Management Accounting | Report

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1& P2 Management accounting. Its importance and difference between management and
financial accounting....................................................................................................................1
TASK 2 ...........................................................................................................................................4
P3 Income statements as per absorption and marginal costing...................................................4
TASK 3............................................................................................................................................6
P4 & D3 Budgets and its advantages and disadvantages............................................................6
TASK 4............................................................................................................................................7
P5,M4 & D3 Balance scorecard approach and its use in attain financial governance and
development of effective strategies.............................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Imda tech limited is one of the biggest manufacture of producing charger for mobile
phones and other gadgets. Under this report a detail description is given on the company. Under
this management accounting tool is described and how it is different from financial accounting is
described in this. How management accounting is useful and helps the manager of the firm in
making decision is described, other than this an explanation is given on various cost accounting
system used by the company. Absorption and marginal costing concepts given a light in this
report. This report contain important information about the various types of budgets used by a
firm and how a budget is prepared by them. What pricing strategy a firm should use in different
stages of their product life cycle is given light on. Other various tools used by the enterprise for
achieving its different kinds of objectives are described within this report.
TASK 1
P1& P2 Management accounting. Its importance and difference between management and
financial accounting
Management accounting is the process of preparing reports for the management that provide the
accurate financial and non financial information that are used by the mangers for taking various
decisions. Management accounting has wide scope. Financial accounting,cost accounting
revaluation,accounting control accounting and marginal accounting comes under the
management accounting Taxation,break even analysis,budgetary control,audit and taxation
comes under the scope of decision making of management accounting. It is prepared monthly
yearly and even on the day to day basis. The users of management accounting internal such as
department mangers and other officers(Zimmerman and Yahya-Zadeh2011). Management
accounting shows where the organisation stands at a particular point of time.
It gives detail of the cash in hand, debtors and the creditors, variance analysis etc.
management accounting is different from financial accounting. The main objectives of
management accounting are it helps in measuring the performances. With the help of
management accounting the performance of the employees are measured by comparing their
work with the desired results. Through this process control is kept on the performance as if the
results are not as that of the required than corrective actions are taken accordingly. It also helps
in maintaining efficiency in the organisation by keeping regular check. Another objective of
management accounting is to minimise the risk for the organisation. Through management
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accounting the future risk which can be anticipated in advance are studied and actions are taken
accordingly so that the degree of risk can be minimised. Decision regarding allocation of
resources are also taken by the company with the help of management accounting so that
resources can be effectively utilised. Financial accounting is done also for the external users of
the business like the share holders debtors stakeholder, government banks etc(Mitchell and
Nørreklit 2010). it gives them knowledge about the financial growth of the company which they
in decision taking of investment. The management reports are prepared on the basis of past
performance as per the requirement where as the financial reports are prepared on the present
financial situation of the company. These reports include cash flow outstanding debts day to day
management etc. it is not a legal requirement to prepare the management reports but financial
reports are necessary to be prepared by the limited companies. Where management accounting
provide only both the financial and non financial reports the financial reports give only the
financial information.
2.Importance of management accounting:
Management accounting plays a very important role in the process of decision making. Managers
are expected to take various dioecious each day andsions. Budgetary accounting helps mangers
to take the various financial decisions. These include deci there decisions have long as well
short term effects on the business. Therefore the management accounting provide the required
data to the different mangers which help them in taking the effective decision regarding the
allocation of finance in the different activities and also from where the company can raise its
funds after anaylising various alternatives available in the market. Management planning also
help the business in forecasting and planning. Data provided in the management make the
mangers aware about the various threats and opportunities of the business.
Therefore this helps in taking the decision of future expansion and other changes if
required in the existing process. Relevant cost accounting is a part of management
accounting(Lukka and Modell 2010). This help the mangers in taking the decision regarding
weather the the company should produce the product itself or should outsource it. Decision is
taken on the basis of the data provided by the accounting that which one is more beneficial for
the company. With the help of this accounting system the cash flow is anaylising ng and the
returns of every year is calculated and therefore it helps in analysing the change in the consume
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