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Management Accounting Assignment- Jupiter PLC

   

Added on  2020-10-23

17 Pages4549 Words410 Views
MANAGEMENTACCOUNTING
Management Accounting Assignment- Jupiter PLC_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Management accounting and different types of management accounting systems.....................1Different methods used for management accounting reporting..................................................2Benefits of management accounting systems..............................................................................3TASK 2............................................................................................................................................4Preparing income statement by undertaking both absorption and marginal costing system.......4TASK 3............................................................................................................................................7Explaining the advantages and disadvantages of different types of planning tools which areused in budgetary control.............................................................................................................7TASK 4..........................................................................................................................................10Evaluating how planning tools help in resolving financial problems and thereby leadsustainable success.....................................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................13
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INTRODUCTIONManagement accounting refers to presentation of accounting information in the form ofreports that will help the management in performing its day to day activities. Managementaccounting helps the management in formulating policies. Jupiter PLC will be included in theassignment to perform its various task. It is a medium sized manufacturing company. This studywill include management accounting and different types of management accounting information.Furthermore, it will include different methods of management accounting reporting. Also, it willprovide benefits of management accounting systems and their application to Jupiter PLC.Moreover, this study will include marginal costing and absorption costing. It will include the useof planning tools in management accounting and use of management accounting to respond tofinancial problems.TASK 1Management accounting and different types of management accounting systemsManagement accounting is a branch of accounting in which accounting information isprovided to management in order to increase profitability of firm and reducing the losses. Itrefers to accounting information to management to make proper decisions to improve variousoperations of organisation. Different types of management accounting systems: The following are the various managementaccounting systems which assist in providing information to management.Cost accounting system: It is a system used by organisation to estimate the cost of itsproducts and services to determine the profitability and also assist in controlling the costof product to increase profitability. Cost accounting system include fixed cost andvariable cost which are used to identify the total cost of product. Fixed cost is a cost ofproduction that remains constant over the period and it does not change with the changein volume whereas variable cost changes with the change in volume (Chenhall andMoers, 2015). Cost accounting systems consist of Job order costing and process costing.Job order costing is that technique in which the manufacturing cost is divided separatelyfor each job. Process costing refers to accumulating manufacturing cost separately foreach process. Cost accounting system is used by Jupiter PLC to determine theprofitability of the firm by estimating the cost of its products.1
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Inventory management system: It is system used of manage the level of inventory in theorganisation in order to utilise the resource in the proper way to reduce maintain stocklevel according to the demand of customers. Inventory management system assist incontrolling the flow of inventory to reduce misappropriation of stock. Inventorymanagement perform functions such as creating purchase orders, sale orders, printbarcode labels etc. Inventory management system include FIFO and LIFO method forvaluation of inventory. According to FIFO method, the first inventory which is purchasedis the one to be sold first. LIFO method assume that the first inventory which ispurchased is the one to be sold at last. This system is used by Jupiter PLC to control thestock level by utilising resources in the effective way.Job costing system: It provides information relating to cost of specific job. It helps inallocating the cost to particular job in the process of production of product. Job costingsystem provide information relating to direct material, direct labour and overhead cost.Direct materials are those materials which are consumed in the produces of productionand can be identified with the product (Dekker, 2016). Direct materials are listed in thebills of materials. Direct labour involves the manpower used in manufacturing thatproduct. Overhead cost are the operating expenses which are incurred by organisation inmanufacturing that product. This system is used by Jupiter PLC to allocate the cost ofproduct to each job it helps Jupiter PLC in controlling the cost at each stage.Different methods used for management accounting reportingThere are different types of management accounting reports which are used byorganization to determine the profitability and to make decisions to improve the performance oforganization.Budget report: This report is prepared by management in order to identify variousdeviation in performance by setting the standards of incomes and expenses and thencomparing the actual incomes and expenses with budgeted to take necessary action toimprove the performance to organization (Fullerton, Kennedy and Widener, 2013).Budget report contains information about actual and estimated figures and on the basis ofthis report, management can take decisions to improve the performance of organization.Accounts receivable aging report : This report is prepared to have understanding ofamount due from the customers to determine credibility of organization. This report assist2
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