Management Accounting Systems and Techniques: Assignment
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Added on 2021-01-03
Management Accounting Systems and Techniques: Assignment
Added on 2021-01-03
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MANAGEMENTACCOUNTING SYSTEMSAND TECHNIQUES
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and need of various types of accounting systems.....................1P2 Methods used for management accounting reporting.......................................................3M1 Benefits and applications of management accounting systems.......................................4D1 Critical analyses of integration of accounting reporting and management accountingsystem.....................................................................................................................................5TASK 2............................................................................................................................................6P3 Calculation of costs and net income using marginal and absorption costing....................6M2 Types of management accounting techniques.................................................................8D2 Interpretation of data........................................................................................................9TASK 3............................................................................................................................................9P4 Advantages and disadvantages of various planning tools used for budgetary control......9M3 Applications of planning tools of budgetary control.....................................................11TASK 4..........................................................................................................................................11P5 Comparison on how organisations are adapting management accounting systems........11M4 Analyses of financial problems......................................................................................13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagement accounting is a process of preparation of managerial accounts and recordswhich helps an organisation in effective decision making process. These reports and books arealso used to gain trust of related parties such as creditors, investors etc. as they reflect true andfair position of a business entity. Unicorn grocery is a medium scale cooperative groceryorganisation which delivers numerous grocery and other general utility equipment’s.Management accounting is used by every organisation irrespective of its nature, size or scope.This organisation uses this system in order to prepare their income statements. This project focuses on management accounting and its methods, techniques, reports etc.which helps in determining future costs and profitability. Numerous significant roles and benefitsof these methods are discussed in this process (Ward, 2012). Management accounting is the keyfor an organisation's success as it focuses on business growth and development by identifyingfuture events which can be prevented. Decision making process becomes effortless due to thesesystems. TASK 1P1 Management accounting and need of various types of accounting systemsManagement accounting is the core function of an organisation as it prepares variousmanagerial records and reports, these reports are different from financial accounts as they can beprepared anytime in an accounting period according to its requirements whereas financialaccounts are prepared at the end of an accounting year. Unicorn grocery is cooperative grocery business firm which produces and deliversgrocery and other home utility goods, they use management accounting and its systems forefficient decision making and for the preparation of their managerial records which help them inserving a true image of the business functions (Parker, 2012).Types of accounting systems and their requirements:Management accounting systems helps a business in organising and controlling theiractivities by determining various costs involved in activities. These systems provide variousguidelines which leads manager to ascertaining and delivering fair image of business functionsand profitability. Some of these systems are explained below:1
Cost accounting system – Under this system, all costs involved in various departmentslike production, marketing, selling, distributing are discovered so that profitability of nearfuture events can be ascertained. Unicorn grocery is engaged in activities likemanufacturing, packaging and delivering which involves respective expenses which aredetermined under this accounting system. Most significant role of this system is that ithelps in ascertaining future income which further can be utilised for decision makingprocess and for future investment decisions.Inventory management system – Inventory management system provides a frameworkwhich guides a business firm in managing inventory. Here, inventory refers to the rawmaterial available in the business, inventory stocked in the warehouse, work in progressstock and finished goods. Unicorn grocery deals in groceries and other home utilityappliances which results to be having ample of semi-finished and finished stock, due towhich this system is entirely appropriate for this company. Manager of Unicorn canfollow this system in order to manage all the stocks. This organisation uses methods ofABC, EOQ, periodic and perceptual for managing their inventory (Otley and Emmanuel,2013).Job costing – Job order costing is a system which determines the costs involved in eachjob. Here, job refers to job order which is taken from the client to complete in a specificgiven time period according to the brief provided by the customer. This system isappropriate for the organisation which deals in customised products like Unicorn grocery,as they get orders from various customers and try to complete manufacturing of that orderaccording to the brief in given time. This system helps an organisation in estimating costswhich can further be utilised in decision making about labour requirements and materialprocurements. Systems which are used for job costing are batch, process, contract andstandard costing systems.Price optimisation system – Under this system, prices are determined of producedgoods. Here, price optimisation is the process of price determination after charging allcosts involved in manufacturing and selling. This system is appropriate for a retailbusiness as they sell numerous products. Unicorn grocery exercise this method in theirpricing planning as they can allocate effective prices. Most important role of this systemis that it helps in maintaining a balance between costs of several products. If the prices of2
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