Management Accounting System and Its Applications
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Added on 2021-01-02
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1 Management Accounting Grootstone Management Accounting 1 INTRODUCTION 1 TASK 11 P1: Management accounting and its types of management accounting systems 1 P2: Different methods used for management accounting reporting3 M1: Evaluate the benefits of management accounting systemandits applications 4 D1: Management accounting system and its reporting are integrated within organisational process 5 TASK 25 P3: Calculation of cost using an appropriate technique5 M2: Various types of accounting techniques7 D2: Data interpretation8 TASK 38 P4: Budgetary control and
Management Accounting System and Its Applications
Added on 2021-01-02
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Management Accounting
Table of ContentsManagement Accounting.................................................................................................................1INTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1: Management accounting and its types of management accounting systems........................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 are integrated within organisationalprocess.........................................................................................................................................5TASK 2............................................................................................................................................5P3: Calculation of cost using an appropriate technique..............................................................5M2: Various types of accounting techniques..............................................................................7D2: Data interpretation................................................................................................................8TASK 3............................................................................................................................................8P4: Budgetary control and different types of planning tool and their advantages anddisadvantages used in budgetary control.....................................................................................8M3: Uses and applications of planning tools for preparing and forecasting budgets...............10TASK 4..........................................................................................................................................10P5: Responses of management accounting system to deal with financial problems................10M4: Management accounting can lead organisation to sustainable success in responding tofinancial problems.....................................................................................................................12D3: Planning tools respond appropriately to resolve financial problems.................................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is a systematic approach that support in management activitiesby planning, controlling, monitoring and enhancing organisation performance. It allowsmanagement to develop their knowledge and understanding which helps them in takinginvestment and financial decisions. It also helps in identifying company's financial position bypreparing income statements, balance sheet, statements of owners equity etc. for a givenfinancial period (Abugalia, 2011).Pavestone is a stone and concrete supplier. It constantly developing new products andservices ensure them in maintaining their position as the most successful autonomous supplier ofnatural stone paving and walling into the construction's mercantile establishment. In this reportcompany is importing, manufacturing and supplying construction products with a healthy pricingstrategy by using various management accounting systems, reporting methods, its benefits oncompany's working. Management also uses various cost methods for evaluation of product cost.Pavestone applies different planning tools for budgetary control and its forecasting. Managementtake several accounting systems to resolve company's financial issues for achieving target.TASK 1P1: Management accounting and its types of management accounting systemsManagement accounting involves in preparing and rendering timely financial andstatistical data to managers which helps in day to day operations and short period managerialdecision making. The objectives of management accounting are assistance in planning andformation of future policies, helps in interpretation of financial data, controlling performance,coordinating operations etc. The outcome of management accounting is periodic statements fororganisation's department managers and top management. Pavestone products are focusing oncreating trading bond with independently, privately owned construction's businessperson. Henceit is important to evaluate company's performance by preparing financial statements so that itsbusiness expand in future. This is done by proper use of several management accounting systemsto create impressive plans and decision to succeed in business objectives (ManagementAccounting, 2015). Cost accounting, price optimisation, inventory management, job costing arethe main management accounting systems explained below:
Cost accounting systems: This accounting system is a process of determining product,process and project cost with proper recording, classifying, analysing, interpreting and evaluatingcosts linked with operations and formulating different courses of action for cost controlling.Pavestone is constantly developing a range of pre cast concrete walling and paving product thatare distributing across the country to builders and landscapers. Therefore it is important forPavestone management to utilise their resources in effective way without any wastage. This canbe possible with proper use of cost accounting system that makes a framework for company todeal against future uncertainty. Actual, normal and standard costing are the three different typesof cost accounting techniques. Actual cost of product like material, labour and marginaloverhead are computed under actual costing. Normal costing is based on actual direct cost andbudgeted overhead rate whereas budgeted material, labour and manufacturing overhead costs aredetermined under standard costing.Price optimisation systems: It refers to impressive management accounting systemwhich management should follow for optimum pricing policies and future growth. Pavestone isimporting, manufacturing and supplying product like stones, concrete and wants to follow priceoptimisation system for creating a sensible pricing strategy that a customer is willing to pay fortheir product because high product price offered by company may moves loyal customerstowards their challengers which is not fair for company. Pavestone implements this managementaccounting system for increasing satisfaction level of customer and maximize their willingnessfor purchasing their products. This system recommends alteration in price strategy which helpsin company's progress (Ding, Dekker and Groot, 2013). Inventory management system: It is an effective accounting system which trackcompany's inventories through the portion or complete of it in a business operations. This systemcovers management of everything from storehouse to shipping, production to retail and all otherinventory movement and its parts. FIFO, LIFO and weighted average are the examples ofinventory management system. Pavestone adopt this system guidelines for managing inventory,maintaining their inflow or outflow invoices of production and sales. Company follows FIFOinventory management system i.e. valuation on the basis of product first produced is sold first.Company is innovating product and wants to maintain their position in the market. Hence theyfollows this system for increasing their future product demand through getting availability ofproduct in warehouse.
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