Management Accounting Techniques and Financial Problems in Prime Furniture

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 2............................................................................................................................................1
P3. Calculation of cost by using different cost analysis techniques............................................1
TASK 3............................................................................................................................................6
P4. Advantage and disadvantage of different planning tool used in budgetary control..............6
TASK4.............................................................................................................................................9
P5. Comparison between organisation using different management accounting system............9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting refers to process of developing reports for business operation
which is used by managers to make decisions. Management accounting are those accounting
which prepared for manager in order to take decision related to management of organisation. It
helps an organisation to forecast future of organisation and allow them to formulate strategies to
face future. It also helps to make management decision related to buy or sell in organisation.
This project report include study of Prime furniture. This project report includes calculation of
cost by using different cost analysis techniques. It also includes advantage and disadvantage of
different planning tool which helps in budgetary control, comparison between organisation
adapting different management accounting system.
MAIN BODY
TASK 2
P3. Calculation of cost by using different cost analysis techniques
Cost refers to the value which is used to produce goods and service to earn profit for
business (Baik, Choi and Farber, 2020). There are different type of cost that incurred in carry out
business activity which are as follows:
Direct and Indirect Cost: Direct cost are those which is included in production of goods
and service and are connected directly with production. These cost include wages. Raw material
and fuel etc. Indirect cost are those which is not directly connected to production of goods ad
service. Allocation of these cost are are done in department wise.
Explicit and implicit cost: explicit cost are those which are based on contract and
include production factor, factor price, price of rent, raw material etc. Implicit cost are those
which is invisible as it include payment of factor of production of company's own operation.
Increment and sunk cost: Increment cost are those which is incurred in organisation by
changing business activity (Bouty and Drucker-Godard, 2019). This cost can be generated by
change occur in total cost or in level of production.
Marginal costing: Marginal costing are those in which variable cost is incurred to cost of
a unit and fixed cost is remain same for period and deduct from contribution. It include
additional cost incurred for production of additional production. It include direct material, direct
labour and direct expenses.
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