Assignment On Management Accounting (Pdf)

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION.............................................................................................................................3LO 1...................................................................................................................................................3P1 Management accounting and essential requirements of different types of managementaccounting systems.......................................................................................................................3P2 Different methods used for accounting reports.......................................................................3M1 Benefits of management accounting systems and their application.......................................3D1 Evaluation of management accounting systems and reporting within organizational process.......................................................................................................................................................3LO 2...................................................................................................................................................3P3 Calculation of Marginal and Absorption costing.....................................................................3M2 Management accounting techniques and appropriate financial reporting documents...........3D2 Preparation of financial reports that apply data for various business activities......................3LO 3...................................................................................................................................................3P4 Advantages and disadvantages of different types of planning tools for budgetary control.....3M3 Use of different planning tools and their application for preparing and forecasting budgets3D3 Evaluation of planning tools to solve financial problems.......................................................3LO 4...................................................................................................................................................3P5 Adaption of management accounting system to solve financial problems..............................3M4 Importance of management accounting in solving financial problems..................................3CONCLUSION.................................................................................................................................3REFERENCES..................................................................................................................................3
INTRODUCTIONManagement accounting is the application of skills and knowledge that is applied inpreparing accounting information to assist management of the company and help them in makingdecisions regarding formulation of policies, planning and to control operations. It helps thecompany in finding out early signs of future problem. It helps the companies in finding outprofitability from the particular product and to analyses new product as well as to value stock andcapital budget analysis. To understand each and every concept of Management accounting, thereport will take Excite entertainment limited which deals in leisure and entertainment industry.The report will first show the basic difference between management accounting and financialaccounting along with different management accounting systems. The report will further focus ondifferent accounting reports and how management accounting system and reporting system areintegrated in the company. Further, the report will discuss about management accountingtechniques and appropriate financial reporting documents along with calculation of absorption andmarginal costing. To solve financial problems how company will use different budgetary toolswill also be in the report and at last the report will include adaption of management accountingsystem to solve financial problems.LO 1P1 Management accounting and essential requirements of different types of managementaccounting systemsManagement accounting is the implied knowledge and skills of manager that helps themanager in taking decisions related to formulation of policies, planning and controlling theoperations of the company. It helps the company in providing financial as well as non-financialinformation on regular intervals to the management.The management accounting is different from financial accounting as it is used for internalpurpose whereas financial accounting is used for external purpose. Financial accounting isregulated by law whereas management accounting is not regulated by law and depends on theskills of manager. Financial accounting provides information to the external users whereasmanagement accounting provides information to the internal users (D'Onza, 2016.). Financialaccounting only takes monetary value into consideration whereas management accounting takesboth monetary and non-monetary value into consideration.The different types of management accounting system are:
Cost accounting systemA cost accounting is a framework used by firms to estimate thecost of their products for profitability analysis, inventory valuation and cost control.The two maincost accounting system are job order costing and process costing(Usenko and et.al., 2018). Costaccounting system includes standard costing which is an integral part of cost accounting system.This cost is associated with direct cost of the manufacturing company which involves direct labor,direct material and overheads. The cost accounting system carries all the inventory accounts atstandard cost it is needed in Excite limited to estimate the cost of products that company is sellingand to do their profitability analysis and valuation of inventory.Inventory management system –This system helps Excite entertainment ltd in trackinggoods through entire supply chain or specific department of the company in which it operates.This system covers everything from production to retail, warehousing to shipments etc. aninventory management most likely to perform functions such as bar coding, inventory alerts,accounting tools, forecasting of inventory etc. It uses two methods to manage the inventory:LIFO– It refers to last in first out which means the materials that has been received in thelast need to be sold at first.FIFO- It refers to first in last out which means the materials that has been received in thefirst need to be sold at last.Job costing system –This system helps in assigning and calculating manufacturing cost ofan individual unit of output in Excite entertainment ltd. This system is used when the productsproduced by the company are different from each other and has significant cost. It records eachproduct's direct material and labor that were used along with manufacturing overhead.Job Order Costing Method– This method of cost accounting system helps indetermining the cost value which has been incurred by the company for producing aspecific product or group of products.Process Costing Method– The process costing method assist Excite Entertainment Ltdwith facility of collecting, gatheringand making assignment of cost amount. This costamount is assigned to manufacturing processes.P2 Different methods used for accounting reportsDifferent methods of accounting reporting used by Excite entertainment ltd are:Budget report –it is the most important report in management accounting as it helps theowners of Excite ltd to understand and control the cost of the company and its operations as a
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