Coping with Financial Problems Using Management Accounting
Added on 2020-06-03
18 Pages4842 Words29 Views
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MANAGEMENT ACCOUNTING
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INTRODUCTIONIn this study, attempts has been made to illustrate on the various aspect of a managementaccountant inSwain & Jones. Efforts have been made in the study to present a detaileddiscussion in the form of a report. The report is to be presented to the General Manager of theorganization so that he is able to critically analyze the functions of the management accountant.In order to provide a precise understanding about the research subject, an organization Swain &Jones has been selected. This study primarily deals with various management accountingtechniques that are applied in an organization, the cost reporting system that is best suited for theorganization and show a relation between the traditional cost accounting system. In addition tothat, attempts have been made in the study to discuss on the factors that acts as drivers to themanagement accounting process of an organization. TASK 1INTRODUCTIONIt is evident that with the advent of globalization, the complexity in the business processhas tended to increase to a significant level. Subsequently, it has raised the level of competitionin the market. In these regards, organizations especially those catering to the manufacturingsector faces several challenges in proper maintenance of records related to the productionprocess. This has necessitated organizations to adopt management accounting process. It not onlyhelps them, management of Swain & Jones in guiding at each step of the process but alsoprovide them with facts and evidences based on which, effective decisions are taken. In additionto that, it enhances the level of efficiency of the management. In this part of the study, effortshave been made to discuss on the various aspect of management accounting system to anorganization including its significance and importance. P1 Management accounting systemPage 3 of 18
The management accounting process unlike the financial accounting system caters to theinternal control of an organization. It is a process of identification of Swain & Jones goals andobjectives, make a critical analysis of the same and communication about the findings to themanagement such that they are able to make effective decision. Earliest this branch ofaccounting was known as cost accounting method. Usually, it is seen that the managementaccounting process tends to involve use of various information related to the cost implicationsincurred internally by the organization. The information aids the managers to critically analyzethe key areas of Swain & Jones and accordingly formulate action plan for future operations ofthe organization (Bodie, 2013). Usually, it is noted that, the management accounting process are classified into four differenttypes. They include Lean accounting system, Traditional accounting system, Throughputaccounting system and Transfer pricing. The explanation of the various types of managementaccounting system is given as follows:Lean accounting system: It is seen that this accounting method is used in leanorganization and forms an integral part of the managerial system. It helps the managers inbringing out the full capacity as well as helps in maintaining a consistent level ofperformance metrics within Swain & Jones. Usually, this form of accounting is used inorganizations in order to tackle many extreme situations that may include issues relatedto market strategies or increasing cost implications in the production process. In contextto Swain & Jones, it can be stated that, this form of accounting is suited and may beapplied in accordance with the convenience of the management (Fullerton et al. 2014). Traditional accounting system: Traditional method of accounting or as popularly knownas the cost accounting system is one of the oldest form of accounting system. Notably,this system of accounting catered to the internal cost incurred by an organization.However, it is seen that this form of accounting was entirely based on assumptions andsometimes gave wrong information to the management. In addition to that, it involvedallocation of the indirect cost although it does not reflect any changes in the consumptionof resources. In context to Swain & Jones, it is noted that, the management of theorganization tends to face certain difficulty in adapting to the new managerial system. Inthis context, it can be said that the management of the organization may opt forPage 4 of 18
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