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Management Accounting - UKC Furnitures

   

Added on  2020-10-05

14 Pages3175 Words361 Views
ManagementAccountingPart 2

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Calculation of cost by using various management accounting techniques...........................11.2 Different management accounting techniques......................................................................41.3 Interpretation of the cost cards of marginal and absorption costing techniques...................4TASK 2............................................................................................................................................52.1 Advantages and disadvantages of planning tools that are used in budgetary control...........52.2 Estimation of expenses by using high low method...............................................................62.3 Purpose of budget and preparation of cash budget...............................................................6TASK 3............................................................................................................................................83.1 The ways in which organisations are adapting management accounting system.................83.2 Management accounting help to improve the financial performance of both the companies.....................................................................................................................................................93.3 Evaluation of planning tools to resolve financial problems................................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11

INTRODUCTIONManagement accounting is the process of controlling, managing, analysing, assessing andevaluating reports that are generated by the managers of the companies. All of them presented infront of internal stakeholders such as managers, directors, equity shareholders in order to analyseorganisation's performance its position in the market (Hiebl, 2014). It helps the managers tomake strategic decisions so that all the predetermined goals like profits maximisation andcustomer satisfaction can be successfully achieved. For all the business entities it is veryimportant to conduct management accounting every year so that actual status of the company canbe examined. The company which is chosen for this report is UKC Furnitures. Various aspectsare discovered under this report such as application of range of different management accountanttechniques and uses of planning tools. Comparison of the way in which company can usemanagement accounting to respond financial problems have also been covered under thisassignment.TASK 11.1 Calculation of cost by using various management accounting techniquesCost: It can be defined as the total expenses that have been faced by an organisationwhile manufacturing a product. There are various types of cost that may take place in theproduction process. These are fixed, variable and semi variable. The expenses that does notchange with the production are considered as the fixed. All the costs that are varies with themanufacturing units are the part of variable costs. All the expenses that are partially fixed andpartially variable are called semi variable. As UCK Furnitures is a manufacturing companyhence all these costs are faced by the company in the production process. It is very important forthe managers of the company to set appropriate prices for all the items that are sold by theorganisation so that large number of customers can be attracted. It will help to expand thebusiness in different locations (Arroyo, 2012). There are two main types of costing techniquesthat can be adopted by the company in order to determine profits. Both of them are describedbelow with the cost card:Marginal costing: It is technique which is used by the companies to calculate themarginal cost that depicts that organisation is achieving economy of scale or not. In UCK1

Furnitures this method is used by the managers to evaluate the level where the organisation canattain profits. It helps to analyse the impact of variable costs on the output units of the company.Cost card for this method for two months is as follows:JanuaryParticulars`AmountTotal sales (35*9000)315000Variable costs:Opening inventoryNilDirect material (12*11000)132000Direct labour (8*11000)88000Variable overheads (5*11000)55000Closing inventory (25*2000)-50000-225000Variable selling cost-9000-9000Gross profit81000Fixed costs:Fixed production cost2000Fixed selling cost20000-22000Net profit59000FebruaryParticulars`AmountTotal sales (35*11500)402500Variable costs:Opening inventory (25*2000)50000Direct material (12*9500)114000Direct labour (8*9500)76000Variable overheads (5*9500)47500Closing inventoryNilVariable selling cost-11500-287500Gross profit103500Fixed costs:Fixed production cost20002

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