Management Accounting INTRODUCTION
Added on 2020-10-23
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3LO1..................................................................................................................................................3P1 Management accounting and its system ................................................................................3P2 Various method used for management accounting reporting.................................................4M1 Benefits of management accounting system and application................................................6D1 Critically evaluation of managerial accounting system and accounting reports....................6LO2..................................................................................................................................................7P3 Calculation of income statement by using marginal and absorption costing method............7M2 Application of management accounting techniques..............................................................9D2 Application of financial reports and interpretation of data ...................................................9LO3................................................................................................................................................10P4 Merits and demerits of planning tools used in budgetary control........................................10M3 Use of planning tools and its application............................................................................12LO4................................................................................................................................................13P5 Management accounting system are adopting by organisation to respond financialproblems.....................................................................................................................................13M4 Management accounting help to respond financial issues..................................................15D3 Planning tools are useful to solve financial problems that lead a sustainable success........15CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONManagement accounting plays a vital role in any organisation that helps to make effectivedecision after analysing all accounts and financial information. It provides financial data andsuggestion to a company for the development and growth of the business by keeping properrecords of accounts and information (Ali and Zhang, 2015). In order to understand the need ofmanagerial accounting Brightstar has been taken. This is a UK based financial consultantcompany that serves financial services in various sectors like as manufacturing, construction,retail etc. The main purpose of this reports is to understand the needs of managerial accountingand its system. This report will contain various topics such as management accounting method,system, techniques and accounting reports. Moreover this report will also include planning toolsthat helps to to control the budget and solving the financial problems. Accounting system arealso helpful to maintain a successful business (Booth,2018).LO1P1 Management accounting and its system Management accounting is the essential information of any organisation that helps toprovide internal financial reports, accounts and records in order to making financial decisions.This involves long term and short term business goals by managing proper final accounts andinformation. It is useful to analysis relevant cost, audience targeting, make or buy decision,planning, preparing budget and controlling the budget (Bui and De Villiers, 2017).Management accounting system the method of tracking accounting activity and providingfinancial information that relates to a business. For instance, Brightstar is a financial consultantcompany that prepares final accounts and reports can be used internally by managers. It also canbe used by external parties such as creditors, investors, and tax authorities. Brightstar followsdifferent types of management accounting system that is given below-Inventory management system: This includes software system for tracking the stocklevel , orders, sales, and supply of product and services. Basically it is mostly used inmanufacturing industry that helps to make a work order, bill of raw material and othermanufacturing documents. Moreover, it is the system of keeping records of non capitalizedassets and stock items. Manager of Brightstar follow this system to maintain proper records and
services which is provides to customer such as insurance policy, loan amount, and mortgageproperty etc.Job costing system: This system is used for distributing and collecting production costsof an individual unit of output. Moreover, it involves various items that has different cost, shouldbe maintained properly and effectively (Ibarrondo-Dávila, López-Alonso and Rubio-Gámez,2015). In Brightstar, manager or accountant keep track of cost of every job and maintainfinancial information that is relevant for operations of the business. Jobs are assigned based onthe work that helps to manage business activities and information separately. In this system costare distributed according to job system that helps to maintain minimize the cost of the enterprise.Price optimisation system: This system includes mathematical calculation by anenterprise that helps to define the customer's responds regarding different prices of product andservices. In additional, it is used to determine the best prices of products and services in order tomake profitable organisation. Any enterprises need to set best prices of product and services thatwill aid the number of customer and increase the profits of the company. Manager of Brightstarcharge reasonable interest rate or fees to its customer by providing financial and consultantservices that helps to attract customer. Customers are rapidly increasing to get financial servicesin Brightstar company because it provides good quality of services and investment suggestionthat is important for each corporation.Cost accounting: This system is maintain to control the cost occurred whilemanufacturing products. It contains storing, classifying and summarizing direct and indirectcosts. In other words, this is a system which is used for estimating the accurate expense ofproducts for evaluating profits and controlling the cost. Managers of Brightstar follow thissystem to know the actual cost spent on employee and and preparing financial plans. It also helpsto understand the where a company should invest to get maximum profits by reducing cost. P2 Various method used for management accounting reportingManagement accounting reports are the ballpark of any organisation which includesplanning, staffing, directing and controlling the business activities. It is clear that withoutfollowing management function a business firm can not run for a long period of time. It providefinancial information that is useful for making future financial plans and controlling the cost ofthe organisation (Jack, 2015). Reports can be used to know the daily, weekly and monthlyoperating activities that gives a accurate information in order to make effective decisions. For
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