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Importance of Management Accounting - Zylla

   

Added on  2020-10-22

17 Pages4643 Words387 Views
Management Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1P1 Meaning of management accounting and requirements and types of accounting.............1P2 Different methods of management accounting reporting..................................................3M1 Benefits of management accounting systems..................................................................5P3 Computation of marginal and absorption costing.............................................................5M2 Range of management accounting techniques.................................................................6P4 Different types of planning tools and merits and demerits...............................................7M3 Use of various planning tools..........................................................................................8P5 How management accounting system used to respond to financial problems..................9M4 Management accounting system leads to organisation success.....................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................12

INTRODUCTIONManagement accounting information is crucial for organisation to resolve various issuesand improve upon its performance. Present report deals with importance of managementaccounting to Zylla Company by which performance may be enhanced in a better way. Types ofmanagement accounting and methods of reporting are also discussed. Moreover, calculation ofmarginal and absorption costing are done. Various planning tools are explained along withadvantages and disadvantages of the same. Furthermore, management accounting systems areexplained which could be used to adapt to respond to financial problems. Thus, such type ofaccounting information strengthens internal operations of the company. P1 Meaning of management accounting and requirements and types of accountingManagement accounting is a useful branch of accounting for the managerial personnel ofthe firm so that they may be able to take enhanced decisions in effective manner. This isessentially required as business operates in dynamic environment where changes takes place nowand often. In such scenario, costs may be increased for manufacturing particular product and assuch, revenue would be impacted significantly. Thus, business needs to make better decisions sothat changes can be handled in effective way and this can be possible because of implementationof management accounting in the organisation.It refers to that part of management where themanagers look out the needs of the business in relation to it operations, preparing financialreports i.e. to be used by the management, helps in decision-making and helping them inplanning policies and strategies.Management of firm relies on financial information which is provided to them with thehelp of financial accounting and from this, managerial reports are prepared and imparted tomanagement in order to take better decision for the firm. Zylla Company also uses suchaccounting as it provides clarity from where it has to improve upon and initiate control uponexpenses for injecting profits. Another essence of such accounting is that business can easilyanalyse costs incurred on activities which can be reduced up to a high extent (Aykan andAksoylu, 2013). It helps organisation to effectively make decisions with much ease. In relation tothis, requirements of different types of management accounting are as follows-1. Cost accounting-1

Cost accounting is effective method as it analyse costs and then make attempt to reduceoverall expenditures of the firm incurred on manufacturing commodities. This is quite usefulaccounting method as overall costs are assessed and unnecessary expenses are carried out whichare not benefiting in the process and as such, they are reduced up too much extent. ZyllaCompany can be benefited by cost accounting as expenditures can be eradicated by cost reportsimparted to management. It is essentially required by the firm so that expenses may not exceedtotal revenue. There are different types of costs such as variable, fixed, semi-variable, indirectand direct which are incurred and management can make enhanced decisions to initiate controlupon the same. Thus, cost accounting is essentially needed in the company to minimise expensesand maximise profits. 2. Price optimisation technique-Price optimisation is another useful method which is used to carry out how demand varieswith the change in price of the firm in the best possible manner (Burritt, Schaltegger andZvezdov, 2011). It is mathematical model which is utilised to know how customer's behaviourchanges when there is increase or decrease in price of particular commodity. This is used toassess whether customers are willing to purchase at the prevailing price or not. It helpsorganisation to quote price with regards to preferences of consumers and as such, price is quotedin relation to customer's demand. Thus, company can easily sell its products without anydifficulty. Zylla Company should also rely on the price optimisation technique so that customersmay be able to purchase goods in effective manner. It is important as when prices are high, rivalsmay drive away customers and when price are set low, profits cannot be garnered. Thus, throughthis method, firm can easily quote price which will be beneficial in every aspect.3. Inventory management-Production is required so that company may be able to sell products in effective way.Customer demand can be easily met by the organisation in effective manner (Cadez andGuilding, 2012). For accomplishing desired production, inventory is needed in optimumquantum to achieve production. It is required in adequate quantity so that no spoilage mayoccur. Wastage is made when excess quantity is ordered by the production department and assuch, extra costs of handling in the warehouse is incurred. On the other hand, if less stock isordered, demand of production department cannot be accomplished. Thus, inventory requirement2

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