Management Accounting System and Types
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Added on 2020-10-23
Management Accounting System and Types
Added on 2020-10-23
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting system and its types.......................................................................1P2 Management accounting reporting and its types...................................................................2M1 Benefits of management accounting system........................................................................4D2 Integration of management accounting system and its reporting in organisational success.4TASK 2............................................................................................................................................5P3 Calculation of cost using an appropriate techniques..............................................................5M2. Various management accounting techniques......................................................................7D2. Data interpretation................................................................................................................7TASK 3............................................................................................................................................7P4. Advantages and disadvantages of different planning tools used for budgetary control.......7M3: Uses and applications of planning tools for preparing and forecasting budgets.................9TASK 4..........................................................................................................................................10P5: Responses of management accounting system to deal with financial problems................10M4 Management accounting can lead an organisation to sustainable success in responding tofinancial problems.....................................................................................................................11D3 Planning tools respond appropriately to resolve financial problems..................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting system is a process of determining, examining, understandingand measuring information. These informations help the management to pursue organisationalgoals and facilitates in the decision making process of the managers (Management accountingdefinitions, 2018). It is used to prepare various reports that provide the information of actualperformance of the company. It also help to control the operational activities of the enterprise.Agmet Ltd is a leading recycler and manufacturing company which is based in UK'smanagement accounting system helps the manager to prepare reports for internal as well asexternal stakeholders of the company. These reports include various informations such as revenues, cash, receivables, payablesetc. This report covers various topics such as management account report, various costingtechniques, planning tools used in budgetary control and financial problems that an organisationhave to face etc.TASK 1P1 Management accounting system and its typesManagement accounting is a method i.e. used by the managers of an organisation tomeasure and evaluate its performance. It helps to keep a track record of various business relatedinformation such as outstanding income, cash, account receivables, account payable andrevenues of the company. Managers of Agmet Ltd use management accounting to gather internalinformation of the production process and business operations. It helps the management to makegood decisions that helps to improve productivity and increase profitability. It facilitate internaland external parties to get internal informations of the company (Belfo and Trigo, 2013). Themanagers of Agmet Ltd use different type of management accounting system such as costaccounting system, price optimisation system, inventory management system, job costingmethod etc. These methods are explained below:Price optimisation system: This system relates to the customer's reaction towards pricechanging system of the company. It is the process of increasing the price against the customerswillingness to pay. Agmet Ltd use price optimisation system to set such price for its productsthat can increase profits for the company and attract the customers. With the help of this system,managers get the idea of customers reactions towards price change. Price optimisation system is1
very beneficial for an organisation to minimize its losses and maximise profits by reducing theloss. Estimation of actual cost will help to reduce the loss or waste in production process.Cost accounting system: It is the process of scripting, classifying, examining,compacting and distributing the costs to the various projects. This system provides the detailedcost information that managers need to control the running operation's cost and plan forupcoming projects of the company ((Budding, Grossi and Tagesson, 2014)). This system is veryhelpful while estimating cost of production of company. Agmet Ltd use cost accounting systemto record various kinds of costs that incurred in manufacturing process. This system helps themanagers of Agmet Ltd to separate different kind of costs such as direct materials, labour,overheads etc.Job costing system: This system is used to determine cost involved in every job. It isused in such situations when each job is different and performed according to the customer'sdescription. It includes the record of direct and indirect cost involved in the job. Agmet Ltd usethis system to evaluate and measure the cost related to each job that are performed in and out ofthe company. It also help the managers of Agmet Ltd to determine the exact cost of various jobs.This is a measuring tool and used to trace specific costs of individual jobs (Gates, Nicolas andWalker, 2012). Inventory management system: Inventory management system is a framework thathelps the management to record inventory related information to reduce the loss of inventory.This system help the managers to keep a track record of inventory that is taken into thewarehouse or going out of the company. The managers of Agmet Ltd use inventory managementsystem to supervise the flow of inventory within and outside of the enterprise. This system isvery helpful for the managers to keep an eye on every activity that is related to the inventory. Itincludes ordering, controlling and storing the inventory.P2 Management accounting reporting and its typesManagement accounting reports are prepared to analyse overall performance of thebusiness whether it is related to operations or production. These reports are prepared after acertain period. These reports are used to program, modulate, make decisions and measureperformance of the company. Agmet Ltd prepare these reports to collect accounting informationswhich is helpful for the company to trim cost and reward employees for their good performance(Ji, 2017). These reports provide various informations such as budget related informations,2
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