A detailed presentation on the cost and management accounting (master of business administration)

1. A PRESENTATION
ON COST & MANAGEMENT
ACCOUNTING
PRESENTED BY :
SAI PRIYANKA KURAPATI

2. Contents covered
under
this topic
 Definition of management accounting
 Tools & techniques of management accounting
 Meaning of the marginal and absorption costing
 Difference between marginal costing & absorption costing
 Conclusion

4. Tools and techniques used in management
accounting
 Financial policy and accounting
 Analysis of financial statements
 Historical cost accounting
 Budgetary control
 Standard costing
 Marginal costing
 Control accounting

5. MEANING OF MARGINAL COSTING
■ Marginal costing is also known as variable costing.
■ It refers to the movement in the total cost, due to the production of an additional unit of
the output.
■ Formula :- change in total cost / change in the quantity produced
■ The concepts that we have to understand in the marginal cost are as follows:
1.Contribution
2.Profit volume ratio
3.Break even point
4.Margin of safety
5.CVP analysis

6. Meaning of absorption costing
 It is a method for inventory valuation , where by all manufacturing
expenses are allocated to the cost centers to recognize total cost of
production .
 It is the traditional method for the cost ascertainment , also known as Full
absorption costing.
 FORMULA: Total cost = direct cost + indirect costs

8. Conclusion
From the above discussion , finally I concluded as follows:
Conclusion regarding the tools & techniques of management accounting
These techniques are applicable in an organization to help in planning, supporting decisions of management ,
improve the organization performance & enhance the chances for a high rate of return in the future.
Conclusion regarding the marginal & absorption costing:
It is clear that absorption costing is a better method than marginal costing in usefulness . but, if a company has just
started out & the purpose is to see the contribution per unit & the break – even point , the marginal cost may be
useful.
Otherwise, it is better to use absorption costing. It will help a firm to look at their cost comprehensively & they
will be able to strategize around their cost effectively.