Management Accounting: Techniques, Budgeting, Pricing, Costing, and Strategic Position

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................3
Microeconomic techniques.........................................................................................................3
Product costing............................................................................................................................4
Income statement using marginal and absorption costing..........................................................4
LO 3.................................................................................................................................................6
Budget.........................................................................................................................................6
Pricing.........................................................................................................................................7
Costing........................................................................................................................................8
Strategic Position........................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is utilized by the organization for the purpose of evaluating the
various business aspect which are used by the business for the purpose of taking crucial business
decisions. This report presents about the usefulness of MA along with its techniques and
systems. It also covers the different planning tools for exercising budgetary control and ways
through which business can respond to its financial problems.
TASK 1
Covered in ppt.
TASK 2
Microeconomic techniques
Cost: It refers to money value that the company spent for the purpose of producing something. It
does not include the profit element (Collis and Hussey, 2017).
Different types of cost
Fixed cost: It is the periodic cost which remains stable irrespective of change in the level
of activity. At zero level of production, the fixed cost will incur.
Variable cost: This cost varies with the variation in the production volume. In case of no
production, the variable cost will be zero.
Cost allocation: It is the process of aggregating the cost and assigning it to the costs
objects. The cost object is the activity for which the cost is measured separately.
Cost analysis:
It used in comparing the cost with respect to the output which helps in taking decision
with respect to cost control.
Cost-volume profit
It is used to determine how the change in the cost and volume of the organization will
affect the company's operating income.
Flexible budgeting
Under this, the budget is very flexible as it adjusts with the change in the level of activity.
Thus, in between changes in the budget can be easily made.
Cost variances
It refers to the difference in the actual amount of the cost and the cost that was planned.

Product costing
Normal and standard costing
The standard costing utilized entire predetermined costs of a product whereas in normal
costing the actual costs of the material and labour (Farkas, Kersting and Stephens, 2016).
Activity-based costing
This method identifies various activities and then cost is assigned to each of the activity
through which product is undergone.
Marginal costing
It used in determining the net income where only variable cost is considered for
calculating the cost of good sold. It is used in maximizing the profits (Ray and Gramlich, 2016).
Absorption costing
Under this, the cost of production is determined using both fixed and variable cost. This
approach is preferred for external reporting.
Income statement using marginal and absorption costing
Profit or loss statements
using Marginal costing
Quarter 1 Quarter 2
Sales Revenue (1*66000) 66000 (74000*1) 74000
Marginal cost of sales
Variable Costs
(0.65*7800
0) 50700
(0.65*6600
0) 42900
50700 42900
Add: Opening Stock 0 7800
Less: Closing inventory
(12000/78000)*
50700 7800 -7800 2600 5200