Decision Making in Management Accounting Report
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Added on 2020-07-22
Decision Making in Management Accounting Report
Added on 2020-07-22
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................1Management accounting and its importance in decision-making procedure.........................1Types of management accounting reporting methods............................................................3Income statement using absorption and marginal costing methods.......................................5Section 2...........................................................................................................................................7Planning tools for budgetary control......................................................................................7Management accounting system to respond financial issues...............................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is important for businesses in order to make effective decisionsregarding different operational activities. The report will cover importance of managementaccounting and procedure of decision making. Management accounting reports to providefinancial and non-financial information that will be discussed in this report. Absorption andmarginal costing method to calculate the net profit amount will be covered here as well. Also,budgetary control and management of resources in the budget will be highlighted. Finally, thereport will analyse the techniques used to respond financial issues within Nero Ltd. SECTION 1Management accounting and its importance in decision-making procedureManagement accounting: Management accounting is important for Hakim group in order tomake decisions regarding different operational activities effectively. Management accountingreports provide useful information which can be financial or non-financial to make decisionseffective. Management accounting is also used by managers to evaluate the cost of businessoperations and resources in order to prepare financial reports which will be internal or external.This will help the business to control and manage strategies and plan for various organisationaloperations (Bedford, 2015). It is also known as the cost and managerial accounting.Accounting systemIt can be said that accounting system provides useful information regarding businessactivities which help to facilitate various resources within Hakim effectively. Such informationprovides data to meet the demands and requirement of business management to make long termdecision-making effective. Accounting system includes the cost of operations, products andservices as well as data.Cost accounting systemCost accounting system will help managers to determine the cost of business resources,products and services and cost of units of various departments. This will provide informationfrom which managers are able to control costs of resources under the budget effectively. Thiswill also help to make strategies and plans to control and manage operational activities(Boučková, 2015). For an example, the cost system is applied on manufacturers, retailers, soleproprietorships and government departments.1
Cost accounting system helps officers to determine the cost of products and servicesoffered by Hakim group.The system also helps in evaluating the selling price of product and service.Inventory management systemInventory refers to products and services, business resources, raw materials, work inprogress and finished goods. Inventory management system will help managers to control theinventory levels. This will also help to evaluate stock availability and quantity or quality of stockto be managed in order to drive effectiveness of operational activities. Inventory cost refers tocarry out the cost of facilitate, capital, utilities, taxes and insurance. For an example, Hakimgroup is able to determine the quantity of stock, cost of transportation and shortage against rawmaterials, work in progress and finished goods.Inventory management system protects against uncertainties and also, shortage of rawmaterial.The system supports strategic plans and policies as well as help in taking advantage ofeconomic scale effectively. Job costing systemIt can be said that it is a process of cost recording and accumulation. It will helpmanagers in Hakim group to identify group of people in which the cost can be managed andcollected effectively (Dekker, Ding and Groot, 2016). For an example, the system is usefulwhere the production is One-Off towards products and services and undertaken for a specialrequirement of a consumer. In addition to this, a short period of time is measured by the firm inorder to complete order provided by customers.Job costing system helps officers to control the cost make planning accordingly andfinally to take decisions.It also helps to calculate or determine the selling price of a product and evaluate profitand loss.Price optimising systemPrice optimising system is a process in which product and service price is changedaccording to the customer sensitivity effectively. This will help to increase the production andprofitability by knowing the sensitivity of consumers to make changes in prices. It is normally2
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