Different types of Management Accounting Systems (Doc)
Added on 2020-12-29
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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and its types of management accounting system..........................1P2: Different methods used for management accounting reporting............................................3M1: Evaluate the benefits of management accounting system and its applications...................4D1: Management accounting system and its reporting integrated within organisational process.....................................................................................................................................................5TASK 2............................................................................................................................................5P3 Calculation of cost using an appropriate techniques..............................................................5M2: Various types of accounting techniques and financial reporting documents......................7D2: Data interpretation................................................................................................................7TASK 3............................................................................................................................................7P4: Budgetary control and planning tools its advantages and disadvantages.............................7M3: Uses and applications of planning tools for preparing and forecasting budgets.................9TASK 4............................................................................................................................................9P5: Responses of management accounting system to deal with financial problems..................9M4: Management accounting to sustainable success in responding to financial problems......11D3: Planning tools respond appropriately to resolve financial problems.................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is the process associated with managerial accounting or costaccounting which is used for analysing, presenting and interpreting of accounting information. Ituse to assist management in the process of decision making, creation of policy related tooperation of companies. Swain & Jones is a retail auto-mobile company. The company marketsand sell new pre owned auto-mobile. Company also sell various accessories and spare part andoffer maintenance and repair services. The company also provide various a wide range of financescheme for vehicle purchase. In this report various type of management accounting system are discussed along withreporting method that benefits its working. Management use cost method and accountinginformation for determining healthy cost for its product. Swains & Jones applies differentplanning tool to properly resolve various financial issue which are addressed in this project. Itsmanagement took several accounting system to resolve company's financial problem forachieving target (Ward, 2012).TASK 1P1: Management accounting and its types of management accounting systemManagement accounting is based on cost accounting methods. It is useful fororganisation in measuring performance of employee as well as company efficiency. The mainbenefits of this concepts are better decision making and help an organisation in achievement oforganisation goal. Swain & Jones is a small size enterprises so it is very important for theirmanagement to produce financial statement. Identify future risk and compare employee'sperformance by adopting various management accounting system. It will result in attractingmore customers towards company products and will increase its profitability.Swain & Jones uses the main management accounting system for creating impressiveplan for doing more sale and make decision that help them to succeed its business objectives.Various accounting system are cost accounting, price optimisation, inventory management,andjob costing which are explained below:Cost accounting systems: A system (also called product costing system) that contain aframework used by firms to estimate the cost of their product for calculating and measuringprofit, inventory valuation and control additional cost. Swain & Jones use this system for1
estimating accurate cost of product that is critical for profitable operation (Wickramasinghe andAlawattage, 2012). It is dealing in auto-mobile industry so it is very important for theirmanagement to know which cars are more profitable and which one are not , this can only behappen when management has estimated the correct cost of its product. This system also helpswain & Jones in computing the closing stock of various accessories, estimating quantity ofproduct that are work in progress and finished good that are ready for sale. It all help companymanagement in preparation of financial statements. Price optimisation systems: It gives a clear picture that how demand for a productvaries at different price level and then combine that data with information on cost and inventorylevel to recommand price that will improve profit. In Swain & Jones management use thissystem of management accounting to set a decent price for its product so more number ofcustomer pay for their product that increase the profitability of business. The management ofSwains & Jones consider all factor to allocate appropriate price tot their product.Inventory management system: This system is useful in tracking all raw material, workin progress and finished goods involve in its business operation. Swain & Jones uses this systemto track everything form its production to retail, warehousing to shipping and any othermovement of stock and parts use in its operation. Basically ,this system help management to seeall the small moving parts of its operation and allows them to make better decision ininvestments. (Inventory management, 2017). It help them to manage their stock on a daily basisas company place new order for product and ship order out to customer. Small business firmslike Swain & Jones are usually more interested in ordering a product and making sales, socompany create an effective inventory management system.This process assist in minimising therisk involved in inventory management and help to control stock related affairs of anorganisation.Job costing systems: This system refer to assigning of manufacturing costs to anindependent product or a group of product. It is used only when manufactured product areidentical or nearly different from each other. Swain & Jones use this approach to record specificcost to individual jobs and measure them to see if the costs can be reduced in later jobs. It alsohelp management to see that if any additional cost incurred may be billed to its customer thathelp management to generate revenue in future. Process, standard and contract costing areexample of job costing system that help management to calculate cost of material, labour and2
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