Management Accounting: Costing Methods, Planning Tools, and Financial Analysis

Management Accounting
(PART 2)

Table of Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
1.1: Costing methods use for calculating net profit the company......................................................3
1.2: Range of management accounting techniques............................................................................5
1.3: Interpretation of collected data from incomes statement.............................................................5
TASK 2.................................................................................................................................................6
2.1: Advantage and disadvantage of using planning tools.................................................................6
2.2: Evaluation of expenses for July and August...............................................................................7
2.3: Purpose and cash budget.............................................................................................................7
TASK 3.................................................................................................................................................8
3.1: Use of accounting system to examine financial issues................................................................8
3.2: Evaluating vital measure to overcome financial issues..............................................................9
3.3: Analysing planning tools used in management accounting.........................................................9
CONCLUSION...................................................................................................................................10
REFERENCES....................................................................................................................................11

INTRODUCTION
In context to current scenario, it has been seen that organisation need to make regular
search of innovative and effective systems that can help the company to gain maximum
benefit during the time. Management accounting is essential aspects which will be consider
as more reliable and accurate tool that assist in increasing profitability for UCK group of
company. By the help of this, they can easily be able to attain their long term aims and
objectives. This particular project report is providing more valuable information about
various costing method which is use for the computing net profit for the company. In
accordance to this, advantage and disadvantage of using planning tools which are helpful in
budgetary control are mentioned under this report. Analysis of financial issues those are
arises in an organisation (Amoako, 2013).
TASK 1
1.1: Costing methods use for calculating net profit the company
Cost is an essential aspect which would be considers more effective tools for the
company. They need continuous planning to manage and control their extra costs which are
increasing profitability during the time. It has been seen that costs are affecting production of
products and services of the company either directly or indirectly. Costs is said to be value of
amount which is related with manufacture process. The primary role of managers is to make
valuable decisions to manage and control excess costs for the company. With the help of this,
overall productivity of the company can also be increase at the same point of time. There are
various types of costing methods which are useful in evaluating overall profit for UCK group
ltd. Some of them are illustrated underneath:
Absorption costing: This seems to be one of the effective methods which are
applicable with production process. It uses to consider both variable and fixed costs
simultaneously, because of this it is known as full costing approaches (Absorption costing,
2018). There are various benefits of using this method but at the same time, it is having
certain limitation. This cannot be taken as more effective tools for making future decision
making.
Marginal costing: It refers as those costs which is uses by the managers in production
of one additional unit. It only considered variable costs and fixed costs are absorbed while

calculating net profit for the company. The major part of this particular report is that a
manager uses this as one of the effective method for making future decision making (Brewer,
Sorensen and Stout, 2014).
NET INCOME AS PER ABSORPTION
COSTING: January February
Sales (35per units) 315000 402500
less:
Cost of Production (12+8+5+1.82) 295020 254790
Gross Profit 19980 147710
LESS:
Fixed and variable cost:
variable sales overheads (1 per unit) 9000 11500
Fixed selling cost 2000 2000
Total costs 11000 13500
NET INCOME AS PER ABSORPTION
COSTING: 8980 134210
Computing net profit by using marginal costing
PARTICULARS January February
Sales (35 per unit) 315000 402500
less:
Cost of Production (12+8+5) 275000 237500
variable selling overheads (1 per unit) 11000 9500
variable cost 286000 247000