Table of Contents

TASK P1: Explain management accounting and give essential requirements for different types of
management accounting?...........................................................................................................................3
Planning: planning is goal setting.........................................................................................................3
Controlling: controlling is to compare actual performance with budgeted performance...................3
1 Planning..........................................................................................................................................3
2 Decision making.......................................................................................................................7
Definition of management accounting................................................................................................9
Definition of management accounting system....................................................................................9
Task m1: Different benefits of management accounting system..............................................................10
Reduce Expenses...............................................................................................................................10
Improve Cash Flow............................................................................................................................10
Business Decisions.............................................................................................................................10
Increase Financial Returns.................................................................................................................11
Task D1: Critical evaluation of management accounting system of mobilink............................................11
Task P2: Different methods of management accounting reporting...........................................................11
Budget Report...................................................................................................................................11
Accounts Receivable Aging................................................................................................................11
Job Cost Reports................................................................................................................................12
Inventory and Manufacturing............................................................................................................12
Definition of management reporting method.......................................................................................12
Types of management accounting reporting method.......................................................................12
Cost Reports......................................................................................................................................13
Budgets..............................................................................................................................................13
Performance reports.........................................................................................................................13
Other Reports....................................................................................................................................13
TASK P3: Absorption costing system and marginal costing system and calculation of cost by these
methods....................................................................................................................................................13
Absorption costing.................................................................................................................................13
Absorption Costing Components.......................................................................................................14
Absorption Costing Steps.............................................................................................................14
 Overhead Absorption.................................................................................................................14
Absorption Costing Problems..................................................................................................15
Cost functions and relationship to average cost................................................................................16
Economies of scale............................................................................................................................17
Perfectly competitive supply curve....................................................................................................18
Decisions taken based on marginal costs..........................................................................................18
Relationship to fixed costs.................................................................................................................18
Externalities.......................................................................................................................................18
Negative externalities of production.................................................................................................19
Positive externalities of production......................................................................................19
Social costs....................................................................................................................................20
TASK M2: Management accounting techniques........................................................................................20
Management accounting techniques....................................................................................................22
Breakeven Analysis: How to Know When You Can Expect a Profit...........................22
TASK D2: Financial reports that covers business activities........................................................................23
Cost-Volume-Profit Analysis..................................................................................................................23
Cost of production report.explanation and formula..............................................................................23
Cost of Production Report (CPR)............................................................................................................23
COST OF PRODUCTION REPORT (CPR):..................................................................................................23
DEFINITION AND EXPLANATION OF COST OF PRODUCTION REPORT (CPR):.........................................23
TASK P4: Advantages and disadvantages of different planning tools........................................................24
Advantages of Planning.........................................................................................................................24
Disadvantages or Limitations of Planning..............................................................................................25
How to avoid the failure of planning?...................................................................................................26
TASK M3: Different planning and forecasting tools...................................................................................30
Regression analysis............................................................................................................................30
Time series analysis...........................................................................................................................31
TASK D3:How planning tools are used to solve financial problems...........................................................31
Definition of break even point...........................................................................................................32
TASK P5:How organizations are adopting to management accounting system.........................................32
TASK M4:Analyze how financial problems can be resolved with management accounting?....................32
Bibliography...............................................................................................................................................32
UNIT 5
Management Accounting
Definition of management accounting

Definition of management accounting system

TASK P1: Explain management accounting and give essential

requirements for different types of management accounting?
The management accounting is used to provide information to management to perform its roles. There
are three important roles of management.

 Planning: planning is goal setting.

 Decision making: decision making is to choose between alternatives.
 Controlling: controlling is to compare actual performance with budgeted performance.

Task M1: Different benefits of management accounting system

Task D1: Critical evaluation of management accounting system of

mobilink
.
Task P2: Different methods of management accounting reporting
Definition of management reporting method
Types of management accounting reporting method

TASK P3: Absorption costing system and marginal costing system and
calculation of cost by these methods
Absorption costing
Absorption costing means that all of the manufacturing costs are absorbed  by the units produced. In
other words, the cost of a finished unit in inventory will include direct materials, direct labor, and both
variable and fixed manufacturing overhead. As a result, absorption costing is also referred to as full
costing or the full absorption method.[ CITATION acc184 \l 1033 ]

Absorption Costing Components

Absorption Costing Steps

Absorption Costing Problems

Marginal cost
The increase or decrease in the total cost of a production run for making one additional unit of an item.
It is computed in situations where the breakeven point has been reached: the fixed costs have already
been absorbed by the already produced items and only the direct (variable) costs have to be accounted
for.[ CITATION bus187 \l 1033 ]

TASK M2: Management accounting techniques

22 Management Accounting Techniques

Management accounting, or managerial accounting, is the use of accounting techniques for business
analysis to support strategy formation, business execution, decision making and risk management. It
includes both analyses of financial and non-financial measures. It should be noted that management
accounting is generally considered a separate practice from financial management functions such as
controlling a team budget.

The following are considered fundamental techniques of management accounting:

 Activity Based Costing

 Cost Benefit Analysis
 Data Dredging
 Data Mining
  Demand Forecasting
 Forecasting
 Lifecycle Cost Analysis
 Net Present Value
 Time Value Of Money
 Rate Of Return
 Statistical Analysis
 Statistical Model
 Statistical Population
 Probability Distribution
 Throughput Accounting
 Theory Of Constraints
 Debottlenecking
 Bottleneck
 Total Cost Of Ownership
 Cost To Company
 Variance Analysis
 Regression Analysis[ CITATION sim17 \l 1033 ]

Management accounting techniques

1. Brake even analysis

2. Budget tree analysis

TASK D2: Financial reports that covers business activities

TASK P4: Advantages and disadvantages of different planning tools

How to avoid the failure of planning?

Budget
Definition
An estimate of costs, revenues, and resources over a specified period, reflecting a reading of future
financial conditions and goals.

TASK M3: Different planning and forecasting tools

Forecasting is prediction about future. It helps us to project our sales and expenses. For this purpose we
use regression analysis and time series analysis
Regression analysis

Time series analysis

TASK D3: How planning tools are used to solve financial problems

TASK P5: How organizations are adopting to management accounting

system

TASK M4: Analyze how financial problems can be resolved with

management accounting?