Question

Answer the following Questions: 1. Write a brief note on Managerial Accounting (its features , advantages and disadvantages) Variable Cost 1600 dhs , Fixed Cost-430 dhs. 2. Sales 2800 dhs, What is the contribution and profit? 3. Write a brief note on Cost Volume Profit Analysis. 4. What do you mean by Cost Behaviour? How is it classified? 5. The following information relates to Melco LLC for the year 2017-18. Sales 15,000 units@25 dhs each -375,000 dhs Variable Cost@ 10 dhs each 150,000 dhs Fixed Cost-48,000 dhs Calculate a. PN Ratio b. Break-Even sales c. Margin of safety d. Margin of Safety Ratio I. Suppose the company has reduced the selling price by 11 % . Find out the new PV Ratio, Break-Even Sales, Margin of Safety and Margin of Safety ratio. III. Find out the sales to be achieved to get the same amount of profit with the reduced selling price. 6, What do you mean by Budget? 7. List the essentials for a Budget preparation. BEST WISHES

Answer 1

Answer(1): Managerial Accounting- It is the branch of accounting that is used for decision making. It is the practice of identifying, measuring, analyzing, interpreting and communicating the financial information and data to the managers so that managers can take decisions related to business operation, finance and investment.

Features of Managerial Accounting- Are as following:

1. Decision making
2. Forecasting
3. Cost benefit analysis
4. Cause and effect relationship
5. Special techniques and concepts

Advantages of Managerial Accounting- Are as following:

1. It makes the managers able to take crucial decisions of business.
2. It is important for effective operations of business.
3. It is important to know the cost and the benefits that are received by occurring the cost.
4. It also helps in knowing the opportunity cost that is very important.
5. It helps in reducing the cost by forecasting and budgeting.
6. It is useful in planning and executions of the financial aspects.
7. It is useful in communicating the useful information.
8. It is useful in knowing the margin and also to increase the profits.

Disadvantages of Managerial Accounting- Are as following:

1. It fails to provide accurate information because it does not follow specific rules and principles.
2. Sometimes forecasting proves wrong, there is a lot of difference between standard and actual cost and profits due to which, variance arises and sometimes this variance is unfavorable.
3. Management accounting is futuristic and not realistic.
4. Managerial accounting depends upon the financial accounting and cost accounting so its results are not reliable and transparent.

Answer(2):

Contribution margin = Sales - Variable cost

Contribution:2800 -1600 = $1200

Profit = Contribution margin - Fixed cost

Profit: 1200 - 430 = $770