Prime Furniture Limited: Management Accounting Systems and Reporting

This report provides an overview of management accounting practices with a focus on Prime Furniture Limited. It differentiates between management and financial accounting, highlighting the importance of management accounting for planning, controlling, and decision-making. The report explores various accounting systems such as inventory accounting, cost accounting, job costing, and price optimization. Furthermore, it discusses methods used for reporting management accounting, including cost variance analysis, absorption costing, marginal costing, merchandise costing, and activity-based costing. The report also touches upon inventory cost evaluation techniques like FIFO, LIFO, and weighted average costing. Finally, it concludes by emphasizing the significance of transformational recordkeeping for corporate entities like Prime Furniture Limited.

Management Accounting (Part 1)

TABLE OF CONTENT
 Introduction
 Management accounting and its various accounting systems
 Methods used for reporting of management accounting
 Conclusion
 References

INTRODUCTION
Accountancy data is one of the most important and
crucial parts since it helps a firm achieve long-term
objectives and plans that really are necessary for a firm
to build consumer loyalty for lengthier than its
competitors in the similar industry. Prime Furniture
Limited that has its offices in the Great Britain and has
been in the industry for a considerable period of time, is
utilized in this power point.

Management accounting Financial accounting
 The primary objective of management
accounting is to provide information
for the management during the process
of planning, controlling and decision
making.
 The focus of management accounting
is upon the effective decision making in
the future.
 The subject matter of management
accounting is segments of the
organization.
 Management accounting does not
consider auditing as mandatory.
 The emphasis of management
accounting is upon punctuality.
 The emphasis of management
accounting is upon the relevance of
planning and control.
 Financial accounting has a primary
motive of making periodical reports for
the shareholders, creditors as well as
various other parties.
 The financial accounting emphasizes
over activities of the past.
 The focus of financial accounting is over
the whole organization rather than a
specific segment.
 Auditing is mandatory in financial
accounting for external shareholders by
the chartered accountants.
 Financial accounting emphasizes upon
precision.
 The emphasis of financial accounting is
over verifiability rather than relevance of
the functions.
Difference between Management
accounting and Financial accounting

Management accounting and its various
accounting systems
Finance accounting is one of the most important
instruments because it assists in the identification,
collection, analysis, and evaluation of important
information so that the company could function in a
systematic and uniform manner, continuing to
expand and flourish in the marketplace. Since Prime
Furniture Ltd. operations on a worldwide scale, it is
far more important for it to manage its resources in a
dependable and practical manner so that they can be
valuable to the company.

 Inventory accounting-
 Cost Accounting-
 Job costing-
 Price optimization-
Mmanagement accounting and its
various accounting systems

Methods used for reporting of
management accounting
The foregoing are among some of the
financial management techniques that are
mentioned in this segment:
 Cost variance-
 Absorption costing process-
 Marginal costing process-
 Merchandise costing-
 Activity-based costing-
 Inventory cost-

Cost variance
Cost variance- This aspect studies and reviews
the discrepancy or dispersion among the
projected and actual costs so that the explanation
may be established and necessary remedial steps
can be taken to enables the business stated above
develop in the near future. There are other
approaches mentioned, but the most effective
ones are discussed in full below from Prime
Furniture Ltd's viewpoint.

Absorption costing process
Absorption costing process- Absorption
budgeting is an accountancy methodology that
considers both expenditures made in the
development and manufacturing of goods and
services, as well as all types of costs, both
internally and externally, in a comprehensive and
exact manner.

Marginal costing process
Marginal costing process- The incremental
costing method is a selling technique that
encompasses all strategies that rely all
throughout company's manufacturing, and the
expenditure is generally referenced to as total
price, which includes 3 categories of expenses:
fixed, flexibility, and semi-variable.

Merchandise costing
Merchandise costing- This aspect includes a number of expenditures incurred, all of
which have been documented below in a systematic and uniform manner with respect to
the components used by Prime Furniture Ltd.

Activity-based costing
Activity-based costing- Activity-based pricing is a type of planning in which commodities
are dispersed depending on the function they complete in order to eliminate inefficiency
and generate income for the company. Cost estimating is important for any business since
it assists in the identification of defects in the organisation so that key methods can be
implemented to produce the desired results in a prompt fashion for Prime Furniture Ltd.
 Stock cost- The different inventory expenses are described in this section.