Management Accounting: Techniques, Reports, and Planning Tools

Management Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 2............................................................................................................................................3
P3 Income statement under marginal costing:.............................................................................3
M2 Range of management accounting techniques and produce appropriate financial reporting
documents....................................................................................................................................7
D2 Financial reports that accurately apply and interpret data for a range of business activities.8
P4 Advantages and disadvantages of different types of planning tools used for budgetary
control..........................................................................................................................................8
M4 Use of different planning tools and their application for preparing budgets and forecasts...9
P5 Management accounting systems to respond to financial problems....................................10
M4 Responding to financial problems, management accounting can lead organizations to
sustainable success.....................................................................................................................11
D3 Planning tools for accounting respond appropriately to solving financial problems...........12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is defined as the process of handling and managing transactions
associated with finance. There are different type of transactions involved in business and it is
necessary to have a proper analysis of managing it in order to record and track all the financial as
well as non financial data and information. Internal reports are made for managing the financial
reports and data effectively (Napitupulu, 2020). There are non monetary as well as monetary
resources available within organisations which is used for managing the organisational activities.
Following report is based upon company naming Prime Furniture that is based on London.
Basically, there are three parts in this report. Part 1 includes information of management
accounting reports and systems. Part 2 includes financial techniques and practical
implementation for the data of company. Last part discusses about planning tools involved in
management accounting systems.
TASK 2
P3 Income statement under marginal costing:
Microeconomic techniques:
Cost: It is delineated to value of money which business uses for producing something as
well as delivering a service (Alabdullah, 2019). Fixed, variable and semi variable as different
costs on which working ny managers are performed in Prime Furnitures. Within the company,
Cost analysis is used as it determines true cost of each programs for analysing services and
products. Absorption costing and marginal costing are two cost analysis techniques which are
used by junior strategic managers of Prime Furniture so that income statement are prepared and
future planning is undertaken.
Product costing:
Fixed costs refers to unchanged rates that is generally negotiated for particular time frame
and it is static at all levels of production. Likewise, variable costs is seen as corporate expense
that changes with production output. Within Prime Furnitures, there are certain other costing
types that are used by managers. One is normal costing that is applied for derivation of cost. The
another is standard costing which is a practice to substitute predicted cost for real cost in records
related to accounts.
Cost on inventory:

Inventory costs refers to kind of cost that is related to procurement, storage as well as
managing organisational inventory effectively. Within Prime Furniture, it comprises of cost
associated with order and holding stock. Through this, managers administer concerned
paperwork (Amir, Rehman and Khan, 2020). Various categories related to inventory costs
includes ordering costs, storage costs, spoilage costs, holding costs and hence forth. When
inventory costs are reduced in an organisation then it benefits in saving multiple kinds of costs
that are essential in managing warehouse facilities. It eliminates obsolete stock that is not sold or
is of complete wastage or drains cash flows.
There are different accounting techniques used to prepare the financial reports mention below:
Marginal costing- This is principle whereby the variable costs are charged to the cost
units and also fixed cost attributable to necessary period is to be written off against contribution
for that time period. This technique is related with preparing the income statement through
including the variable expenses as main cost and the fixed expenses as the periodical cost.
Absorption costing- This technique is related with developing the income statement
through including fixed expenses and variable expenses as main cost. This method of calculating
product cost or company through taking into an account the indirect expenses and direct costs.
Both cost are beneficial for company in managing expense that may contributes in
maximising the profitability level (Tekathen, 2019). Thus, it is crucial for management of
business organisation to effectively analysis the financial reports for calculating the overall cost.
Within the assistance of this, Prime Furniture can improving their performance level and attain
competitive growth are market place.
Calculations of costs for Prime Furnitures through costing techniques: