Management Accounting and Planning Tools for Innocent Drinks

Management
Accounting
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Table of Content
Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
P1 Describe management accounting and kinds of management accounting system.................3
M1 Determine the benefits of MA in accordance of chosen organisation..................................4
P2 Discuss methods of management accounting report..............................................................5
D1 Critically evaluate how management report as well as MA would integrate........................5
P3 Calculate cost using marginal and absorption cost.................................................................6
M2 Management accounting techniques.....................................................................................9
D2 Interpretation related to financial information.......................................................................9
P4 Evaluate planning tools related to budgetary control.............................................................9
M3 Discuss the use of different planning tools.........................................................................11
P5 Comparison of different organisation to deal with different financial issues......................11
M4 Analyse the way financial issues would result in better performance................................13
D3 Evaluate several tools which provide a great success..........................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Management accounting is the process in which the manager undertakes several
decisions related to finance and is responsible for carrying and managing the overall activities so
that they could bring desirable output (Berry, Broadbent and Otley, 2019). This report is based
on Innocent drinks which is a manufacturer of smoothies, juices and so on. This report includes
kinds of management information system and several planning tools used in it. This report
covers several ways that the management could resolve financial problems.
Main Body
P1 Describe management accounting and kinds of management accounting system
Management accounting is defined as the process in which managers facilitate decision
making by devising proper planning as it provide expertise knowledge related to financial
matters which assist the management in preparation and execution of strategy at a proper period
of time (Ciller and Lumbreras, 2020). The role of management accountant is to carry and
managing the overall financial activities as it involves preparation of various financial aspects
such as income statement, cost statement and so on. Another major role is to render a business
advice in order to ensure long term sustainability of a business which drive a vast growth.
Management accountant are most valuable for the firm as it renders a specialised knowledge plus
skills that provide assistance to the management in undertaking the activities of an enterprise.
The objective of such aspect is that it aids the management to make proper accuracy of
data by making comparison of past and current financial statement so that they could determine
the performance of business and also through this they could identify the weakness and make
corrective actions by analysing deviations. The basis function of using management accounting
is that it assists the senior authority to apply certain level of knowledge as well as several
techniques while preparing financial statement in a best possible manner which provide a proper
accuracy and transparency of a business (Dejaco, Cecconi and Maltese, 2017). The manager of
Innocent Drinks would make an effective planning by allocating the resources and analysing
financial statements so that an effective decision could be made. This ensure prosperity of
success and derive an ultimate growth of the company to the next level and thus they would
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attain goals in a short span of time. In the context of Innocent Drinks, the kinds of management
accounting are as follows:
Cost accounting system: A cost accounting system is a procedure which is considered by
firm in order to determine the cost of merchandise with the help of several measures such as cost
control, inventory valuation as well as profitability analysis. This approach is used by Innocent
Drinks as the manager has to be careful while evaluating the cost or price of goods as there is lot
of fluctuation in market but this is due to the reason of demand and supply of products.
Inventory management: This process refers to storing, ordering and delivery of
inventory at the right place till the consumers within a limited time (Del Pero, and et.al., 2018).
The manager of Innocent Drinks would track the stock and take care of its packaging so that it
would not lead to defects and spoilage of items. It would maintain an appropriate record of stock
and reviewing them so as to make sure that it is available to the customers in a best possible
manner.
Job costing system: This is most crucial aspect which is used by corporation such as
Innocent Drinks which track the overall cost of a merchandise and determine the profitability. In
other words, it is understood as the procedure of evaluating the material and labour cost for each
job performed by them. In an emerging corporate world like Innocent Drinks, this is most
efficient method which aids in determining the cost that is incurred in relation to job process.
M1 Determine the benefits of MA in accordance of chosen organisation
MA Evaluation of Benefits/advantages
Cost Accounting This prove to be advantageous for Innocent Drinks as they tend
to minimise the cost of production so that their profit margin
increases.
Inventories Management This provide benefit for the company as they tend to take
insurance of inventories in case of occurrence of any abnormal
losses and maintain proper storage cost.
Job costing system This would aid Innocent Drinks to maintain proper accountability
in their working procedure through systematic allocation of each
job.
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