Management Accounting System and its Various Types
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Added on 2020-02-03
Management Accounting System and its Various Types
Added on 2020-02-03
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management Accounting System and its various types.......................................................1P2. Methods of Management Accounting Reporting..................................................................2M1. Advantages of Management accounting systems................................................................2D1. Integration of Management Accounting System and its reporting......................................3TASK 2 ...........................................................................................................................................3P3 Cost per unit and its usage for Income statement under absorption costing and marginalcosting.........................................................................................................................................3M2 Income statements under Marginal and Absorption costing................................................5D2 Financial report of the business activities.............................................................................6TASK 3 ...........................................................................................................................................6P4 Advantages and limitations of Budgetary Control.................................................................6M3 Planning tools and there uses................................................................................................9D3 Planning tool respond appropriately for resolving conflicts...............................................10TASK 4 .........................................................................................................................................11P5 Comparison between Dell and its competitor in order to adopting management accountingsystem........................................................................................................................................11M4 Management accounting in respond to financial issues.....................................................12CONCLUSION..............................................................................................................................12
INTRODUCTIONManagement accounting is a complete and practical concept of gathering information offinancial accounting and cost accounting in the organization. It helps managers in taking shortterm and day-to-day decisions by preparing managerial reports and accounts that provide correctand reliable information. For improving the performance level, many organisations are adoptingthis system in operations. Likely, company Dell also applies the tools and techniques ofmanagement accounting (Bennett, Schaltegger and Zvezdov, 2013). The report revealsadvantages of this system in an organisation and connection between system and its reporting inthe process of organisation. The cost has computed by both the methods i.e. absorption andmarginal costing. This assignment expresses that organisation can solve its financial issues withthe help of different planning tools.TASK 1P1. Management Accounting System and its various typesIntroduction: - Management accounting includes the methods and concepts which areessential for effective planning, selection of business actions among various alternatives and forcontrolling by the evaluation and accurate interpretation of reports. The information is to becollected, classified and summarized by management accountant and presented in such a waywhich suits managers, need to review for taking decisions (Busco and Scapens, 2011).Definition: - Management accounting is the process of analysing, evaluating andpresenting information of accounting that is collected through financial and cost accountingwhich supports management for policy creation, formulating strategies and taking decisions forroutine activities of the business.This plays a crucial role in the business activities of Dell. By adopting managementaccounting system, company becomes more efficient in measuring the performance, assessingrisk, allocating resources and presenting different financial statements(Kaplan,andAtkinson,2015).Types of Management Accounting System are:Batch costing – The group of costs incurred when a bunch of goods or services areproduced is to be termed as batch costing. It is always evaluated for a group of productsor services and particularly (Macintosh and Quattrone, 2010). For the purpose of cost1
accounting the cost may be considered as essential for assigning the batch cost toindividual unit within a batch. Process costing – This is one of the important types of accounting systems. Processcosting is the method of allocation of cost to the produced units for production of hugequantity of homogeneous products in Dell. It is to be considered as operation costing as itshows the cost of product at each level of production process.Contract costing – It is the method of identifying and tracking of costs that is attachedwith a particular or specific contract to a client (Modell, 2010). Here, both the parties ofcontract are agreed to company with a particular amount of reimbursement. P2. Methods of Management Accounting ReportingManagement accountant uses various reports for analysing the company's information.These reports are as follows:Cost reports – Management accounting calculates the cost of items produced. It consistsof cost of raw material, labour and overheads. The complete related information isclassified and summarized into the cost report which is used by the managers forevaluating cost and managing margin of profits. Budgets – Budget preparation is a crucial task for management because this is the basefor upcoming activities. It involves all the possible sources of income and expenditure ofcompany. Dell tries to achieve its targets and goals by staying with the budgeted figures. Performance reports – In this report, comparison of budgeted amount with the actualperformance of organisation is to be done. The information related to differences anddeviations in accounts are covered under the performance report which helps to takecorrective actions (Parker, 2012). Other reports – Other reports are prepared and used by the management accountant ofDell. Comparison of order placed and received are to be mentioned in other informationreports. M1. Advantages of Management accounting systemsThere are several benefits of management accounting that helps to promote businessoperations of Dell. The advantages are as follows:2
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