Management Accounting Report: Systems, Reports, and Techniques

This report provides an overview of management accounting, focusing on its role in decision-making within organizations. It defines management accounting as the process of gathering, analyzing, and interpreting financial information for internal use. The report uses GSQ Limited as a case study, covering management accounting systems, reports, and costing techniques. It explains marginal and absorption costing methods, including their application in profit or loss statements. The report includes calculations for labor costs and concludes by highlighting the importance of management accounting systems and reports in strategic and operational decision-making. It emphasizes the role of cost accounting techniques in profit analysis and planning tools for cost control. References to relevant academic sources are also included.

MANAGEMENT ACCOUNTING

TABLE OF CONTENT
INTRODUCTION
MAIN BODY
CONCLUSION
REFERENCES

INTRODUCTION
 Management accounting can be defined as the method of gathering, analysing, interpreting
and preparation of financial reports used by the management in decision making.
 This is the process involving use of financial information and the resources in decision
making by the managers. Management provides information and prepares report that is
essential for the internal users of the management. Present report is based on GSQ limited a
manufacturing concern.
 Report will cover management accounting systems, reports used in management accounting
and costing techniques used in management accounting. It will also cover the management
accounting costing techniques used for recording closing stock. It will also provide about
the planning tools used by MA and how MA systems help in solving the financial issues of
an entity.

Marginal Costing
 Marginal costing refers to the costing technique
in which only variable cost are considered for
calculating the cost of product. This is also
known as the direct costing method.
 Marginal costing considers the fixed as period
costs and are not considered in the costing of the
product. In marginal costing variable cost is
charged to the cost units. Fixed costs is charged
directly against the contribution.

Absorption Costing
 This is costing techniques that consider all the
cost incurred for manufacturing the product.
 This involves both variable as well as fixed
costs associated with the product. In this method
overheads are considered absorbed by the cost
units of the product (Abernethy and Campbell,
2018).
 Absorption costing unlike marginal costing do
not considers the fixed cost as period cost.

Profit or loss statements using Absorption costing
(50000 units) June
Sales Revenue (50000*30) 1500000
Marginal cost of sales
Direct materials (50000*8) 285000
Direct Labour (16667*9) 150000
Variable production
overhead (50000*2) 100000
Fixed production overhead 160000 695000
Gross Profit 805000
Fixed admin & distribution
cost 60000
Vaiable selling expenses (50000*4) 200000 260000
Net Income 545000

Calculation of labour cost
1 unit = 20 minutes
50000 units = 1000000 minutes
Total hours (1000000/60)
16666.66667
Units per hour 50000 / 16667
3
Labour Cost 16667 * 9
150000

CONCLUSION
The above report about management accounting has provided important information of all the concepts
used by organisation. Management accounting systems such as inventory management systems, cost
accounting systems, job costing systems and price optimisation helps the business in effective
management of business operations.
They help the business in keeping proper record of all the transactions of business. The management
accounting reports helps in taking strategic and operational decisions as it involves detailed information
about the costs and performance of business.
This is essential for business decision making as it provides the business to make strategic steps
regarding the strategies for improving the efficiency and productivity of business. Cost accounting
techniques helps business in analysing the profits of company.
This also planning tools involving forecasts about the future income and expenditures that are helpful in
controlling the cost of operation.

REFERENCES
 Turner, M.J. and et.al., 2017. Hotel property performance: The role of strategic
management accounting. International Journal of Hospitality
Management. 63.pp.33-43.
 Bui, B. and De Villiers, C., 2017. Business strategies and management
accounting in response to climate change risk exposure and regulatory
uncertainty. The British Accounting Review.49(1).pp.4-24.
 Collis, J. and Hussey, R., 2017. Cost and management accounting. Macmillan
International Higher Education.