Assessment Cover Sheet

Student ID Number/s: Student Last name/s: Student First name/s:

MIT190392 Thapa Pradip

Course: MPA School: MIT

Unit code: MA515 Unit title: Managerial Accounting

Due date: May 1, 2020 Date submitted: May 1, 2020 Campus: Sydney

Lecturer’s Name: Dr Mac Wright Tutor: Dr Mac Wright

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the consequences of engaging in plagiarism, collusion and contract cheating;
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MIT190392 Pradip May 1, 2020

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 Table of Contents
Executive Summary................................................................................................................................................3
Introduction...........................................................................................................................................................4
Body.......................................................................................................................................................................5
Management Accounting vs Financial Accounting.................................................................................................5
Types of Approach..................................................................................................................................................6
Traditional Costing..............................................................................................................................................6
Standard costing.................................................................................................................................................6
Activity-based costing (ABC)...............................................................................................................................6
Achme Supply Co. Ltd.............................................................................................................................................6
Types of Manufacturing Company......................................................................................................................7
Conclusion..............................................................................................................................................................7
References..............................................................................................................................................................8

Executive Summary
Management Accounting and financial accounting are differentiated in different subject matter like users of
information, regulation, sources of data and nature of the information. Traditionally as management
accountant had only focused on the costs of departments and products but modern management accountant
focusses on the costs of activities, products, customer and suppliers. There is different approach of
management accounting. In this report only three approaches are mentioned as traditional costing, standard
costing and Activity based costing. Achme company is the manufacture of individually designed tools for the
Wiley E Coyote Company Ltd., which falls on electronics, computer and transportation industries. So, in case of
Achme, Activity Based Costing is suitable for generating cost information. With the help of ABC approach,
Achme can allot the overhead cost to those cost protests that have the right to be accused of overhead costs.
Thusly, supervisors can see which activity drivers should be diminished to contract a relating measure of
overhead cost.
 Introduction
Management Accounting is the procedures and methods that attention on the viable and effective utilization
of hierarchical assets to help chiefs in their errand of upgrading both customer worth and shareholder esteem
[ CITATION Lan17 \l 1033 ]. Management accounting, additionally called managerial accounting or cost
accounting, is the way toward breaking down business costs and activities to plan inward monetary report,
records, and record to help supervisors' dynamic procedure in accomplishing business objectives. As it were, it
is the demonstration of comprehending money related and costing information and making an interpretation
of that information into helpful data for management and officials inside an association.

[ CITATION MyA20 \l 1033 ]

Financial accounting is a particular piece of accounting that stays with the track of money related trades .
Utilizing normalized rules, the transactions are recorded, summed up, and introduced in a financial report or
financial statements, for example, an income statement or a balance sheet of financial accounting isn't to
report the estimation of an organization. [ CITATION Har20 \l 1033 ].

For instance, Alex is the CEO of a little counseling firm. He needs to enlist a management accountant and
financial accountant. He has thought of a rundown of occupation assignments and he needs to split them up
into those that ought to be performed by the managerial accountant and those that ought to be performed by
the financial accountant. Here is the rundown of undertakings that Alex has concocted:

1. To prepare cash flow

2. To report income statement
3. Make Budgeting
4. To Calculate the changes in stockholder equity
5. Cost management
In this example, the main errands that would be doled out to the management accountant are budgeting and
costing systems. The financial accountant would deal with different undertakings [ CITATION MyA20 \l 1033 ].

Body
Management Accounting vs Financial Accounting
There are a number of differences between management accounting and financial accounting, which are
as follows:

 Users of information: Financial accounting information are used for external which may include
shareholders, creditors, banks, securities exchange, trade unions and government agencies.
Management accounting information are used for internal like managers and employees at all
levels.
 Regulations: In management accounting, there is no accounting standards or external rules and
information is generated to satisfy managers’ information needs. But in financial accounting there
are accounting standards and corporation law. They regulate the content of external financial
reports.
 Sources of data: In management accounting, both financial and non-financial data drawn from
many sources like the core accounting system, physical and operational data from production
systems etc. In case of financial accounting, financial data are drawn from the organization’s core
transaction-based accounting system.
 Nature of the information: In management accounting, the nature of information is past, current
and future-oriented, subjective, relevant and supplied at various levels of detail to suit managers’
specific needs etc. In case of financial accounting, the nature of information is past, reliable,
verifiable and not timely. The information is not always relevant and highly aggregated.

In one statement, the key contrasts among cost and financial accounting are that management
accounting is deep down centered around management choices, while financial accounting is centered
around giving financial statements to outside parties [ CITATION Lan17 \l 1033 ].
Types of Approach
Traditional Costing
Traditional costing is the allocation of factory overhead to things subject to the volume of production
resources ate up. Under this strategy, overhead is commonly applied reliant on either the proportion of
direct work hours exhausted, or machine hours used. This is a particularly essential issue in uncommonly
robotized production circumstances, where factory overhead is huge and direct work is close to
nonexistent.

Standard costing
Standard costing is an accounting system used by specific creators to perceive the qualifications or variances
between the certifiable costs of the goods that were conveyed, and the costs that should have occurred for the
genuine goods made. The costs that should have occurred for the veritable extraordinary yield are known as
standard costs, which are likely organized with a maker's budgets, profit plan, master budget, etc. The standard
costs incorporate the thing costs, to be explicit, direct materials, direct work, and assembling overhead.
Differences between the real costs and the standard costs will appear as variances, which can be investigated
[ CITATION Aln15 \l 1033 ].

Activity-based costing (ABC)

Activity-based costing is a methodology for more unquestionably assigning overhead costs by allocating them
to activity. At the point when costs are dispensed to activity, the costs can be given out to the cost addresses
that use those exercises. The system can be used for the emphasis on the decline in overhead costs. ABC works
best in complex conditions, where there are different machines and things, and tangled frameworks that are
difficult to channel through [CITATION She \l 1033 ].

Achme Supply Co. Ltd

Achme company is the manufacture of individually designed tools for the Wiley E Coyote Company Ltd. So,
being a management Accountant, I should tailor to Achme’s needs which are among costing, budgeting,
performance measurement and cost management. Traditionally as management accountant had only focused
on the costs of departments and products but modern management accountant focusses on the costs of
activities, products, customer and suppliers. In the past, management accountant monitors financial
performance but now days accountant monitor performance across a range of success factors like quality,
sustainability and delivery too. They are supporting the management of both customer value and shareholder
wealth. In the past years, management accountant had controlled the cost through financial performance
measurement system but now they analyze real causes of costs and eliminate wasteful activities [ CITATION
Lan17 \l 1033 ].
Types of Manufacturing Company
Manufacturing implies changing crude materials into completed items that are usable by society. The Bureau of
Labor Statistics classifies manufacturing into six broad classifications.

 Clothing and Textiles

 Petroleum, Chemicals and Plastics
 Electronics, Computers and transportation
 Food Production
 Metal Manufacturing
 Wood, leather and paper

[ CITATION Ind20 \l 1033 ]

As Achme is the small manufacturer of individually designed and made tools which falls on electronics,
computer and transportation industries. So, in case of Achme, Activity Based Costing is suitable for generating
cost information. With the help of ABC approach, Achme can allot the overhead cost to those cost protests that
have the right to be accused of overhead costs. Thusly, supervisors can see which activity drivers should be
diminished to contract a relating measure of overhead cost. [ CITATION Act19 \l 1033 ]

Conclusion
The Management Accounting encourages the administration to play out the entirety of its capacities including
planning, sorting out, staffing, directing, and controlling while financial accounting is a particular piece of
accounting that stays with the track of money related trades which assists with setting up a salary explanation
or an asset report. The traditional system for cost accounting insinuates the allocation of gathering overhead
costs to the things delivered. Standard costing is an accounting system used by specific creators to perceive the
qualifications or variances. As Achme is the producer of independently structured and made devices which falls
on gadgets, PC and transportation enterprises. Along these lines, if there should be an occurrence of Achme,
Activity Based Costing is appropriate for creating cost data. With the assistance of ABC approach, Achme can
apportion the overhead cost to those cost fights that reserve the option to be blamed for overhead costs.
 References

Accounting Tools. (2020). Retrieved from https://www.accountingtools.com/articles/what-is-the-difference-

between-cost-accounting-and-financial.html?rq=financial%20accounting

Activity Based Costing . (2019). Retrieved from Accounting tools:

https://www.accountingtools.com/articles/2017/5/14/activity-based-costing?rq=Activity%20based
%20costing%20

Alnoor Bhimani, C. T. (2015). Management and Cost Accounting. United Kingdom: Pearson .

Averkamp, H. (2020). Accounting Coach. Retrieved from https://www.accountingcoach.com/financial-

accounting/explanation

Corporate Finance Institute. (2020). Retrieved from

https://corporatefinanceinstitute.com/resources/knowledge/accounting/managerial-accounting/

Industries at a glance. (2020). Retrieved from U.S. Bureau of Labor Statistics: www.bls.gov/iag/tgs/iag31-
33.htm

Langfield-Smith, S. H. (2017). Management Accounting: information for creating value and managing
resources. Australia: McGraw-Hill Education Pty. Ltd.

My Accounting Courses. (2020). Retrieved from https://www.myaccountingcourse.com/accounting-

dictionary/management-accounting

P, A. (2020). Accounting Notes. Retrieved from http://www.accountingnotes.net/financial-management/3-

main-approaches-to-financial-management-management/10616

Shea, V. J. (2018). ERROR RATE IMPACTS ON DECISION EFFICACY: ACTIVITY-BASED COSTING SYSTEMS IN SMALL
BUSINESS. QRBD, 59.