Management Accounting Techniques

This presentation provides an overview of management accounting techniques and their relevance to GSQ Ltd. It covers the concept of management accounting, different techniques used, such as marginal costing and absorption costing, and their application in decision making. The presentation also highlights the benefits of integrating management accounting system in an organization.

Management
Accounting

TABLE OF CONTENTS
 INTRODUCTION
 MANAGEMENT ACCOUNTING TECHNIQUES
 CONCLUSION
 REFERENCES

INTRODUCTION
 Management accounting refers to identifying, measuring, analysing and interpreting the
information which will help in decision making process of the organisation.
 It involves timely preparing financial information and providing it to managers so that
managerial decisions can be taken.
 In this report, GSQ Ltd is taken as an organization.
 It covers introduction to management accounting system, different types of techniques
and planning tools used in management accounting

MANAGEMENT ACCOUNTING
TECHNIQUES
There are different types of tools and techniques in the management
accounting. Some of them are stated below.
 Marginal costing method: It is a technique used in fixing the selling
price, the best use of available resources, to make or buy decision,
acceptance or rejection of the order. It is based on fixed cost, variable
cost and contribution.

Cont..
Particulars £ £
Sales Revenue (50000*30) 1500000
Marginal cost of sales
Direct material 400000
Direct labour 150000
Variable production overheads 100000
Variable selling, distribution and
administrative expenses 200000 850000
Contribution 650000
Fixed costs
Fixed manufacturing overhead 160000
Fixed selling and administration costs 60000 220000
Net profit 430000

Cont..
 Absorption costing method: It is a method for capturing cost related to manufacturing.
It includes both direct and indirect cost.
Particulars £ £
Net sales 1500000
Less: Cost of sales
Opening inventories
Variable production cost 650000
Fixed overhead Absorption 160000
Less: Closing inventories
Cost of Sales 810000
Gross profit 690000
Less: Variable selling expenses 200000
Fixed admin. And distribution cost 60000 260000
Profit or loss 430000

Cont..
 From the above, it can be said that GSQ Ltd should use absorption costing method as it
allocated fixed overhead cost to each units of a product produced whether it is sold or
not. It also shows the clear profitability of the organization.

CONCLUSION
 It can be summarized from above that management accounting is useful for every organization.
 The importance and benefits of management accounting has helped GSQ Ltd in understanding it and
implementing it in its organization.
 The different types of management accounting system that can be used by GSQ Ltd in order to achieve
its objectives more efficiently.
 It also analyses the usefulness of integrating management accounting system in an organization and also
different types of management accounting system that are very essential for the businesses to reduce risk.
 It also includes analysing the management accounting techniques, that is, absorption costing and
marginal costing method and its relevance to GSQ Ltd

REFERENCES
 Aleem, M., Khan, A. H. and Hamad, W., 2016. A comparative study of the different
costing techniques and their application in the pharmaceutical companies. The Audit
Financiar journal. 12(143). pp.1253-1253.
 Bottomley, B. and Bosman, R., 2018. Job costing: An analysis of the construction
industry.
 DeNisi, A. . and Murphy, K. R., 2017. Performance appraisal and performance
management: 100 years of progress?. Journal of Applied Psychology. 102(3). p.421.