Management Accounting: Methods of Costing and Break Even Analysis

Management Accounting

Contents
INTRODUCTION.......................................................................................................................................3
PART A.......................................................................................................................................................3
Methods of costing..................................................................................................................................3
PART B.......................................................................................................................................................7
Break even analysis.................................................................................................................................7
CONCLUSION.........................................................................................................................................13
REFERENCES..........................................................................................................................................14

INTRODUCTION
Management accounting is providing financial details in this kind of manner as to
facilitate administrators in developing a company's strategy and day-to-day activities. It concerns
the company's overuse accounting data gathered with the assistance of financial accounting and
cost analysis for policy implementation, preparation, monitoring and action taking. Management
accounting is the process of determining, tracking, reviewing, understanding and relating
financial information to supervisors for the purpose of achieving the objectives of an enterprise.
The area of management accounting takes on a very important role in companies in current
market climate as critical choices are made contributing to income maximization and value
formation. Companies choose to monitor quality research that goes well beyond the value-based
information given by conventional managerial accounting records from historical general ledger
structures. This report is consisting of absorption and activity based costing with their advantages
and disadvantages. Additionally, relevance of break even analysis in the 21st century companies
produces multiple products and single products.
PART A
Methods of costing
1. Absorption cost of each type of stove
Information given in question of Hoffman Ltd
Light weight Megarange
Production units 4500 500
Direct Material 3 cost per unit 10 cost per unit
Direct labour 6.30 per hours (9hours) 6.30 (7 hours)
16 hours per stove 15 hours per stove
Statement of absorption cost
Particular LWs MRs