Management Accounting Report: Financial and Performance Analysis

This report delves into the core principles of management accounting, providing a comprehensive overview of its various facets. It begins with an introduction that discusses the importance of accounting information for decision-making in both present and future contexts. The report then explores the key differences between financial and management accounting, emphasizing their distinct objectives and user bases. Task 1 examines the critical role of decision-making in accounting. Task 2 focuses on the computation of income statements using both absorption and marginal costing methods, highlighting their impact on profitability analysis. Task 3 covers the process of preparing budgets and explores different pricing strategies. Finally, Task 4 introduces the Balance Scorecard as a systematic and strategic approach to performance management. The report concludes with a summary of the key concepts discussed and provides relevant references.

MANAGEMENT
ACCOUNTING

Table of Contents
Introduction......................................................................................................................................1
TASK-1............................................................................................................................................1
Financial Accounting.............................................................................................................1
Management Accounting........................................................................................................2
Key Differences Between Financial Accounting and Management Accounting...................2
Importance of Decision Making.............................................................................................3
TASK-2 ..........................................................................................................................................6
Computation of income statement using Absorption costing method....................................9
Computation of income statement using marginal costing method.....................................10
TASK-3..........................................................................................................................................11
Process of preparing budget.................................................................................................13
Pricing strategies..................................................................................................................13
TASK-4..........................................................................................................................................14
Balance Scorecard................................................................................................................14
A systematic and strategic approach....................................................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18

Introduction
Accounting fee management information solutions to discuss the company incurred in the
present and future. It also deals with inventory of various techniques. Cost estimates for
miscellaneous services are calculated by comparing the actual impact of the budget process. Also
book a different budget that helps to compare the results of real work. The provision also
includes costs, budget and a different language due to the mixture. It also deals with various
solutions that help business strategy to improve this process.
Budget management, task unit cost accounting help to give detailed information on the
various costs of business management. Through it, students can identify the tool or technology
available to analyse business costs and give economic costs organisation, provides also helps us
to understand the problem and made a series of decisions on costs and budgets.
Each organization concerned is the cost companies to reach their goals and do business
successfully. To this end, organizations must understand and classify the various costs of
overhead and any pay the interest to receive reports and budgets of the various business
processes to pay.
TASK-1
Accounting, refers to data storage and classification where simple financial transactions
and other events and interpretation of results. The machine is used to control financial
transactions, accounting and bookkeeping and Accounting confirms give a true and fair picture
of the financial position of the company in different directions.
Financial Accounting
Accounting Financial accounting in financial reporting from third parties such as
creditors, shareholders, investors, suppliers, creditors, customers etc. This is the purest form of
accounting and reporting where documents are in the system by providing consumers with
information and related materials.
 Is based on the recognition of the assumptions and principles and arrangements within
the conservative and stable, and the consolidation of financial statements and other costs
of the acquisition, which includes the statement of the balance sheet of income and cash
flows from each other in line with the law on real estate, materials, fit, exercise
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 Typically, the report is based on certain account calculations, so that consumers can
compare the financial situation, profitability and performance of the company during this
period. Not only external factors but internal managers should expect planning and
decision-making.
Management Accounting
Management accounting, accounting management machines also assists management to
establish, manage, forecast, plan and control the day-to-day operations of the organization
department. Quantitative and qualitative data collected and analysed for their accounts
Accounting is an area providing financial information or costs. Instead, he pulled out of
promotional materials, as well as accounting and accounting help budget, specific goals, decision
- making, and can depend on demand management, ie weekly, monthly, quarterly, etc. On the
other hand, the formation of the organization said.
Key Differences Between Financial Accounting and Management Accounting
 Represents the accounting industry, which tracks each unit financial information.
Accounting is a branch of accounting records and reports financial information and
financial data packages.
 Accounting users to control the internal company and external factors, when used in
internal audit and internal control.
 Accounting and financial management will not reach the public is the use of the
organization, and therefore very difficult.
 Only financial information in the financial statements. However, both accounting in
management, financial statements and financial statements, such as the number of
employees, the amount of raw materials used and disposed of, etc.
 The accounting performance of the group, but not the expense of a specific form of
control.
 Accounting focuses on providing information about business model results from users,
while financial focus on providing information to help them evaluate performance and
plan ahead.
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 Accounting is performed mainly for a specified period, usually a year. Instead made
statements according to management requirements, say quarterly and semi-annual, and
more.
 Accounting is mandatory for all companies to audit. On the other hand, it is optional
because it does not.
 The necessary accounting data is published and the audit report is reviewed. On the other
hand, management accounting, which requires no advertising and publishing, because it
is for internal use.
Importance of Decision Making
Controlling accounting and bookkeeping is very important, in fact, they help
organizations in different ways. Accounting also helps maintain the validity of a number of
transactions and compare the two periods of the group or two units, while the president to
facilitate the analysis of the efficiency of the statement production strategy provides an effective
political future.
Explain the different types of Management Accounting
Here we look at production units Limited pirates are as follows based on the breakdown
of costs related - information. Pirate Limited (Far, 2011).
Before going to where the issues, let us understand what the real cost. Cost words to
show how much money the company uses in creating goods and services included in the costs of
raw materials, equipment, goods, services, employment, goods, etc.
 Cost of all three major components:
 Components - direct / indirect
 Work - direct / indirect
 Costs - direct / indirect
These elements can be divided during production and cost.
i. Cost accounting systems
 Product cost - this is the cost of manufacturing the product.
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 Period costs - costs, production costs are recognized in profit or writing at different times.
 The price includes the cost of goods "direct costs". Direct costs associated with direct
product manufacturing (Tyran, 1982). These costs are naturally variable costs. Direct
costs are as follows:
 Direct materials - these are the property caused by the production, such as raw materials.
For example, the accumulated cost for plywood, textile fabric, wooden boards, IMDA
Tech Ltd, etc.
 Direct Labour - this is the work of the production companies or set to a specific
manufacturing cost centre. For example, education, artist, saws, installation, etc.
 Direct Expenses - two IAS (International Accounting Standards) costs directly part of the
cost structure. These are the costs of improvements, quality or design. For example, to
buy special equipment to update the style tables and chairs (Far, 2011).
Inventory management systems
 Indirect materials - not included in the cost of direct and indirect materials imported
materials.
 Wage labour costs - labour costs that are not linked directly to the production costs of
management. For example, supervisors, brooms and other techniques.
 Indirect costs - costs indirect costs mainly for the factory. For example, mainly consist of
depreciation on machinery, electricity, rent, telephone bills, council tax, insurance and
other expenses.
 The cost of the cost of the total cost of administrative costs and the costs of sales and
distribution, as well as economic costs.
◦ Administrative costs - is the total ownership of the administrative expenses of the
Organization. Management fees, office rent, council tax, water charges, telephone
bills, etc. (Far, 2011).
◦ Selling and distribution costs - the costs of creating a viable for the sale and
distribution of a number of death sentences product. These costs include advertising
costs, market research, salary surveys, bonus and others
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Job costing systems
Job costing: This method is the industry and are all kinds of jobs and the calculation of the cost
of each function using this method. For example, by building services that provide homes,
factories, shops and others (Lucy, 2002).The cost of assets - these costs are those associated, has
stabilized short - term financing. These include dividends, interest, long-term and short-term and
long-term loans.The additional cost can be divided into the following:Based on the behaviour-
The costs are divided on the basis of cost to the behaviour of three types, variable, fixed costs
and variable costs and a half.
iv. Price optimising systems
 Price history: the cost of past and present obligations.
 Where costs: costs, which have been prepared in advance for future use (Rouwendal,
2012).
 There are several types of cost method of regulation. In order to successfully manage the
work under normal conditions. They are as follows:
 Value of the contract: the method used to calculate the cost of the project costs or
contracts which led to bridges, buildings, construction, etc.
 Valuable method: This method is used in the organization, which follows a different
process to make the final products. For example, in the textile industry to make the final
product (cloth), the following various processes such as spinning, weaving, dyeing,
folding paper, so that the costs can be calculated separately for the product (Harris,
1995).
 Service price: This method is suitable for business services. For this method, the cost of
interest was prepared by the Special Services Organization (Baum, 2013).
 Hackers measure limited methods of work to determine the cost of a particular job in this
case.
 Limited costs: This method is used in the organization, while each unit produced. The
cost of this method was cleared from the cost of the product and the cost of fixed changes
in profitability (Harris, 1995).
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 Fixed costs: the cost of equipment, even if the business has changed. It does not affect the
level of production (Underwood, 2006).
 Variable costs: Costs vary depending on the level of production OY pirates (Czopek,
2004).
 Semi - variable cost: the cost, there are two types of fixed and variable costs
characteristics.
◦ On the basis of the ability to manage: Based on the ability to control costs and are
divided into two types of control controlled by the administration and management
can not control.
◦ On the basis of time: Based on the time and costs are classified as two types of cards
original price and cost.
TASK-2
Cost Calculation Method
There are different ways to calculate the cost of production, the cost of goods sold, unit
costs and other institutions or companies the right to choose what kind of method is confirmed
by product production. Write in a way that can be classified as follows.
The following equation is obtained for marginal cost:
Marginal cost variable costs = + Fixed costs.
It accepted the recognition of excellent reception as part of the administrative costs.
Production costs are absorbed by production units. Costs may be fixed or variable, assigned to
different cost centers, which dealt with the rate of uptake (Rouwendal 2012). With this method,
the cost of recovering from the sale price of goods or services. These include technology costs
associated with manufacturing and also directly to products and services.
Based on cost absorption, the cost may be to find a solution to limited piracy
Smart Competition:
A variety of public expenditure varies in proportion to production units that direct agents,
and indirect costs of direct, which can not be transferred directly to a particular product. General
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fixed costs remain constant regardless of the total output consists of rental and removal device,
insurance, office and other costs more element of the most consistent and most of them in the
output of half or semi - solid variable.
The difference between the marginal cost and the fixed and variable costs of the
product. Costs of producing an additional device called marginal cost. Other production costs
remain unchanged. It should be noted that the concept of fixed and variable costs in the short
term. And long-term, all-changing costs.
Costs can also be classified in terms of fiscal year. The benefits of the afterlife cost of
capital. These costs will be in a few years. On the other hand, the only fact costs are known to
cost year to year because of the part of the total cost. The cost-making option can also be
classified as low cost payment, unregulated cost control, cost-sharing cost difference, etc.
Normal price:
Standard costs of production costs, direct labor and related expenses directly. Contrast analysis is
an important part of the standard rate, which shows the real difference between the actual cost
and the standard cost. Some of the major languages is the difference of material costs of
changing size and labor costs variation.
Value rating:
Cost savings and cost - cost control and cost reduction is a very important tool for organizations
to work effectively. Lower costs and lower the cost of products or services a device has been
designed and manufactured. While on the other hand, cost control is to achieve goals in advance.
Producer prices - sometimes crucial to sell their products at marginal cost in the market. The cost
of welding of support for these decisions.
Absorption costing- reconstruction is another name for the absorption in the sky of the region.
Exchange of information on products in a given category. Cost breakdown per unit.
Making or buying decisions - reducing the number of times the quality control organization
decides to buy a particular part in the production of products covered. Large capacity and
decision must be made. Distribution costs help to make this decision.
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Product diversification / expansion / stop production line - depend on the profitability of the
company’s management decided to diversify their products or not. After a certain period of time,
managers must take the initiative to develop business so that the company's competitiveness.
Appropriate distribution of costs to launch remaining Imda Tech UK Limited
The launch the furnace directly. This method is suitable for this valuable process costs. Since
most of the costs corresponding to different shopping departments, it is the direct cost of the
organization, except for a few top shopping. In this process, the following accounting system
approved by the Ministry of different production costs measure the cost of machine production.
Therefore, the process is the best accounting estimates.
Materials - The first step is to remove the raw material production. After the first step on raw
materials and selected materials from sub-sub-sub-section includes new expenses.
Wage costs are added to the cost of staff working on the product or process - work. Wages are
divided and applied in appropriate circumstances. With the cost of various components of the
average salary can be distributed, for example, salary divided by the time to invest in product
production.
Direct costs - direct costs are those associated fully to produce specific products. These costs will
be directly charged to this process. Direct costs are no exception rent, electricity, consumption
and so on.
Costs - These costs do not participate directly in production, but overwhelmed by the absorption.
In other words, this is the indirect costs of the organization. The CEO can hire an account
maintaining machinery and equipment, etc.
DIRECT LABOUR £5
DIRECT MATERIAL £8
VARIABLE PRODUCTION £2
FIXED PRODUCTION £5
________________
£20
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BUDGETED NORMAL OUT PUT £36000
SEPTMEBER £1500
FIXED £10000
VARIABLE %15
Reward = 0.75 * 8 * 1500 36000
Higher by 15% of the time
= 15% * 2 2400 2400
The amount of £ 91400
Computation of income statement using Absorption costing method
Income Statement using Absorption Costing Method
Particulars Amount
Units (Production) 2000
Units (sold) 1500
Sales @35 per unit 52500
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Less: COGS 30000
Add: Over absorption cost (Working Note 1) 5000
Add: COS (Working Note 2) 35000
Gross Profit 17500
Less: Selling, distribution and admin
expenses (Fixed)
-10000
Less: Selling, distribution and admin
expenses (Variable)
-7875
Profit/(Loss) -375
Working note 1: calculation of over absorption cost
Over absorption cost = Budgeted fixed overhead - actual fixed overhead
15000 + (2000/3000*15000)
15000 – 10000
Over absorption cost = 5000
Working note 2: calculation of cost of sales (COS)
COS = Direct material + Direct labour + variable production overhead + fixed production
overhead
12000 + 7500 + 3000 + 7500
COS = 30000
Computation of income statement using marginal costing method
Income statement using Marginal Costing Method
Particulars Amount
Units (Production) 2000
Units (sold) 1500
Sales @ 35 per unit 52500
Less: Marginal COS (Working Note 1) 30375
Contribution 22125
Manufacturing Cost (Fixed) 15000
Selling, distribution and admin expenses (Fixed) 10000
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