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Management Accounting INTRODUCTION 1 TASK 11 P1 Management Accounting System and Its Essential Requirement 1 P2 Benefits and Application of Management Accounting System 5 TASK 25 P3 Calculation of Cos

   

Added on  2021-02-19

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Managementaccounting

INTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting system and their essential requirement..........................................1P2 Type of management accounting reports and its importance to management.......................3M1 Benefits and application of management accounting system...............................................4D1 Critical evaluation of various reporting and accounting system............................................5TASK 2............................................................................................................................................5P3 Calculation of cost by using appropriate technique...............................................................5M2 Type of accounting techniques............................................................................................10D2 Data interpretation...............................................................................................................10TASK 3..........................................................................................................................................10P4 Merits and Demerits of using planning tools used in budgetary control..............................10M3 Different planning tools and their applications...................................................................12TASK 4..........................................................................................................................................12P5 Comparison with other organisation to overcome financial issues......................................12M4 Management accounting can lead organisation to sustainable success in respondingfinancial problems.....................................................................................................................14D3 Planning respond appropriately to resolve financial problem.............................................15CONCLUSION..............................................................................................................................15REFRENCES.................................................................................................................................17

INTRODUCTIONManagement accounting is also known as cost accounting as well as managerialaccounting. It is the procedure utilise for analysing business cost or operations for preparinginternal financial report and account which help manager within decision making process foraccomplishing business goals. Management accounting help in conducting business activitieswithin effective manner like planning, organising, staffing, directing and controlling. Forunderstanding this overall concept medium scale organisation which is named as Cambridgemanufacturing Ltd. This organisation manufacture variety of specialist dietary products as wellas offers nutritional assurance. Respective manufacturing organisation conduct its operationwithin United Kingdom. This report will going help in understanding concept of managementaccounting, type and their requirement in organisation. Along with this, calculation of costthrough suitable technique has been done and various type of accounting technique will discuss.Furthermore, merits and demerits of using planning tools in budgetary control will explain aswell majors to overcome financial issues. TASK 1 P1 Management accounting system and their essential requirementManagement accounting system is related to collecting, analysing and presentingmonetary as well as non-monetary information to its end user according to requirement. It is

crucial part of an organisation because it is implemented in internal system for controllingorganisational activities within proper manner. This system help in keeping financial record andhelp in making effective accounts. There are different type of management accounting systemwhich help in growth of company as well as in building market image.Difference between Management accounting and financial accountingBasisFinancial AccountingManagement AccountingMeaningIt indicates to an accountingsystemwhichmakeconcentration on thepreparation of financialstatement of a company tooffer financial information tothose parties which showsinterest. It refer to an accountingsystem which provides relvantinformation to the managers tomake or design plans, policiesand strategies to operate thebusiness effectively. ObjectiveThe major purpose of thisaccounting system, to providefinancial information tooutsiders. The objective managementaccounting is to assist themanagement in planning anddecision making process byoffering detailed informationon various matters. Time frameFinancial statements areprepared at the end of theaccounting which is usuallyone year. The reports are prepared as theneed and requirements of theorganisation. Explanation of these accounting system in relation of Cambridge manufacturing Limitedmention below :- Price optimisation system – Every organisation work with the motive of profitmaximisation so they mainly focus towards price structure of different products. Cambridgemanufacturing limited implement specific system for setting price of their products. But beforesetting price of offering company conduct market research for identifying perception of

customers related to particular product and services. The main requirement of this system toCambridge manufacturing Ltd is about ascertainment of the price in respect of the demands theyhave in market. Inventory management system - The particular system major part of manufacturingcompany to track record and manage stocks within organisation. Mainly manufacturingorganisation can use inventory management system for keeping proper records analysis of stockon every production level. This method can assist respective manufacturing company withintheir activities as well as assist in identifying need of material at different level. This system willhelp an organisation to manage their inventory and achieve better better outcomes within giventime period. Respective method will be advantageous for business firm in maintaining properstock within proper manner and use resources in production procedure. As a result it can reducewastages and help to place next order of goods and services. There are various techniques ofinventory explanation of these are as follows :- LIFO – As per this method stock which come last will goes out first. Thus, LIFO issimply last in first out. FIFO – There are stock coming first and sale out first. Thus, it depends that in FIFOmethod first in first out take place. AVOC – It is calculating cost of inventory on average basis. Cost accounting system – This accounting system gives direction to organisation byconcentrating on cost and increasing profitability. Cost accounting system involve systematic setof activities such as understanding, analysing, entering, summarizing cost of goods as well asservices. In relation of Cambridge manufacturing Ltd implement specific system for analysingvariance by comparing within actual as well as estimated cost. Cost accounting system isgenerally utilise by Cambridge manufacturing Ltd with the motive of improving their productionlevel as well as profitability. Job costing system – This is kind of accounting system which help in analysingexpenditure which occur for particular job. With the assistance of job accounting system detailinformation related to cost will be gained which is connected to accounting period. In respectiveCambridge manufacturing Ltd, this costing system is implemented for gaining knowledge aboutvarious assigned job. There are several information which gained through job costing system areas follows :-

Direct material – It is part of variable cost that is related to the production unit as well astrack cost of material within particular job. Direct labour – In this cost of labour will be track related to specific job and also involvetime card and time sheet. Overhead - At the end of every accounting period the total amount of each cost to applymethodology regarding to allocation. P2 Type of management accounting reports and its importance to managementThere are different type of management accounting report which will be use byCambridge Manufacturing Limited for keeping record of every transactions. Managementaccounting report will help in taking better decision on the basis of provided information whichhelp in generating profit for business firm in future. Explanation of these reporting system aremention below :- Cost managerial accounting report – This type of report is design for identifying costof amount spent on manufacturing process. Respective reporting system will give fulldetail related to amount invested for conducting business activities. Cambridgemanufacturing Ltd. Have to prepare cost managerial accounting report because it help incontrolling cost which affect profitability of company as well as also help inunderstanding actual expenditure. So that, optimum utilisation of available resourcesmethod will be use in company. Account receivable ageing reports – It is most important tool which help in managingorganisational activities as well account receivable ageing report shows amount whichcustomer have to pay company. Respective report help Cambridge manufacturing Ltd. Inidentifying that finance division is collecting receivable slowly as well as credit policiesalso. Budget report – Motive behind designing this report is to compare actual budget withits estimated. Financial data of an organisation are recorded within budget report whichis prepared by expertise. It also assist in identifying level of expenditure within anorganisation. Cambridge manufacturing limited prepare budget report foe ensuring thatresources are allocated within proper manner as well it help in reducing operational costand assist in determining availability of sufficient funds.

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