for forecasting budgets....................11
TASK 4..........................................................................................................................................11
P5 Brief description regarding tools of management accounting apply for solving financial
problems...............................................................................................................................11
M4 Uses of management accounting tools for attaining organization success solving issue of
finance..................................................................................................................................13
D3 Evaluation of how planning tools use in order to resolve financial problem for leading
organization success.............................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Management accounting, the term define as systematic procedure which help in
collecting, analysing, measuring and representing accounting information in such a way which
useful for take essential business decision. In order to understand relevance of management
accounting Prime Furniture has been taken. It is medium size organization which operate
business in UK. This report define uses of different types of management accounting system for
the purpose of systematically run business operations. As well as use of costing technique for
determining value of profit. It is also showcase how different types of planning tools use for
formulate budget and useful for solve financial problem by using tools of management
accounting.
TASK 1
P1Brief description regarding the term management accounting and needs of various types of
management accounting system.
P2Explanation regarding use of different types of reports use in management accounting
approach.
M1Benefits of management accounting system.
D1Evaluation of benefits of integration of management accounting reports with systems.
Covered in PPT
TASK 2
P3 Preparation of income statement by using marginal as well as absorption costing method.
Costing: Procedure of determining cost is known as costing. There are various types of
method in management accounting technique which manager use for the purpose of evaluating
and measuring cost. Organizations on the basis of their suitability select or choose techniques
which beneficial for calculating cost of each business activity. Following are define below
Marginal costing: This is consider as one of the most useful and suitable technique
which manager apply for calculating marginal cost. In marginal costing only variable cost are
consider for the purpose of evaluating cost of each business activity (Christensen. and Himme,
2017). Thus it is also known as variable cost. The main purpose of using marginal cost is to
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recognize the impact of increase production capacity of organization profit and affect of each
business unit on organization.
Marginal costing statement help in providing base for evaluating relationship between cost and
profit as well as useful in analysing cost benefit analysis ratio.
From this calculation it evaluate that Prime Furniture able to generate 4300 profit by applying
marginal costing for calculation of cost.
Adsorption costing: This is also consider as effective technique which beneficial and
useful in order to determine price as well as cost of each business activity(Hiebl, M. R. and
Richter, 2018). It is differ from marginal costing as in variable costing manage only consider
variable cost for the purpose of evaluating profit value, on the other side in case of absorption
costing, manager consider variable as well as fixed cost and each element which directly impact
on profitability of organization. It is useful tool for evaluating cost and fulfilled all the limitations
of marginal costing.
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