Management Accounts Essay Example | Topics and Well Written Essays - 2500 words

Management Accounts - Essay ExampleFor example, the make up of labour engaged in a serve well department can be charged wholly and directly unless the canteen expenses of the factory cannot be charged directly and wholly. Its proportionate shargon will have to be found out. Charging of costs in the former case will be termed as allocation of costs whereas in the latter, it will be termed as apportionment of costs.Management Accounting is an indispensable tool for any business unit to train budgets. It sets standard costs and actual costs of processes, departments or products and through variance analysis measure the lucrativeness and social use of funds. This assists the management to attract more investors and tap potential funding sources.The main point of be is the providing crucial management information to ascertain costs, proper allocation of costs to a nerve center of responsibility, cost planning and visualise. Further, it provides the necessary information to plan t he cost of operation and ability to monitor and control those cost against the plan.cost can provide all the information required for the effective management decisions. The effective costing is therefore essential for survival of any business.3.2 Methods of costingCosting can be be as the procedure and technique of ascertaining costs. The principles in every method of costing are same but the methods of analyzing and presenting the costs differ with the nature of business. The methods of costing are as follows submersion CostingMarginal CostingJob CostingActivity Based CostingBatch Costing3.2.1 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 labour, and twain variable and fixed manufacturing overhead. As a result, absorption costing is also termed as full costing or the full absorption method. 3.2.2 Marginal costing Ma rginal cost means the cost of the marginal or last unit produced. It is also defined as the cost of one more or one less unit produced besides existing level of production. Marginal costing may be defined as the technique of presenting cost data wherein variable costs and fixed costs are shown separately for managerial decision-making.Marginal costing technique has given birth to a very useful concept of contribution