Management Accounting: Techniques, Uses, and Analysis

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Range of management accounting techniques.............................................................................1
Microeconomic techniques..........................................................................................................1
Product costing............................................................................................................................2
Cost of Inventory.........................................................................................................................3
Use of planning tools in management accounting.......................................................................5
Using budgets for planning and control.......................................................................................5
Pricing..........................................................................................................................................6
Common costing systems............................................................................................................7
Strategic Planning........................................................................................................................8
Organisations responding to financial problems.........................................................................8
Identification of financial problems.............................................................................................8
Financial governance...................................................................................................................9
Characteristics of an effective management accountant..............................................................9
Effective strategies and systems..................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The file is about management accounting, its concepts, uses and analysis. Management
accounting is accounting used by managers for making business decisions. It covers concept of
costs, inventory valuation, planning tools used in management accounting and ways in which
organisations respond to financial problems.
Range of management accounting techniques
Microeconomic techniques
Cost: Costs can be said as the expenses which a business incurs in production of goods,
administration expenses and services and is composed of fixed and variable costs. Fixed costs
can be on the assets, land and machinery of the organization. Variable costs are those which
keep on changing like variable commission etc.
Different costs and analysis
Fixed costs: The costs which doesn't varies with changing output. The costs include building,
factory, legal and insurance etc. They can be maintenance costs which are fixed monthly for
machinery servicing (Rikhardsson and Yigitbasioglu, 2018).
Variable costs: These costs are those which depend on the output produced. For e.g.: use of raw
materials, it can be more or less. The examples of variable costs are raw materials, labour costs,
IT fees and taxes.
Cost volume profit analysis is method of accounting of costs that analyse the varying levels of
costs and volume have on an operating profit. The cost-volume profit analysis is also known as
break-even analysis.
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Flexible budgeting
This budget is a budget which adjusts with change in volume or activity. These budgets are
workable where costs vary with volume or activity, the flexible budget flexes according to
variable rate per unit of the activity instead of having an amount which is fixed.
Cost variances
It is the difference between actual expenses which are incurred and the expenses which have
been set standard. It can be in the form of material variances, labour variances.
Marginal costing
It does not take fixed overheads as per unit cost and treats these costs as a one-line expense. It is
the cost of adding one additional unit of output.
Application:
Variable costing are used for internal reporting and decision-making (Rikhardsson and
Yigitbasioglu, 2018).
Absorption costing
It takes in account which distributes costs per unit speaking of both variable and fixed costs and
distributes overhead costs also. Inventory valuation is stated in the balance sheet of the
organization.
Application:
Absorption costing is used for reporting to external shareholders and for filing of taxes (Allain,
Lemaire and Lux, 2021).
Product costing
Fixed costs
These are those costs which do not vary with the production volume. They remain the same
regardless of the quantity produced. A company cannot avoid these fixed costs like rent of
machinery.
Variable costs
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