Report on Management Accounting - Sollatek company
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Added on 2020-01-23
Report on Management Accounting - Sollatek company
Added on 2020-01-23
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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................4P1 Management accounting and their different types of requirements.......................................4P2 different methods used for management accounting reporting..............................................5M1 Benefits of accounting system..............................................................................................7D1 Evaluating management accounting system.........................................................................7TASK 2............................................................................................................................................8P3 Find out the cost by using techniques and make income statement with marginal andabsorption cost............................................................................................................................8M 2 Two major accounting techniques of Sollatek. ..................................................................9D.2 Financial report for interpretation of data of cited company.............................................10TASK 3..........................................................................................................................................10P4 Advantages and Disadvantages of the planning tools used for budgetary control .............10M3 Planning tools in forecasting budget..................................................................................13D 3 Appropriate planning tool for accounting to solve financial problems..............................13P5 Management accounting system are adopted by the organisation.......................................14M.4 Management accounting can lead organisations to sustainable success...........................16CONCLUSION.............................................................................................................................16REFERENCES..............................................................................................................................18
Report From: Management Accounting OfficerTo: General Manager Subject: To write a report to GM covering management accountings and system together withdifferent costing techniques and reporting to enable the organization implement them.
INTRODUCTIONManagement accounting is that process where it helps the organisation in analysing,identifying, presenting and recording the financial information which is used by the managers forplanning and decision-making. It is concerned with providing the more helpful reports andinformation to internal users so that they can manage and monitor all the activities which hasbeen perform by the employees. Management accounting comprises with the tool of accountingmethods, techniques, methods which are assist with the organisation in maximising the profitsand to minimise the risk (Baldvinsdottir, Mitchell and Nørreklit, 2010). Through accountingsystem, the managers will get the essential and accurate data in which they can run theorganisation objectives. Management accounting is also termed as cost accounting or financialaccounting. With the use of management accounting the organisation can measure their actualperformance in terms of financial and take more appropriate actions to make sturdy position inglobal competitive market. The present report is based on Sollatek company which deals in theproduct of to protect the electrical and electronic equipments. This company is also manufacturein tyres and valves. The main aim of this company is that to protect the electrical equipmentsagainst the unstable and unreliable voltage. In this project different type of managementaccounting is discussed. Further the advantages and disadvantages of planning tools is alsodiscussed.TASK 1P1 Management accounting and their different types of requirementsManagement accounting is the combination of finance, accounting and management inwhich skills of business techniques are need to be add in value of business (Luft and Shields,2010). Management accounting collaborate all information such as cash flow, revenue oroutstanding debts which are changing the reports time to time and give the statistic information.The managers of Sollatek company helps the managers to work across the business, not just infinance, but they have to advise also to other managers on the basis of what is the financialimplication of decisions which are taken the higher authority. Through this they can monitor therisk and make appropriate strategies to accomplish with the targets. Management accounting isalso a that source where is analyse and communicate the relevant financial and non-financialinformation to generate high amount of profits (Van Helden and Northcott, 2010). Management
accounting is an effective planning tool in which the managers can make proper financialstatements to utilise the best resource in appropriate manner. It provides the appropriate data andinformation, through it will recover the efficiency and effectiveness of organisation. Themanagers have to take the advice from expertise in which they can implement and formulate theappropriate strategies to reduce the cost and increase the per unit of profits. To analyse theproper results of the company in terms of finance then it is significant to properly understand theconcept (Weißenberger and Angelkort, 2011). Along with this they have to do proper evaluationas well as interpretation of the resources and funds which are investing by the company tomaximise the profits. It helps the managers to devise the plan and take alternative solutions tomake strong position in market. The funds which are utilising by the company should have tomake proper records. There are many type of management accounting which can be used by the managers ofSollatek. These accounting system are traditional cost accounting, through put accounting, leanaccounting and transfer pricing. While using these accounting system the employees of companycan reduce the cost of products and increase the profits. In Lean accounting, it is the mostrevolutionary technique in terms of management accounting system. Through this method thecompany make the strategy to reduce the cost by eliminating the waste. The accountants ofSollatek is providing the immediate financial information for making the decision in appropriatemanner which will measure the profitability of company (What are the Different Types ofManagement Accounting Systems?, 2017). If there is any excess in the cost, then these are treatedas waste and it is cut from the system which bases on the information. In traditional cost accounting, the managers can keep the record that how they areallocating the costs relating to materials and labours and overhead. In this the managers can usejob order or process costing methods. In process costing method, the cost is allocated on thebasis to produce the large number of homogeneous products. On other side in job order, thismethod can be used when managers are using large projects where all the cost can be easilytraceable to individual projects. In throughput accounting the accountants are mainly focus on the to identify theconstraints in organisation (Macintosh and Quattrone, 2010). Constraints include where theinsufficient level of materials, labours and overheads are facilitating. Reducing the constraints
with the use throughput accounting it increase the production volume and thereby reduce the costof individual products of per unit. This method is work with the traditional job process or order. In last transfer pricing, this method is when Sollatek transfer the goods from onedepartment to another department and through this cost of goods are increasing. The products aretransform from every departments and it add a small portion of cost in to the products. There is some advantage of management accounting which also give benefit toorganisation.It is flexible in nature and therefore it can be prepared at any point of time i.e. monthly orweekly basis. It increases the efficiency of operation of company and for this everything is to be donein systematic way. With the help of using accounting budgetary control and capital budgeting tool companycan easily reduce both capital and operating expenditure. Through this company caneasily reduce the price and generate more profits. Cost accounting system is framework which is using by firm to estimate their cost ofproducts for doing inventory valuation, analysing profitability and control the cost. Two type ofcost accounting are there; job order costing and process costing. Job costing, it is best suited for those situation where organisation is producing goodsand services and these are depended upon the receipts of customer order. Through this methodcompany can identified cost which will incurred on every occupation. Inventory management system, it is an ongoing process where organisation need todiscuss that how much stock is needed to store. Companies are managing their inventory on dailybasis and it is important for them to create different ways in which they resolve inventorymanagement challenges by finding appropriate solution. Price optimisation, this help to organisation in setting out the best price for productsbecause there are many small enterprises which are facing difficulties in deciding the value ofgoods and services which are offering by them. P2 different methods used for management accounting reportingManagement accounting is the concept which is eligible across the business. Thisaccounting is management their finance, budget, financial decision etc. With the help ofmanagement accounting the sollatek company provide financial or non-financial decision to their
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