Management Accounting : IG group
Added on 2021-02-19
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1LO1..................................................................................................................................................1P1. Explaining the concept of management accounting and the essential needs of varioussystems of the management accounting......................................................................................1P2. Explaining the different techniques that could be used as reporting under managementaccounting...................................................................................................................................2M1. Evaluating the benefits and the uses of the management accounting systems in an IGGroup..........................................................................................................................................3LO2..................................................................................................................................................4P3. Preparing the income statement with application of marginal and absorption costingmethod.........................................................................................................................................4LO3..................................................................................................................................................7P4. Evaluating the benefits and the limitation of different budgetary tools................................7M2.Explaining the uses and the application of the planning tools...........................................10LO4................................................................................................................................................11P5 Organisation adapting management accounting systems to respond to financial problems....................................................................................................................................................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting refers to the practice of planning, directing, organising andcontrolling the management functions within an IG Group. The present study is based on IGgroup, a financial accountancy firm that provides the consultancy services to different IGGroups. Furthermore, the report provides deep insights regarding the systems of the managementaccounting and its applications. Moreover, it includes various techniques that can be used forresolving the financial problems and also the different planning tools that can be used by thefirm. LO1.P1. Explaining the concept of management accounting and the essential needs of various systemsof the management accounting Management accounting refers to the application of the appropriate methods and theconcepts in order to process historical and the estimated economic data of an enterprise forhelping the management in developing the plans for achieving the reasonable objectives. It alsoensures in making of the rational decisions towards reaching the goal effectively and efficiently(Horton and de Araujo Wanderley, 2018). It is also known as the managerial or as costaccounting, is referred as the process that is used for analysing the cost involved in the businessand the operations for preparing the financial report internally which in turn helps the managersin making suitable decisions. Management accounting and financial accounting are the majorbranch of the accounting and are different to a larger extent as MA deals with the formulation ofmanagement reports while financial accounting relates to the framing of the financial statements.Management accounting is optional on the part of the IG Group whereas financial accounting isa compulsion for the company to adopt. There is no requirement for auditing the reports underMA but it is mandatory for the enterprise to get auditing of its final reports from the statutoryauditor. There are various systems under the management accounting which are important and plays acrucial role in the smooth functioning of the operations of an entity is as follows-Cost accounting system- It is called as the information system for the management interms of the determining the cost as it establishes the budget, actual cost and the standard cost. Itis the set of the procedures that are used for refining or converting the raw data into the usableinformation in respect of making management decisions, for ascertaining the cost of the products1
and the services and assessing the profitability. This system plays an essential role in the IGGroup as it helps in making the analysis of the cost behaviour patterns of different items of theexpenditure within an IG Group (Messner, 2016). It enables an enterprise in estimating the futurecost with the reasonable accuracies. Inventory management system- It refers to the system of management accounting thattracks the goods throughout the supply chain or in the overall portion within which the businessoperates. This system plays a significant role in managing the order as it helps in integrating andtracking the orders from the different marketplaces (Quattrone, 2016). It enables the mangers increating the appropriate purchase order from their suppliers and also helps in managing theinventory in the smart way against the competitors of the company. Job costing system- It is the system that includes the processing of accumulating theinformation relating to the cost attached with the particular production or the services. Theinformation provided by this system is essential for submitting the information of the cost to thecustomers under the contract where the cost could be reimbursed. Such information is useful fordetermining accuracy in the estimating system of the company that could help in quoting orfixing the prices which allows for the reasonable profit.Price optimization system- It is the system of the management accounting thatmathematically analyse the response of the customer towards different price level of the IGGroup's product and the services through the various channels (Sinaga and et.al., 2019). Thishelps an entity in determining or fixing the best possible prices so that larger profits could begenerated and this in turn results in the achievement of the objective of a business that is profitmaximization. P2. Explaining the different techniques that could be used as reporting under managementaccountingManagement accounting reports is been used by the IG Group for the purpose ofplanning, decision making, regulating and in measuring the performance. Such reports are beencontinuously been generated in order to keep the appropriate records regarding the internalworking of an enterprise. Most of the critical decisions are based on the accuracy of such reports.Therefore, preparation of these reports requires the highly skilled people or the experts so thatuseful information could be gathered by the company (Malina, ed., 2018). Different reports thatare been framed by the managers are as follows- 2
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