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Management Accounting of Airdri

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Added on  2020-06-04

Management Accounting of Airdri

   Added on 2020-06-04

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Management Accounting
Management Accounting of Airdri_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and essential requirement of its types............................................1P2 Types of management accounting report...............................................................................3M1 Application of management accounting on Airdri along with its benefits...........................5D1 Integration of management accounting system.....................................................................6TASK 2............................................................................................................................................6P.3 Calculations for various costing techniques for Airdri.........................................................6M2 essential requirement of management accounting technique in financial reporting............9D2. Providing necessary information to general manager..........................................................9TASK 3..........................................................................................................................................10P4 Advantages and disadvantages of planning tools used for budgetary control.....................10M3 Planning tools for forecasting of budgets...........................................................................13D2. Evaluating how planning tools can help in resolving problems.........................................13TASK 4..........................................................................................................................................13P5. Explaining how management accounting system helps in responding to problems...........13M4. Analysing response of financial problems in the sustainable success of organisation......14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
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INTRODUCTIONManagement accounting also known as managerial accounting provides aid to thedecision making of management by analysing costs and operations of business and preparinginternal financial records, reports and accounts. This system facilitates financial accounting andfinancial statement preparation. The main purpose of management accounting is to providerelevant data to the internal users like management which will enable them in taking futureeconomic decisions regarding sales, revenue, cost, expenditure, expansion of business, etc. In thepresent report various tools and techniques of management accounting has been used along withthe use of those tools and techniques. For the better understanding of this research report,discussion is based on a small business organisation i.e. Airdri that is based on UK. Variousinformation is provided to the general manger of Airdri regarding management accounting, itstypes, reports under management accounting etc. Further for organisation, income statement hasbeen prepared with two of the management accounting techniques that is marginal costing andabsorption costing along with explaining difference among two. Different budgets that are usedin management accounting are also provided below.TASK 1An Organisation to get success and to get favourable growth in world of competitionneed to analyse its internal strength. Therefore, management accounting is a technique thatenables managers and small business owners to take economic future decisions along withidentifying favourable solutions to the business problems (AbRahman and et.al., 2016). It alsohelps in improving the efficiency of business operations by using some tools like budgets, costs,revenue, etc.P1 Management accounting and essential requirement of its typesThere are different types of management accounting system that can help Airdri in takinginformed decisions by providing the management accurate and timely information such as costcutting, increasing time of production, preparation of budgets etc. This system will also befruitful for Airdri for adequate allocation of funds in activities like material purchase along withidentifying areas where company will be able to cut down its expenses and costs. Before1
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understanding the essential requirement of types of management accounting system, knowing itstypes is important. Below diagram clearly exhibits some types of management accounting.Management AccountingSystemCost accounting system: This system helps organisation in determining the costs of theirproducts and services along with cost control, inventory valuation and profitability analysis(Bertz and Quinn, 2014).It would be beneficial for Airdri to estimate cost of its productsaccurately for identifying profitable operations. It is essential for organisations to know whichproducts are profitable for their business and which are not, this can be done only with costaccounting system of management accounting.Inventory management system: Every business unit has number inventories as stock.Managing these inventories is essential in order to identify the actual inventory rotation in thebusiness. Being a retail store, it is more necessary for Airdri to maintain and manage itsinventory. However, many software’s are available in the market that have done easy to manageinventory. But the company can also use tradition inventory management methods like LIFO orFIFO method. This system includes supervision of both, capital assets and stock of organisation.Thus, this will help Airdri in determining any dead stock in the organisation along with thoseinventory that has the highest rotation.2Cost accounting systemCost accounting systemInventory management systemInventory management systemJob Costing SystemJob Costing SystemPrice Optimising SystemPrice Optimising System
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