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Assignment On Financial Accounting | Her Company Limited

   

Added on  2020-02-12

18 Pages4882 Words56 Views
MANAGEMENTACCOUNTING

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Several kinds of management accounting systems and their essential requirements in HerCo. Ltd....................................................................................................................................1P2 Different method which are used by Her Co. Ltd. In management accounting reportingsystem.....................................................................................................................................3TASK 2............................................................................................................................................4P3 Calculation of net profit with the help of marginal and absorption costing......................4Difference among marginal and absorption costing methods................................................6TASK 3............................................................................................................................................7P4 Advantages and limitations of various planning tools which are helpful for budgetarycontrol.....................................................................................................................................7TASK 4..........................................................................................................................................11P5 Assessing adoption of different management accounting systems by Her Co. Ltd in orderto combat shortfalls..............................................................................................................11CONCLUSION..............................................................................................................................14........................................................................................................................................................15

INTRODUCTIONAccounting is an integral process of every business organisation which helps to identify,record, classify, measure, summarize, verify as well as interpret various financial transactionsand informations of the firm. Further, it is very necessary to manage such financial transactionsin order to improve financial performance of the business entity. The study is based on HerCompany Limited which is based on the UK country and producing different kinds of plasticproducts. The report describes about different types of management accounting systems andapproaches which are helpful for the entity. Further, the report analyses about methods which areused by Her company limited for managing accounting reports at the workplace. It showspreparation of income statement for determine net income or profit with the help of absorption aswell as marginal approach of costing. At the last, present study shows various tools of planningused for control over the budgetary at the workplace of Her company limited.TASK 1P1 Several kinds of management accounting systems and their essential requirements in Her Co.Ltd.Management accounting systems are important part of the company such as Her Limitedwhich helps to fulfil requirements of business and achieve goals and objectives in effectual way.In the business process various systems of management accounting used by the firm areexplained as below:Transfer pricing: Level of price at which a parent company sales its products andservices to the subsidiary firm for consume and further production process is known astransfer pricing. When compare with the market price and transfer price amount is alwayshigher in the market. Motive of the companies while selling services and products in themarket is to earn and maximize level of profit (Andor, Mohanty and Toth, 2015.). On theother side, the parent company not selling goods and services to subsidiary for maximizeprofit. The respective management accounting system requires for Her Limited in orderto reduce total cost of production and provides goods at the lower prices compare torivalry firms. Further, more number of users attract towards it and helps to generatehigher sales and yield at the end of year.1

Cost accounting: The approach of management accounting where different kinds of costsand expenditures are to be analysed and helps to Her limited to determine cost of per unitis identified as cost accounting. When the business entity adopt accounting system suchas cost at the workplace then highly able to determine total expenditures incurred in theproducing goods and services. When the level total cost is higher, then the company ableto take corrective actions for overcome such kinds of problems and obstacles. Higher thelevel of expenses are lead to increase prices of products and services in the market.Ultimately less number of customers will attract and reduce profitability ratios at the endof year.Process costing: According to the respective management accounting system companyrequires to know every phases of production and operation process (Bierman Jr andSmidt, 2014). Here management of Her Limited can know that at every stage ofproduction there are how many costs is incurred and what is level of output. If atparticular stage it can be found by managers that costs incurs higher, then it makesstrategies to control over the expenses.Budgetary control: At the last it management accounting approach where Her Limited iseasily determined that how many expenses will be incur in the future along with disposals(Venkatesh, 2016). Here it can know net cash balance and financial performance in theoverall plastic industry at the end of current and future accounting periods.Job costing system- This is a system for assigning manufacturing costs to an individualproduct or batches of products. Generally, the job order costing system is used only whenthe products manufactured are sufficiently different from each other.Batch Costing system- It is also known a order costing system, in which costing of jobsare implement on the specific orders. There are two type of costs which are used in batchcosting such as set up cost and carrying costs. Thus, by using batch costing it help theorganisation to make effective control on each unit of cost.Inventory management system- This system of costing is help to track the inventory suchas orders, sales and deliveries etc. It also used in manufacturing industry so that it willhelp to create a work order, bill of materials and various kinds of order document.2

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