This document provides an overview of management accounting. It defines management accounting as accounting that assists management in creating policy and day-to-day operations. The key functions of management accounting are to provide, modify, analyze, and interpret accounting data to facilitate management control and decision-making. Management accounting furnishes both financial and qualitative information to managers.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Presentation on Budget, budgeting and budgetary control..
Contents-
1) Budgeting [characteristics]
2) Budgetary control
3) Difference in budget, budgeting, budgetary control
4) Essentials in budgetary control
5) Requisites for budgetary control system
6) Merits & limitations
7) Zero-based budgeting
8) Difference in Traditional & Zero based budgeting.
To assist the management in promoting efficiency. Efficiency includes best possible services to customers, investors and employees.
To prepare budgets covering all functions of a business (i.e, production, sales, research and finance).
To analyze monetary and non-monetary transactions.
To compare the actual performance with plan for identifying deviations and their causes.
To interpret financial statement to enable the management to formulate future policies.
To submit to the management at frequent intervals operating statements and short term financial statements.
To arrange for the systematic allocation of responsibilities.
To provide a suitable organization for discharging the responsibilities.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Presentation on Budget, budgeting and budgetary control..
Contents-
1) Budgeting [characteristics]
2) Budgetary control
3) Difference in budget, budgeting, budgetary control
4) Essentials in budgetary control
5) Requisites for budgetary control system
6) Merits & limitations
7) Zero-based budgeting
8) Difference in Traditional & Zero based budgeting.
To assist the management in promoting efficiency. Efficiency includes best possible services to customers, investors and employees.
To prepare budgets covering all functions of a business (i.e, production, sales, research and finance).
To analyze monetary and non-monetary transactions.
To compare the actual performance with plan for identifying deviations and their causes.
To interpret financial statement to enable the management to formulate future policies.
To submit to the management at frequent intervals operating statements and short term financial statements.
To arrange for the systematic allocation of responsibilities.
To provide a suitable organization for discharging the responsibilities.
Strategy, budgetary planning and expenditure managementTonderayi Chikanda
Explore how enhancing your strategic planning skills, budgetary planning and expenditure management can significantly transform your organization's effectiveness, efficiency and excellence.
Definition and objectives of Management Accounting - Relationship between Cost, Financial and Managerial Accounting. Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information in order to plan the formulation of policies to plan and control the operations of the controlling of business operations, Characteristics of Management Accounting
or
Nature of Management Accounting
or
Features of Management Accounting
Objectives/ Role/ Purpose of Management Accounting. The scope of Management Accounting is wide. All the functions related to finance are included in management accounting. It covers not only the use of financial data and a part of costing theory but may be extended beyond the boundaries of accounting and costing. Functions of Management Accounting
Management Accounting - Meaning, Definition, Characteristics, Scope, Objectiv...RajaKrishnan M
Meaning Definition Characteristics Scope Objectives and Function Financial accounting and Management accounting - Management accounting and Cost accounting - Cost accounting and Management accounting and Financial accounting - Tools and Technics- Advantages and limitations
Strategy, budgetary planning and expenditure managementTonderayi Chikanda
Explore how enhancing your strategic planning skills, budgetary planning and expenditure management can significantly transform your organization's effectiveness, efficiency and excellence.
Definition and objectives of Management Accounting - Relationship between Cost, Financial and Managerial Accounting. Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information in order to plan the formulation of policies to plan and control the operations of the controlling of business operations, Characteristics of Management Accounting
or
Nature of Management Accounting
or
Features of Management Accounting
Objectives/ Role/ Purpose of Management Accounting. The scope of Management Accounting is wide. All the functions related to finance are included in management accounting. It covers not only the use of financial data and a part of costing theory but may be extended beyond the boundaries of accounting and costing. Functions of Management Accounting
Management Accounting - Meaning, Definition, Characteristics, Scope, Objectiv...RajaKrishnan M
Meaning Definition Characteristics Scope Objectives and Function Financial accounting and Management accounting - Management accounting and Cost accounting - Cost accounting and Management accounting and Financial accounting - Tools and Technics- Advantages and limitations
Presentation on finance fundamentals for nonprofit organizations. Geared towards non-accountants, this presentation deals with the following:
- Characteristics of nonprofits and responsibility for financial information
- Basic review of accounting principles
- Financial statements
- Different members of the finance team
- Financial policies for nonprofits
- Communicating financial results
- Nonprofit tax
Presentation on Budget, Budgeting & Budgetary control
Contents:
1) Budgeting [characteristics]
2) Budgetary control
3) Difference in budget, budgeting, budgetary control
4) Essentials in budgetary control
5) Requisites for budgetary control system
6) Merits & limitations
7) Zero-based budgeting
8) Difference in Traditional & Zero based budgeting.
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NGOs are key partners with any Government in carrying Social Welfare in any Society. Effective Audit & Efficient Management are extremely important in building transparency. Chartered Accountants play an important role.
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
As a manager, discuss how you would use or have used the concepts .docxwraythallchan
As a manager, discuss how you would use or have used the concepts
1) Cost-Volume-Profit Analysis
2) Importance of Profit- cost- volume analysis
3) Variable Costing in Planning
4) Importance of Variable costing
Instrcutions:
1) Original post for two different topics total 600 words
2) 3 Responses to classmates = 450 words total
3) 3 articles/peer reviewed references for one question and 3 Articles/Peer Reviewed references for other question.
4) Citation required in the body.
5) APA format
Response#1(Mahesh)
Cost-Volume-Profit Analysis is observed as the employment of a model that helps in breaking down the complexity that exists between cost of production and operation, quality of goods produced, and the profits generated from the whole undertaking (Lulaj & Iseni, 2018). CVP takes into consideration the influence each aspect of operation or production unit has on the running of an organization. It stipulates the expenses that are to be incurred in a given operation by considering the fixed and variable costs that come with production of a good or a service or yet the sale of a product. This makes it an essential tool in the control of budgetary allocation in an organization as it provides the necessary information that gives direction on the combined activities that are likely to add value to an investor's capital (Serfling, 2016). A major example may be stipulated in the production of a food product, which seems to gain demand on weekends. In such a case, the business producing the product will commit its resources elsewhere during the weekday to optimize on the scarce resources and avoid drowning in expenses example fixed costs such as rent and utilize its production unit to meet the accruing demand on weekends.
Thus, it is without a doubt to state that CVP Analysis is a major tool of planning used in managing risks, optimizing on the scarce resources which are all essential in enhancing customer satisfaction (Lulaj & Iseni, 2018). Essentially, CVP provides information that is crucial in the control and planning of production, among other operational activities in an organization.
Variable Costing
Variable costing revolves around the assigning of the period and product costs in regards to a given kind of product. Researchers observe that it is an essential approach in internal reporting due to its ability to break the complexity that comes along with an organization’s operation and production (Creese, 2017). It addresses costs product costs related to manufacturing and specifically those that can be directly attributed to a product. In this case, it provides enough information that is crucial in controlling the production sector and makes plans through strategies such as budgetary allocation (Serfling, 2016). This is so in that it provides the relationship between the expected and actual costs and through this it becomes easier for the management to schedule their operations, which’s crucial in maximizing the .
the document is on Cost volume profit analysis.
(Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income.)
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http://sandymillin.wordpress.com/iateflwebinar2024
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Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
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Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
2. Introduction
Management accounting can be viewed as Management-
oriented Accounting. Basically it is the study of managerial
aspect of financial accounting, "accounting in relation to
management function". It shows how the accounting
function can be re-oriented so as to fit it within the
framework of management activity. The primary task of
management accounting is, therefore, to redesign the
entire accounting system so that it may serve the
operational needs of the firm. If furnishes definite
accounting information, past, present or future, which may
be used as a basis for management action. The financial
data are so devised and systematically development that
they become a unique tool for management decision.
3. DEFINITIONS OF MANAGEMENT
ACCOUNTING
According to The Report of the Anglo-American
Council of Productivity:
"Management accounting is the presentation of
accounting information in such a way as to assist the
management in creation of policy and the day to day
operation of an undertaking".
4. NATURE OF MANAGEMENT
ACCOUNTING
The term management accounting is composed of
'management' and 'accounting'. The word 'management'
here does not signify only the top management but the
entire personnel charged with the authority and
responsibility of operating an enterprise.
The task of management accounting involves furnishing
accounting information to the management, which may
base its decisions on it. It is through management
accounting that the management gets the tools for an
analysis of its administrative action and can lay suitable
stress on the possible alternatives in terms of costs, prices
and profits, etc. but it should be understood that the
accounting information supplied to management is not the
sole basis for managerial decisions.
5. FUNCTIONS OF MANAGEMENT
ACCOUNTING
Provides data
Modifies data
Analyses and interprets data
Serves as a means of communicating
Facilitates control
Uses also qualitative information
6. SCOPE OF MANAGEMENT
ACCOUNTING
Management accounting is concerned with presentation of
accounting information in the most useful way for the
management. Its scope is, therefore, quite vast and includes
within its fold almost all aspects of business operations.
However, the following areas can rightly be identified as falling
within the ambit of management accounting:
Financial Accounting
Cost Accounting
Budgetary Control
Inventory Control
Interim Reporting
Taxation
Internal Audit
7. THE MANAGEMENT ACCOUNTANT
Management Accounting provides significant economic
and financial data to the management and the
Management Accountant is the channel through which
this information efficiently and effectively flows to the
management. The Management Accountant has a very
significant role to perform in the installation, development
and functioning of an efficient and effective management
information system.
"The management accountant is exactly like the spokes in a
wheel, connecting the rim of the wheel and the hub
receiving the information. He processes the information
and then returns the processed information back towhere
it came from.”
8. FUNCTIONS OF MANAGEMENT
ACCOUNTANT
It is the duty of the management accountant to keep
all levels of management informed of their real
position. He has, therefore, varied functions to
perform. His important functions can be summarized
as follows:
Planning
Controlling
Coordinating
administers tax policies and procedures
ensures fiscal protection for the assets of the business
9. MANAGEMENT ACCOUNTING
AND FINANCIAL ACCOUNTING
These differences can be laid down as follows
Objectives
Analyzing performance
Data used
Monetary measurement
Periodicity of reporting
Precision
Nature
Legal compulsion
10. LIMITATIONS OF MANAGEMENT
ACCOUNTING
Limitations of basic records
Persistent efforts
Management accounting is only a tool
Wide scope
Top-heavy structure
Opposition to change
Evolutionary stage
11. MARGINAL COSTING AND PROFIT
PLANNING
It is important for managers to ascertain the cost
behaviour pattern and use it to estimate the total cost,
total revenues and thereby profits at various sales
volumes.
The cost revenue relationship holds for a short period.
Therefore, this relationship cannot be used to estimate
long-term performance of the firm. However, this
short-term validity helps to maximise profit with given
resources. For the purpose of taking tactical decisions
managers use the marginal costing techniques.
12. CVP ASSUMPTIONS AND USES
The assumptions of the CVP analysis are:
(a) Fixed and variable cost patterns can be established
with reasonable accuracy,
(b) Total fixed costs and variable cost per unit will not
change during the period under consideration,
(c) Selling price will remain constant at all sales volumes,
(d) Factor price per unit
(e) Efficiency and productivity will remain unchanged
during the period under consideration,
13. BREAK-EVEN POINT AND MARGIN
OF SAFETY EQUATION METHOD
Break-even point is the sales volume or sales value at
which the firm neither makes profit nor incurs loss. In
other words, at the break-even point, revenue equals
total costs.
Marginal Cost Equation
Revenue - Variable costs - Fixed costs = Operating
income Or S – V – F = P
Or S-V=F+P=C
Where S = revenue, V = total variable cost, C = total
contribution F = total fixed cost
14. Contribution/Sales Ratio (C/S Ratio)
C/S = Total contribution/Total turnover x 100
Or (S-V)/S x 100 or (F+P)/S x 100
Break-even Sales
In determining break-even sales, we need to know
(a) Fixed costs and (b) Contribution per unit or the C/S ratio.
At break-even point (BEP), total contribution equals fixed
costs. Therefore, BEP in terms of unit is calculated by
dividing total fixed costs by contribution per unit. BEP in
terms of sales value is calculated by dividing total fixed
costs by the C/S ratio.
15. Margin of Safety
Margin of safety is the difference between the
estimated sales and sales at BEP. It provides very useful
information to management, i.e. by how much can
sales drop below the budgeted sales before a loss is
incurred. Margin of safety is usually expressed as a
percentage of budgeted sales.
16. C/S Ratio and Break-even Point in a
Multi-Product Situation
In a multi-product situation, it is not possible to
express the break-even point in terms of units. It is
quite likely that different measuring units are used to
measure sales quantity of different products.
BEP is calculated in terms of sale value by using
weighted average C/S ratio. Weight of each product in
the sales-mix is used to calculate the weighted average
C/S ratio.
18. MARGINAL COSTING TECHNIQUES
Marginal costing technique assumes that fixed costs are
given and only variable costs and revenue can be
influenced by short-term managerial actions. Therefore, in
the short-term, profit can be maximised by maximising
total contribution, which is the difference between total
revenue and total variable costs.
Underlying assumptions that fixed costs do not change
with change in the activity level and that there is a linear
relationship between revenue and variable costs, which do
not hold good beyond the relevant range.
Similarly, in practice, it is difficult to segregate the total
cost into fixed and variable elements accurately.
19. PRODUCT MIX
Product Profitability :
If the same facilities can be used to produce more than
one product, contribution per unit is taken as the
profitability index for each product. The assumption is
that there is no limiting factor and there is no limit on
the number of units of each product, which can be
produced and sold.
20. Limiting Factor Analysis
Limiting factor or key factor is defined as anything which
limits the activity of an entity. An entity seeks to optimize
the benefit it obtains from the limiting factor. Examples are
a shortage of supply of a resource and a restriction on sales
at a particular price. Limiting factors restrict the number of
units that can be produced or sold. Typical examples of
limiting factors are:
a) Sales demand in quantity,
b) Sales demand in value,
c) A limit to availability of material,
d) A limit to availability of a particular grade of labour,
e) A limit to machine capacity,
f) A shortage of working capital.
21. MAKE OR BUY DECISION
If no limiting factor is in operation, the decision to buy or to
manufacture a product rests on whether the bought-out price of
an article is lower than its marginal cost. The fixed cost is
irrelevant for our decision because fixed cost will not change as a
result of buying the product/component from outside. If the
bought-out price of an article is lower than its marginal cost, it
will be profitable to buy the article from outside in all
circumstances.
The firm will save marginal cost and will spend lower than the
marginal cost to buy the article. If the bought-out price is higher
than the marginal cost, the total cost of production will increase,
if the firm decides to buy the article from outside. Therefore, if it
has a choice, it will buy the article for which the difference
between the bought-out price and the marginal cost is the lowest
among article under consideration.
22. SHUTTING DOWN DECISIONS
Marginal costing technique can be used in deciding
whether to discontinue a section of the business. If we
assume that discontinuance will not influence the total
fixed costs of the firm, the decision will hinge on whether
the particular section of the business is contributing
towards fixed overheads.
Closure of an activity, which generates positive
contribution, reduces the current operating profit or
increases the operating loss. In certain situations, a part of
the fixed cost is avoided by temporary closure. In such a
situation, if avoidable fixed cost is higher than expected
contribution, the business segment should be closed.
23. Responsibility Accounting
Responsibility accounting is a system of control by
delegating and locating the responsibility for costs. It
is similar to any other system of cost such as standard
costing or budgetary control but with greater emphasis
towards fixing the responsibility.
According to Robert Anthony, Responsibility
accounting is “ that type of management accounting
that collects and reports both planned & actual
accounting information in terms of responsibility
centers.”
24. Steps required for Responsibility
Accounting
Set the targets
Communicate the the targets to concerned executives.
Continuous appraisal of actual performance
Variance in actual & planned
Communicating the variance to higher management
Taking corrective measures
25. Responsibility Centre
Responsibility accounting focuses attention on
responsibility centers. Responsibility centre refers to
any organization unit that is headed by a responsible
manager.
Responsibility accounting measures both inputs &
outputs of the responsibility centers in monetary
terms.
27. Performance Evaluation Criteria
Return on Investment Method
ROI= EBIT/Capital Employed*100
Residual Income or Economic Value Method
Sales Volume Method
Contribution Method
28. BUDGET
Definition of Budget:
The Chartered Institute of Management Accountants,
England, defines a ‘budget’ as under:
“A financial and/or quantitative statement, prepared and
approved prior to define period of time, of the policy to be
perused during that period for the purpose of attaining a
given objective.”
According to Brown and Howard of Management Accountant
“a budget is a predetermined statement of managerial
policy during the given period which provides a standard
for comparison with the results actually achieved.”
29. Forecast Vs Budget
Forecast
•Forecasts is mainly concerned
with anticipated or probable
events
•Forecast is only a tentative
estimate
•Forecast results in planning
•Forecasts may cover for longer
period or years
Budget
•Budget is related to planned
events
•Budget is a target fixed for a
period
•Result of planning is
budgeting
•Budget is planned or
prepared for a shorter period
30. Budgetary control
Budgetary control is the process of establishment of
budgets relating to various activities and comparing the
budgeted figures with the actual performance for arriving
at deviations, if any. Accordingly, there cannot be
budgetary control without budgets. Budgetary control is a
system which uses budgets as a means of planning and
controlling.
According to I.C.M.A. England Budgetary control is
defined by Terminology as “the establishment of budgets
relating to the responsibilities of executives to the
requirements of a policy and the continuous comparison of
actual with the budgeted results, either to secure by
individual actions the objectives of that policy or to provide
a basis for its revision.”
31. Objectives of Budgetary Control
1.Planning: A budget is a plan of action. Budgeting ensures
a detailed plan of action for a business over a period of
time.
2. Co-ordination: Budgetary control co-ordinates the
various activities of the entity or organization and secure
co-operation of all concerned towards the common goal.
3. Control: Control is necessary to ensure that plans and
objectives are being achieved. Control follows planning
and co-ordination. No control performance is possible
without predetermined standards. Thus, budgetary control
makes control possible by continuous measures against
predetermined targets. If there is any variation between the
budgeted performance and the actual performance the
same is subject to analysis and corrective action.
32. Scope of Budgetary Control
Scope:
1. Budgets are prepared for different functions of business
such as production, sales etc. Actual results are compared
with the budgets and control is exercised.
2. Budgets have a wide range of coverage of the entire
organization. Each operation or process is divided into
number of elements and standards are set for each such
element.
3. Budgetary control is concerned with origin of
expenditure at functional levels.
4. Budget is a projection of financial accounts whereas
standard costing projects the cost accounts.
33. Techniques of Budgetary Control
Technique:
1. Budgetary control is exercised by putting budgets
and actual side by side. Variances are not normally
revealed in the accounts.
2. Budgetary control system can be operated in parts.
For example, advertisement budgets, research and
development budgets, etc.
3. Budgetary control of expenses is broad in nature.
34. Requisites for Effective Budgetary
Control
The following are the requisites for effective budgetary control:
1. Clear cut objectives and goals should be well defined.
2. The ultimate objective of realising maximum benefits should always be kept
uppermost.
3.There should be a budget manual which contains all details regarding plan and
procedures for its execution. It should also specify the time table for budget preparation
for approval, details about responsibility, cost centers etc.
4. Budget committee should be set up for budget preparation and efficient of the plan.
5. A budget should always be related to a specified time period.
6. Support of top management is necessary in order to get the full support and
cooperation of the system of budgetary control.
7. To make budgetary control successful, there should be a proper delegation of authority
and responsibility.
8. Adequate accounting system is essential to make the budgeting successful.
9. The employees should be properly educated about the benefits of budgeting system.
10. The budgeting system should not cost more to operate than it is worth.
11. Key factor or limiting factor, if any, should consider before preparation of budget.
12. For budgetary control to be effective, proper periodic reporting system should
beintroduced.
37. Types of Budgets
(A) Classification on the basis of Time:
1. Long-term budgets
2. Short-term budgets
3. Current budgets
(B) Classification according to functions:
1. Functional or subsidiary budgets
2. Master budgets
(C) Classification on the basis of capacity:
1. Fixed budgets.
2. Flexible budgets
38. Functional budget
The functional budget is one which relates to any of the
functions of an organization. The number of functional
budgets depends upon the size and nature of business. The
following are the commonly used:
(i) Sales budget
(ii) Purchase budget
(iii) Production budget
(iv) Selling and distribution cost budget
(v) Labour cost budget
(vi) Cash budget
(vii) Capital expenditure budget
39. Zero Base Budgeting (ZBB)
Zero base budgeting is a new technique of budgeting.
It is designed to meet the needs of the management in
order to ensure the operational efficiency and effective
utilization of the allocated resources of a concern.
According to Peter A. Phyhrr ZBB is defined as an
“Operative planning and budgeting process which
requires each manager to justify his entire budget in
detail from Scratch (hence zero base) and shifts the
burden of proof to each manager to justify why we
should spend any money at all”.
40. Important aspect of ZBB
Zero-based budgeting involves the following
important aspects:
1. It emphasises on all requisites of budgets.
2. Evaluation on the basis of decision packages and
systematic analysis, i.e., in view of cost benefit
analysis.
3. Planning the activities, promotes operational
efficiency and monitors the performance to achieve
the objectives.
41. Steps involved in ZBB
The following are the steps involved in zero base budgeting:
1. No previous year performance of inefficiencies is to be taken as
adjustments in subsequent year.
2. Identification of activities in decision packages.
3. Determination of budgeting objectives to be attained.
4. Extent to which zero base budgeting is to be applied.
5. Evaluation of current and proposed expenditure and placing
them in order of priority.
6. Assignment of task and allotment of sources on the basis of
cost benefit comparison.
7. Review process of each activity examined afresh.
8. Weightage should be given for alternative course of actions.