MANAGEMENT ACCOUNTING.

MANAGEMENT ACCOUNTING

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY..................................................................................................................................................3
TASK 2......................................................................................................................................................3
P3. Calculation of costs and preparation of financial statements under marginal and absorption
costing method........................................................................................................................................3
M2. Accounting techniques to produce financial statements.................................................................5
D2. Interpretation of prepared financial statements...............................................................................6
TASK 3......................................................................................................................................................6
P4. Limitations and benefits of planning tools of budgetary control.......................................................6
M3. Use of different planning tools and their application for preparing and forecasting budgets........10
TASK 4....................................................................................................................................................10
P5. Analysis of ways in which management accounting methods help organisation to respond to
financial problems that will have sustainable success...........................................................................10
M4. MAS to solve financial issue...........................................................................................................12
D3. Importance of financial plans for planning and managing monetary sources which can contribute
in overcoming problems regards to finance..........................................................................................13
CONCLUSION.............................................................................................................................................13
REFERENCES..............................................................................................................................................14

INTRODUCTION
The word MA is described as a means of establishing internal reporting with aid of monetary and
non - monetary details (Alsharari, 2019). There are a broad variety of strategies such as
absorption, marginal in which to render financial reports. This form of accounting is too crucial
for each type of business sectors because under it detailed information about internal reports is
offered and each of them contains financial & non financial information. Such information acts
as a key tool for making decisions in an effective manner. This is so because such accounting
information acts as a framework for taking judgments. Prime furniture limited is the firm chosen
for this project. It involves in manufacturing of different types of furniture items. The document
provides detailed information on different accounting methods, corporate accounting preparation
tools and management processes to address financial problems.
MAIN BODY
TASK 2
P3. Calculation of costs and preparation of financial statements under marginal and absorption
costing method.
Micro economic techniques:
Cost- This can be described as the overall cost of undertaking various forms of development and
operations. Various categories of costs occur, including fixed costs, contingent costs, actual
expenses, indirect costs, and many others.
Cost volume analysis- The cost-benefit planning is a significant method to the weakening
framework and attributes of options that are used to assess the optimal way to achieve gains
while preserving costs (Cescon, and Grassetti,
Taschner and Charifzadeh, 2020).
Cost variance- This can be described as the estimation method for the disparity between real and
expected costs. It is viewed in unfavorable and positive ways.

In the context of planning financial accounts, there are a variety of important techniques such as
absorption and marginal strategies. They can be used for writing business financial reports. In the
following description, these are defined as follows:
 Absorption costing method- This is a method of costing methodology which specifies and
generally allocates the costs of different activities. Under it item's costs shall be done as
fixed and unfixed costs.
 Marginal costing method- The costs involved in multiple operations can be interpreted as
a way to classify them. The fixed costs are called the cost of time and the cost of the
products varies.
Product costing:
 Fixed cost- It is a kind of expense not influenced or adjusted by the change in the volume
of output.
 Variable cost- It is a form of expense which can be modified or influenced by changes in
the amount of output.
 Standard costing- Standard costing incorporates planned expenses with real costs in
financial reports. The adjustments between the expected costs and the real costs are then
reported as shown.
 Activity based costing- The activity costing approach determines the operating functions
of each process and measures the cost relative to the practical usage of the product and
the facility for each process (Aureli, Cardoni and Lombardi, 2019). This method
attributes indirect costs more direct than conventional costs. In the context of prime
limited company, such costing technique is used in order to assess day to day activities
and cost related to each. By this method, it becomes easier for managers to know which
kind of activity is leading to higher amount of cost.
 Role of costing in setting prices- Costing plays a significant role in price regulation when
firms adjust rates on the basis of it. That's because if the costs are greater than anticipated
than the values fixed by businesses, vice versa.