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Management Accounts - Essay Example
Author : powlowskijessie
Pages 10 (2510 words)
This report aims at providing costing methods with appropriate procedure of allocation and apportionment cost to understand different costing methods and its deployment in management's decision making process. This will assist the managers of "The Home" to adopt and implement a sound management accounting system that will further give support to them in planning, organising, and controlling their nursing home business.
For example, the cost of labour engaged in a service department can be charged wholly and directly but the canteen expenses of the factory cannot be charged directly and wholly. Its proportionate share 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 set budgets. It sets standard costs and actual costs of processes, departments or products and through variance analysis measure the profitability and social use of funds. This assists the management to attract more investors and tap potential funding sources.
The main aim of costing is the providing crucial management information to ascertain costs, proper allocation of costs to a centre of responsibility, cost planning and control. ...