Management Accounting

Management
Accounting
System

Content
Introduction
Management Accounting
Management Accounting Systems
Management Accounting Reporting
Conclusion

INTRODUCTION
This report will focus on the basics of management accounting.
Management accounting helps the business or any organization to
analyze data from financial information provided by financial
accounting. Management accounting is the procedure of identifying
analyzing, interpreting and communicating the financial information
which helps the business to achieve its goals.

Accounting techniques
Absorption costing- Absorption Costing means a costing system for
paying for all production costs. This approach is used by the
management to bear the costs of a commodity. Specific costs and
indirect costs are all included. Materials, workers working in
manufacturing, are direct expenses. Included are plant leasing,
management expenses, regulatory and Insurance Indirect costs.

Continue
Marginal costing- Marginal costing is a methodology of costs, where
even the marginal costs, i.e. variable costs for units of costs, are paid,
while fixed costs for that time are entirely excluded from the
expenditure.


Calculation (Under marginal costing)
Income Statement
For the month of October 2019
Amount (£) Total (£)
Sales 40,000*25.00 1000000
Cost of Sales
Variable Manufacturing Cost:
Direct material 40000*10.00 400000
Direct wages 40000*8.00 320000
Variable Manufacturing Overheads 40000*2.00 80000
Variable Selling Expenses 40000*4.00 160000 (960000)
_________
Contribution 40000
Less: Fixed Manufacturing Cost (150000)
Less: Fixed admin and distribution costs (50000)
______(200000)___
Actual Net Loss (160000)

Calculation (Under absorption costing)
Income Statement
For the month of October 2019
Amount (£) Total (£)
Sales 40,000*25.00 1000000
Cost of Sales
Variable Manufacturing Cost:
Direct material 40000*10.00 400000
Direct wages 40000*8.00 320000 (720000)
Manufacturing Overheads:
Variable 40000*2.00 80000
Fixed 150000 (230000)
_________
Gross Profit 50000
Less: Variable selling expenses (160000)
Less: Fixed admin and distribution costs (50000)
_____(210000)____
Actual Net Loss (160000)

Conclusion
In accordance of above project report this can be concluded that
accounting techniques are too crucial for companies in order to
produce income statement. As well as to this, there is different
outcome under absorption and marginal costing due to its approach
to consider cost.

References
 Klychova, G. and et. al, 2019, December. Improvement of the Tool
of Strategic Management Accounting. In Energy Management of
Municipal Transportation Facilities and Transport (pp. 669-686).
Springer, Cham.
 Amoako, G. K. and et. al, 2021. Institutional isomorphism,
environmental management accounting and environmental
accountability: a review. Environment, Development and
Sustainability, pp.1-16.

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