Management Accounting: Techniques and Applications

Management Accounting
1

Contents
INTRODUCTION...........................................................................................................................3
TASK 2............................................................................................................................................3
P3 Calculation of costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs of Prime Furniture Ltd......................................3
TASK 3............................................................................................................................................5
P4 Explanation of advantages and disadvantages of various planning tools used for budgetary
control..........................................................................................................................................5
TASK 4............................................................................................................................................7
P5 Comparison of how different organisations are using management accounting techniques to
respond to different financial problems.......................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
2

INTRODUCTION
This project report aims at calculation of income statement using different techniques of
costing such as marginal and absorptional to understand the difference between the two. An
attempt is being made to understand the advantages and disadvantages of various planning tools
used for budgetary control by an organisational context of TESCO plc ltd. TESCO plc ltd. is a
British multinational retail grocery supermarket chain (Otley, 2016). This project report also
aims to evaluate the different methods in which different organisations are using management
accounting system to respond to financial problems as well.
TASK 2
P3 Calculation of costs using appropriate techniques of cost analysis to prepare an income
statement using marginal and absorption costs of Prime Furniture Ltd.
Marginal Costing Method: Income Statement
Quarter 1 Quarter 2
Sales 66,000.00 74,000.00
Less:Marginal Cost of Sales (0.65 per unit) 50,700.00 42,900.00
Less: Opening Stock NIL 7800 (12,000*0.65)
Add: Closing Stock 7,800 2,600
Contribution 23,100.00 25,900.00
Less: Fixed Costs
Fixed Costs 16,000.00 16,000.00
Fixed Selling and Administrative Costs 5,200.00 5,200.00
Net Profits 1,900.00 4,700.00
Calculation of Closing Stock
Marginal Cost
Variable Cost of Production 52,000.00
Units 80,000.00
3