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Evaluation of Management Accounting Systems

   

Added on  2021-02-20

19 Pages5878 Words99 Views
MANAGEMENTACCOUNTING1
Evaluation of Management Accounting Systems_1
Table of ContentsINTRODUCTION...........................................................................................................................3Task 1...............................................................................................................................................3P1 Explanation of management accounting and its different types of system. ..........................3P2. Different methodologies employed used in Management Accounting Reporting................5M1 Benefits of management accounting system:.......................................................................6D1 Critically evaluation of management accounting systems and reports integrated withinorganisational processes..............................................................................................................7TASK 2............................................................................................................................................7P3 Calculation of costs using appropriate techniques to prepare income statement. .................7M2. Various Techniques of Management Accounting System..................................................9D2 Produce financial reports that accurately apply and interpret data for a range of businessactivities......................................................................................................................................9TASK 3..........................................................................................................................................10P4 Advantages and disadvantages of different types of planning tools used for budgetarycontrol.......................................................................................................................................10M3 Use of different planning tools and their application for preparing and forecasting budgets...................................................................................................................................................12P5 Comparison of organisations while adapting management accounting systems to respondto financial problems.................................................................................................................12M4 Responding to financial problems, management accounting can lead organisations tosustainable success....................................................................................................................14D3 Evaluate how planning tools ..............................................................................................15CONCLUSION..............................................................................................................................15REFERENCES .............................................................................................................................162
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INTRODUCTIONManagement accounting is a systematic set of activities which includes activities relatedto deep analysis of various expenses of business and preparation of internal financial reportwhich assist managerial personnel’s in decision making activities to achieve objectives ofbusiness organisation (Aksoylu and Aykan, 2013). It simply refers to providing relevant financialperformance to top management for the purpose of strategy formulation and implementation.This report contains an explanation about management accounting system and its types alongwith benefits, various methods of management accounting reporting, use of planning tools and,advantages and disadvantages of planning tools in the context of Cambridge ManufacturingCompany Ltd., a medium size manufacturing company. It is a manufacturer of weight losssupplements in UK. This report also exhibits comparison of ways in which organisations coulduse managementaccounting to respond to financial problems and analysis of how and to what extent, respondingto financial problem help in achievement of sustainable success.Task 1P1 Explanation of management accounting and its different types of system. Management accounting system implies to a set of activities which involves preparationand reporting of financial and accounting information to managerial personnel’s which assist inoperating organisation's daily activities and functions in effective. It also helps management intaking short term decisions. Under management accounting system, main motive of differentprocess is to provide raw information or data to top management for decision-making process.Management accounting system is adopted by business organisation to assess and evaluate theiractual performance and growth effectively. It simply defied as a systematic process ofpreparation of accounts and other management reports that is ultimately used by management toprepare an action plan for future and to take strategic decisions (Boiral, 2016). In CambridgeManufacturing Company Ltd, management accounting is essential aspect of organisation. Incompany this system is used for internal analysis of company's activities and functions. Incompany, at first divisional and functional managers collect, identify, select and evaluateinformation and then communicate or report such information to top level management in3
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company to assist them in strategy formulation and implementation. Following are some keymanagement accounting system that is adopted by Cambridge, as discussed below: Inventory management system: It is a most significant management accounting systemwhich is adopted by business organisations for the purpose of effective management of variousinventories like finished goods, raw material, work in progress, closing stock, spare tools etc.This management accounting system assist in tacking actual and real time movement of variouskind on inventories within a business enterprise. This system also assists in identification of maincause of increase in abnormal loss or normal loss. As Cambridge Ltd is a manufacture of weightloss supplements, so inventory management system is essential part company. In company,various production managers by applying inventory management system monitor the flow ofinventory and minimise additional inventory cost like storage cost, inventory handling costs etc.In company this system ensures the availability of inventory in manufacturing and productionprocess. Price optimisation system: This system is applied by companies to critically analyse therelationship between demand of product or service and price of product and service. Under thissystem business organisation assess a most appropriate price at which demand is maximum. Thissystem includes a process of analysis of customer's response at different price level of product.Main motive of this system is to minimise the price of product while maintaining same profitmargin. In Cambridge Ltd, this system is adopted by company to gain competitive advantages byoptimising price of products. Management with help of this system analyse the consumerresponse at different price of product to fix a most appropriate price (Bromiley and et.al, 2015). Cost accounting system: It a kind of management accounting system in which provideassistance to business organisation in monitor and optimization of various expenses and costs.This system includes a systematic set of activities like entering, analysing, classifying,summarizing and evaluation of various expense or costs to develop a frame for controlling thesecosts. Main objectives of this system are to enhance the cost efficiency within businessorganisation. It assists identification and assessment of excessive costs if any. It also providesassistance in comparison of actual and budgeted cost. It indicates towards any event which mayincur any additional cost in manufacturing and production cost. In this system is used to analysethe cost of construction project and any escalation in cost of project. In Cambridge Ltd, this4
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