Management Accounting: Techniques and Planning Tools for Financial Statements and Problem Solving

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 2............................................................................................................................................1
P3. Accounting techniques for preparing the necessary financial statements.............................1
P4. Differentiated planning tools.................................................................................................6
P5. Comparison among business to show how they uses management accounting systems for
solving financial issues. ..............................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Accounting primarily connects with finance-related operations, but there are other
various accounting approaches that emphasize all forms of transfers, like management
accounting (MA). MA is an accounting system that is important for monetary and non-monetary
documents control and reporting (Armitage, Webb and Glynn, 2016). This description is used
when the supervisors are expected to produce inner reports at all time. MA is intended
specifically for managers to take corrective action pertaining to the use of financial and non-
financial sources. In this study, a company named Prime Furniture is chosen. This business is
growing London based that provides accounting-related training courses to newly hired people.
The report highlights certain cost accounting techniques and planning tools,. While many
financial approaches and their practical impact on a given data set are described in the project. In
the end part of the report the role of management strategies and management accounting systems
are presented to solve the companies’ financial problems.
TASK 2
P3. Accounting techniques for preparing the necessary financial statements
Cost is a word which denotes value of money used in a venture to manufacture or
produce something. In Prime Furniture, cost plays significant role in devising pricing decision.
Various costs are analysed by managers of Prime Furniture that are named as controllable cost,
fixed cost, opportunity cost, sunk cost and opportunity costs. Applying marginal and absorption
costing assist managers to prepare required financial statements for an accounting year (Shil and
Das, 2018).
Cost volume profit is an analysis method that focuses on effects of varying levels
together with having operating profits. Businesses such as Prime Furniture uses cost volume
profit framework for looking towards the ways units they are required for selling so to achieve
break even. Application of techniques of cost analysis in Prime Furniture includes following:
Marginal costing-It is a strategy required for the preparation of income statement by
recognizing contingent expenditures as key costs and fixed expenditures as periodic costs.
Absorption costing- It is a process required for the preparation of the income statement
by recognizing the cost of variable costs and fixed expenses. This method accounts for direct and
indirect expenses, such as direct products, direct labour, leasing, and insurance.
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