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Report on Management Accounting Systems

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Added on  2019-12-18

Report on Management Accounting Systems

   Added on 2019-12-18

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MANAGEMENTACCOUNTING
Report on Management Accounting Systems_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3P1. Explaining management accounting and essential requirements of different types ofmanagement accounting systems.................................................................................................3P2. Different methods used by the business firms for management accounting reporting.........5TASK 2............................................................................................................................................7P3. Calculation of net income with the help of marginal and absorption costing method..........7TASK 3..........................................................................................................................................10P4 Benefits and drawbacks of different kinds of planning techniques......................................10P5 Comparing different management accounting systems........................................................14CONCLUSION..............................................................................................................................14REFERNCES.................................................................................................................................16
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INTRODUCTIONManagement accounting is the one of the important discipline that is used by the managersto make cost related business decisions. In the current report, varied management accountingsystems are described in context of Swing patrol. Mentioned firm is operating a dance class inthe UK and comes in the category of small scale firm. In the report different managementreporting and planning tools are also discussed in detail. At end of the report, applications ofplanning tools is revealed and comparison of different MAS is made. P1. Systems of MA and their requiementsToThe General manager of Swing Patrol Date: 11/9/2017Sub: Management accounting systems and their typesManagement accounting is the one of the most important domain under which accountingof cost is done and same is computed for varied product lines as well as deviation is same isidentified. There are number of advantage of management accounting for firms. Main merit ofmanagement accounting is that it help management in tracking cost of project. Thus, by takingaction on time firm manage cost of its product. Main objective behind using managementaccounting is to keep detail record of expenses that are incurred in the business and to takerelevant business decisions. Business firms aim at earning maximum amount of profit at anycost. Numerous factor impede growth rate of revenue in the specific financial year. Cost is one ofthe factors that affect the overall profitability of business firm. Thus, Swing Patrol aims atreducing the cost of production and distribution as well as inventory storage so that stiff controlcan be maintained on the overall cost that is beard by the business firm to produce goods atworkplace. Tracking of the cost is inevitable to maintain cost value up to certain level in business(Burritt and et.,al., 2011). For this purpose, management accounting is used by the businessfirms. Management accounting is the discipline under which cost is recorded and differentaccounts are prepared to evaluate cost time to time. In this regard, some of the important toolslike variance analysis and budget are used by the business firms. In the variance analysis, actualcost that is generated in the business of Swing Patrol is compared with the parameters and on thatbasis, firm’s performance is accessed by the management accountant. Budget is anotherimportant tool under which maximum limit is ascertained up to which business firm can make
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expenditure in its business. Budget may be prepared on quarterly basis and to control cost onmonthly basis, follow up is done. In case it is estimated that determined level may be breachedthen in that situation, in starting stage, corrective actions are taken by firm to control the cost(Burritt and Schaltegger, 2010). In break-even analysis method, fixed and variable cost are takenin to account along with the sales price. Thus, by using output of the break even analysis methodSwing Patrol is determining the extent to which it must produce units so that cost can be coveredand sufficient amount of profit can be earned in the business. It can be said that there are multiplebenefits of management accounting for the business firms. Management accounting systemrefers to the way that is followed to record costs that are related to business. According tobusiness requirements varied cost accounting systerms are developed. Some of the essentialrequirements of management accounting systems are given as below: Cost accounting: Cost accounting management accounting system is used by the firms.Under this accounting system all sort of expenses are recorded by the business firms. Costaccounting is required to make estimation about the likely amount of expenses that can be madeby the business firm in the upcoming time period (Cuganesan, Dunford and Palmer, 2012). Thus,projections are made about the cost on the basis of cost accounting system. Under mentionedmanagement accounting systems all sort of expenses are classified separately. Thus, it can besaid that clear division of cost is done in the management accounting system. Managers of themost business firms use data that is recorded under mentioned system to make businessdecisions. Example: Cost accounting is followed by Toyota because it is making single sort ofproduct in its business.Job order: Job order is the other accounting system which is often used by the firms thatare producing multiple products. In many firms different sort of products are produced on thebasis of order that is place by the client. Under job order accounting system cost data related todifferent product lines or batch is required to be prepared. On daily basis all expenditures that arerelated to specific batch are recorded in the accounting system under separate document as perrequirements. Through mentioned accounting system one easily identify the product line whosecost is very high or skyrocketing at fast pace. By developing suitable strategy cost can beencapsulate up to specific limit by the managers. Job order is the costing system that is widelyused by the firms especially in the manufacturing sector. Those firms that are operating in theservice sector also use mentioned approach because they offered wide variety of services to the
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