Management Accounting: Costing Methods, Techniques, and Financial Reports

Management Accounting
(Project 2)

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1: Costing methods uses for evaluating net profit ..............................................................3
1.2: Various range of management accounting techniques....................................................4
1.3: Develop financial report that apply and interpret data for a business ............................5
TASK 2............................................................................................................................................5
2.1: Advantages and disadvantages of various types of planning tools used for budgetary
control.....................................................................................................................................5
2.2: Estimate the expenses for July and August.....................................................................7
2.3: Cash budget ....................................................................................................................7
TASK 3............................................................................................................................................8
3.1: Adoption of accounting system to deal with financial issues.........................................8
3.2: Analyse measures to improve financial performance of both company's.......................8
3.3: Evaluate planning tools use in management accounting.................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is an essential aspect for every small or large business
organisation. This will assists in better understanding of accounting systems those are being
crucial in analysing positive outcomes for the company. The second part of this project is
focusing various costing methods those are helpful in determining accurate net profitability of an
organisation during the time. Some specific tolls and techniques which is use in planning tools to
control budgets. Understanding of different financial issues and effective measure to resolve
them are discuss under this project reports (Bennett and James, 2017).
TASK 1
1.1: Costing methods uses for evaluating net profit
In every business organisation, they need to make proper evaluation of total costs which
will be related with the production process. The costs are directly or indirectly associated with
the manufacturing of goods and services. This would simply said that the value of money render
for receiving something. This is use to formulate anything and that represent financial evaluation
of material, resources and risk factors or utilities those are associated with a product. The
different types of costs are discuss underneath:
 Fixed and variable cost: This happens to be the utmost important costs which will be
applicable during the time of producing specific products. Variable cost are remain
changing with the production units, whereas fixed costs are unchanged whether
production is going on or stop. These two costs are having direct relationship with
production. Therefore, it kept increasing and decreasing with the level of output.
 Historical and replacement cost: These are said to be sum total of capital which is paid
during the time of buying past and get consider as main base for financial accounts.
Likewise, a replacement costs is a present amount that is to be paid in current time for
replacing the assets (Galliers and Leidner, 2014).
 Absorption costing: It refers as all those costs which is incur by the company on overall
production of products. This includes both variable and fixed costs because of which it is
known as full costing method. The type of costs carry under this costing is direct
material, labour and other overhead cost. Likewise, under this costs a portion of fixed
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overhead cost is allocated to every units of products along with manufacturing variable
costs.
 Marginal costing: It is mostly related with various sources which is being used for the
purpose of making vital decision-making. These are said to be these are said to be those
costs which is been done with additional units produce. It would consider only variable
costs and fixed costs not taken into account. This can be define as total cost of a marginal
or final unit of output produced. This is not determine as process costing rather than it is
more simple techniques for analysing cost details (Haimes, 2015).
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
Contribution 29000 155500
less:
fixed manufacturing overheads 20000 20000
Fixed Admin & selling cost 2000 2000
total fixed costs 22000 22000
NET INCOME AS PER MARGINAL COST 7000 133500
NET INCOME AS PER ABSORPTION COSTING:
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
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