Essays on Management Accounting Assignment

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References 13IntroductionThe managerial accounting can present a detailed plan for the future regarding cost, expenses, budgets and profits. It takes into account the constraints, controls and the process of the controls in planning the accounting and budgeting. The decentralization of the processes and decision-making will make this effective. The directions and motivations are the part of the managerial accounting. The financial and operational feedbacks are necessary and they should be continuously monitored. This ensures the finished products to come out in time. This can be termed as the phase of accounting concerned with the providing information to managers to use in planning and controlling the processes and operations.

This will take into account the non value added activities, organizational charts, performance reports, plan do check act cycle, planning, control cycle, process and reengineering, raw materials, segments, setup, staff, through put time and TQM are taken into consideration. (Mc Graw Hill Companies, 2007) Task 1Breakeven AnalysisBreakeven Chart: The breakeven point is important for preparing chart. The fixed costs and variable costs for the centrex product are as follows: The variable cost per unit is 10 GBP.

The fixed cost is 25,000GBP. The variable cost of 10,000 units as mentioned will be 10x10,000 = 1,00,000GBP. The following graph shows number of units in X axis and cost in lacs of pounds on Y – axis. The fixed cost is shown as 25,000 GBP. (Mc Graw Hill, 2007) After this the total revenue line has to be plotted. This requires the multiplication of sales price by number of units and termed as output. As the sales price is 14 GBP the total revenue can be calculated as 14x10,000= 140000.

The4 total revenue line is in orange colour and the variable cost line is in green color. The intersection of them will give the break even point as 1,25,000 GBP. The profit will be 1,40,000-1,25,000 = 15,000GBP on the centrex product. (bbc. co. uk, 2007) 2.2 Breakeven Level of Output: Fixed costs are put at 25,000GBP. The variable cost will be maximum at 1,00,000. This makes the total cost of the product at 1,25,000 and the profit at 15,000 GBP. When the total revenue is 1,25,000 the product marketing and sales reaches the breakeven point.

After that every pound of revenue obtained can be termed as profit. To get a profit of 15,000 GBP in the first year the company should sell 10,000 units of Cetnrex. The top portion between two lines gives the profit and the below portion inserted between the lines gives us the possible loss. Here the possible loss is more than the possible profit but the probability of gaining is more. 2.3 Margin Safety: The margin safety can be termed as the amount that is obtained by subtracting the breakeven sales from the budgeted sales or forecasted sales of the company.

Here the forecasted sales can be put at 9,000 units and that amounts to 126000GBP. The breakeven sales is put at 1,25,000GBP. The difference is 1,000 GBP. This should be divided by budgeted sales and multiplied by 100 to get percent. This puts the margin safety percentage at. 793. The sales of the company have to change more than 70 percent to show a net loss. This keeps the company at a secure position regarding after reaching the breakeven point.

(cliffsnotes. com, 2007)

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