Management Accounting: Planning Tools for Budgetary Control

Management Accounting

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INTRODUCTION
Management Accounting is the practise of planning business operations documents that
allow managers to make short-term as well as long-term decisions. It allows a company to
achieve its objectives by defining, evaluating, assessing, interpreting and transmitting guidance
to stakeholders (Armitage, Webb and Glynn, 2016). Management accounting reflects from all
accounting policies targeted at reminding management of operating business outcomes. It utilizes
data concerning to the cost of goods or services obtained by company. Budgets are also used to
measure decisions taken in the form of organisational planning. Management Accountants use
the performance reviews to observe variances between real outcomes from
budgets. .Management accounting allows managers to make choices within an organisation. The
information recorded covers all areas of reporting that notify the business activities in relation to
price of goods or services purchased by organisation. Management accountants are using budgets
to calculate the marketing strategy of activities.
This report based on Crest Dairy where prime responsibility of management accountant of
the company is to analyse the data provided by managerial accounting to support managers in
making effective actions to meet results. Elizabeth has newly joined the Department as a trainee
junior management accountant, and management accountants must prepare a report that offers
greater understatement of management accounting principles. This report covers several topics
such as different types of management accounting systems, report and methods to calculate cost
of product and overall profit. In addition, it includes the different planning tools which are
required for budgetary control. Along with it, organization needs to identify the ways which
helps in resolving financial problems.
MAIN BODY
TASK 1
Covered in PPT
TASK 2
P3. Cost calculations and preparation of income statement
Cost per unit by using marginal or absorption method:
Cost of unit under marginal costing
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Direct materials 54
Direct labor 60
Variable manufacturing overhead 30
Cost per unit under marginal costing 144
Cost of unit under absorption costing
Variable production cost per unit ( marginal cost-
ing) 144
Selling and administration cost =(190,000 / 4800)
= 39.58 or 40
Cost per unit under absorption costing 184
Income Statement as Per Marginal Costing for Waffles (£)
Sales revenue 960,000
Less Cost of sale (4800 * 144) 691,200
Other variable cost
Variable selling and admin expenses 90,000
Total (781,200)
Contribution Margin 178,800
Less Fixed costs
Fixed overhead cost 60,000
Fixed selling cost 30,000
Fixed admin expenses 70,000
Total (160,000)
Net Income 18,800
Income Statement as Per Absorption Costing for Crest Dairy Amount(£)
Sales revenue 960,000
Less Cost Of Sales (184 * 4800) (883,200)
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