Management Accounting Planning Tools - PDF
20 Pages4967 Words346 Views
Added on 2021-01-01
Management Accounting Planning Tools - PDF
Added on 2021-01-01
ShareRelated Documents
MANAGEMENTACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Calculating costs by applying different costing techniques for preparing income statements1TASK 2............................................................................................................................................7a) Explaining the use of planning tools used in management accounting..............................7Analyzing use of planning tools and implications in preparing and forecasting budgets ....8c) Evaluating how organizations are adapting management accounting for respondingfinancial problems..................................................................................................................8d) Analyzing how management accounting leads organizations to sustainable success........8e) Evaluating how planning tools helps in solving financial issues.......................................8CONCLUSION ...............................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONManagement accounting is the technique or process of representing the financialinformation in the most discrete way that could help the management in taking rational decisionsfor the company (Kaplan and Atkinson, 2015). The present report is going to discuss thedifference between marginal and absorption costing, reasons for variances in net profitcalculations under these methods. Further the report will cover planning tools of budgetary toolsand how management accounting helps organisations in responding to their financial problems. TASK 1Calculating costs by applying different costing techniques for preparing income statementsCost of production under marginal costing:Direct materials: 12Direct labour: 16Direct Variable expenses: 20 Total production cost : 12+16+20 = 48Closing stock calculation calculations : Production units = 40000 unitsSales Units = 36000 unitsStock remaining at the end of 1st year = 4000* 48 = 192000income statement for the 1st year (marginal)sales2520000marginal cost of salesopening stockadd: variable production costdirect material480000direct labour640000Variable expense800000total variable expense1920000less:closing stock192000marginal cost of sales1728000fixed cost of production64000gross profit728000selling&distribution overheads10000admin costs15000EBIT703000
less: interest1000Profit before tax702000Tax @19%133380PAT568620(£)Income statement under Absorption costing :Cost of production under absorption costing:Direct materials: 12Direct labour: 16Direct Variable expenses: 20 Indirect variable expenses : 10000/40000 = 0.25Total fixed overheads (64000+15000)/40000 = 1.975Total production cost : 12+16+20+0.25+1.975 = 50.225Closing stock calculation calculations : Production units = 40000 unitsSales Units = 36000 unitsStock remaining at the end of 1st year = 4000* 50.225 = 200900(£)income statement for the 1st year (absorption)sales2520000marginal cost of salesopening stock0add: variable production costdirect material480000direct labour640000Variable expense800000fixed indirect production cost64000total production cost A1984000less:closing stock198400cost of sales A-B1785000gross profit734400selling&distribution overheads10000admin costs15000EBIT709400
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Advantages and Disadvantages of Management Accountinglg...
|16
|3982
|469
Accounting of Management Accountinglg...
|12
|3372
|134
Advantages and Disadvantages of Budgeting Control Techniqueslg...
|16
|3624
|49
Management Accounting System: PDFlg...
|16
|3280
|169
Management accounting - Assignment Solutionlg...
|13
|3957
|346
Evaluation of Management Accounting Systemlg...
|16
|4120
|211