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Different Types of Management Accounting Systems

   

Added on  2020-10-22

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MANAGEMENTACCOUNTING
Different Types of Management Accounting Systems_1

Table of ContentsINTRODUCTION...........................................................................................................................4TASK 1............................................................................................................................................4Management accounting and different types of management accounting systems....................4Different methods for management accounting reporting..........................................................5Evaluation of benefits of management accounting system ........................................................6Integration of management accounting system and management accounting reporting............7Planning tools of management accounting.................................................................................8TASK 2............................................................................................................................................8Income statement using marginal costing and absorption costing for the month may and June......................................................................................................................................................8Analysing, Interpretation and Recommendation of the financial statements to the managementof the organisation.....................................................................................................................10CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................13
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INTRODUCTIONManagement accounting refers to identifying and analysing cost of business andoperations which helps the enterprise in preparing financial report for the internal users inachieving financial goals. It is also known as cost accounting. Management accounting is reallyimportant in terms of making decisions by the manager. It includes capital budgeting,forecasting, costing of product etc. To understand the work and concept of managementaccounting in business the report has taken SDK jewellers UK which is small medium enterprisewhich deals in watches and jewellery and was founded in 1991. it is online watch retailer withstaff of 30-40 members. The report includes different management accounting systems anddifferent methods of accounting reporting. It shows pro and cons of management accountingsystem and integration of management accounting and reporting in the organisation. TASK 1Part 1Management accounting and different types of management accounting systemsManagement accounting also known as cost accounting consists of analysing andevaluating cost of business and its operations which helps the company in preparing financialreport for the internal users which helps in decision making process to achieve various goals setby the company. It contains both monetary a well as non monetary information and has no fixedformat.It helps the management in preparing financial strategies which uses budgets, job costingtechniques and sales forecast. This helps the business in knowing how the budget of the companyned to be implemented and take care of the needs of shareholders as well as customers.Management accounting helps the entrepreneur in maintaining profitability of then company as ithelps in determining the production level, overhead costs, objective of sales which can impactprofitability of the company (Warren and et.al, 2015).Management accounting system and their essential requirement Management accounting takes information for internal users and develop reports for thepurpose of decision making. This helps the company to run efficiently. Management accountingsystem includes different systems that are required to carry operations in the organisation. theseare -
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Inventory management system – It deals with stock and inventories of the business andbuild a network to take care of stocked goods. The manufactures with the help of inventorymanagement system can specify shape and location of the goods that will be placed in thecompany.Cost accounting system- It is used to record production activity through inventory systemand helps the manufacturer in in tracking the flow of inventory. It continuously keeps the recordof the various stages of production. It helps the company in determination of profit and lossesand to find tout the cause of decrease and increase in profit and losses. It help the manufacturerin doing correct valuation of inventory and helps them in making decision that hey need tomanufacture the stock or need to purchase from outside (Carlsson-Wall, 2015).Job costing system- it helps in assigning cost to various job to estimate its standard andactual performance. It helps the managers to calculate the profit of individual job and help themin keeping track of individual performances.Price optimization system- It helps the managers in finding out the price which customerwill pay willingly for their product. The company through this system make sure that they selltheir products at optimise profit and get decent profit.Different methods for management accounting reportingManagement accounting report are the reports prepared for internal users which includesbudgeting decisions, cut cost etc. and give a sense and information about company's financesand saves time and money of the company. It helps in providing all the information related tofinance to the managers which helps them in making decisions. The report can be prepared onweekly, quarterly and monthly basis according to the need of information. The report need to beunderstandable with good presentation. The information need to be accurate and understandableby the users. The data and figures use din report have to be accurate and reliable and need tohave relevance for which it is being used (Smith, 2017). The report must be presented within thespecific time frame. The different methods of management accounting reporting are -Budget report – it helps small business to analyse company's performance and help largecompanies in analysing individual department's cost and performance. It helps the company inestimating budget requirement and comparing actual cost with estimated cost. They also help themanager and owners to use budget report in providing incentives to the employees working in
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