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Importance of Management Accounting and Types of System - Report

   

Added on  2020-07-23

15 Pages4532 Words85 Views
MANAGEMENTACCOUNITNG

Table of ContentsINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................1P1: Importance of management accounting and their various types of system use in anorganisation............................................................................................................................1P2: Various accounting system reports .................................................................................3P3 Calculation of profit by using absorption and marginal costing techniques.....................4SECTION 2......................................................................................................................................7P4: Advantage and disadvantage of using planning tools in order to control budget ...........7P5: Different financial risk and their crucial control measures..............................................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONManagement accounting is an essential aspect of every manufacturing business whethersmall or large. They uses this in as primary tools for keeping their everyday business transactionsin well organise or systematic manner. The main motive of managers is to make effective plan sothat future aims and objectives can be attain in more easy and economical manner. Now a day’splenty of organisation are facing various issues associated with financial statements. They can beresolve through using appropriate accounting and reporting systems (Abdelmoneim Mohamedand Jones, 2014). Understanding of different costing method which will be useful in evaluating netprofitability of an organisation. Further, this report is presenting various planning tools those arebeing helpful in budgetary control. Apart from this, all those financial problems and its effectivemeasure to resolve them are discussed under this report. The overall project report, is providingvital information about use of management accounting information those are assessing for thebetterment of an organisation.SECTION 1P1: Importance of management accounting and their various types of system use in anorganisationIn every manufacturing business, it is crucial to maintain their accounting detail in wellorganise format so that proper detail information about actual gains and budgeted would beanalyse properly. The manager of John Lewis would hold responsible for making maximumprofit by using resources in effective ways. They need to take valuable decision regardingincrease their productivity as well as efficiency of the department (Management Accounting,2017). Some other aspects for using accounting system regarding company’s partners such asinvestors, shareholders, customer and so on. They are responsible for making crucial decision inorder to get positive results in coming time. By the help of using accounting system, it wouldenable managers to focus on vital factors that should incur maximum gains to an organisation. Itis said to be an effective process of preparing management reports and accounts which will beprovide reliable and accurate financial and statistical information to concern managers of aproject (Akbar, 2010). There is various importance of using management accounting systemsthose are discussed underneath: 1

It would help in forecasting the future: A most crucial aspects for every business tomake appropriate forecasting which will assists in effective decision making andsearching for some useful information about the company. Like whether they are able toinvest in respect to generate maximum gains in coming time.It will assists in making or buy decision: It happens to be one of the effective methodby which manufactures can make production of products as per the demand of customers.Cost and productivity are the deciding aspects in this particular process of decisionmaking.There are various types of management accounting system which would assists in thebetterment of an organisation. Those are being discussed underneath:Cost accounting system: It is known as effective process of recoding, classifying andsummarising or evaluating alternative course of actions those are being used for the purpose ofcontrolling costs. Its primary motive is to advise owners on the most crucial action based on costefficiency and effectiveness (Belfo and Trigo, 2013). Price optimisation system: Under this accounting system, a manager uses to makenumerical evaluation by a company to determine responses from customers about various pricesfor its products and services. It is mostly used by the company to identify prices that John LewisCompany has decided from their products.Inventory management system: As per this system, manufacturing department can makecontrol over their opening and ending stock level during the year. This will help them to recorddetail systematic detail of inventory position kept by the company. By this, managers can trackstock level, orders or any sales and deliveries. In production sector, this system is more effectivein creating a work order, bill of material and other important purpose. By the help of usingperfect stock management business can attain their target in more easy and fast manner.Job costing system: This is valuable costing system which is useful in assigning productioncosts to a single products or groups. Basically, the job order costing is mainly assessing onlywhen the products manufactured are relatively different from one another.Benefits: It would deliver crucial benefits that set them from process costing. This systemdelivers access the expenses those are incur on each job during production process.2

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