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Explain Management Accounting

   

Added on  2020-11-12

18 Pages5393 Words478 Views
MANAGEMENT ACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1LO 1.................................................................................................................................................1P1 Explain management accounting and give the essential requirements of different types ofmanagement accounting systems...........................................................................................1P2 Explain different methods used for management accounting reporting...........................3P3 Calculate costs using appropriate techniques of costs analysis to prepare an incomestatement using marginal and absorption costs......................................................................5P4. Types of planning tools used in budgetary control:..................................................10P5 management accounting systems to respond to financial problems...............................13CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................17

INTRODUCTIONManagement accounting is a process of collecting previous data, analysing and measuring them,making plans for achieving organisational goals accordingly. It is a process used for decisionmaking process. Rent-A-Car industry is an american company which was established in 1957 bySt. Louis, Missouri. The company rents the car and also it oversees commercial fleetmanagement, sales used car, lorry, etc. This study will disclose different management accountingreports, different management accounting tools, management accounting techniques,determination of costs of the organisation. This assignment will also cover the marginal costingand absorption costing with their examples, different budgetary planning tools along with theiradvantages and disadvantages. This study will also suggest how management accounting systemresponds to different financial problems.LO 1P1 Explain management accounting and give the essential requirements of different types ofmanagement accounting systems.Management accounting is an accounting system is application of knowledge and skills toprepare and present financial and other information related to decision making in such a way sothat they could help them in decision making, planning and organising operation ofindustry(Kaplan and Atkinson, 2015.).Management accounting is a process of looking forward and taking decision which couldhelp them to create a better future of the organisation. Management accountants are also knownas value-creators as they work for creating more value of the organisation in future than itshistorical values.essential requirements of different types of management accounting system:Knowledge and skills related to management accounting of Rant-A-Car can be experienced fromdifferent fields and functions of the organisation like pricing, valuation, efficiency auditing,marketing etc.some essential requirements of management accounting system are as follows:11Cost accounting system:cost accounting system of the industry is the very importantgathered by managerial accountant of Rent-A-Car. It shows the cost company incurred by1

the organisation with a view to get cost associated with the product or service providedby the industry to its customer(Quattrone, 2016.).. 11Accounting related to cost of the company can be gathered through its costrecordings, cost analysing, cost reports, vouchers, etc. a management accountantneeds to gather a detailed information relating to cost through various factors so thathe can get the actual cost of the product or service and can make plans to reduce itscost and get maximum returns.BenefitsThis system is helpful for the company to be cost effective. Management can make effective decisions in order to make the company cost effectiveand enhace its profitability.It also enables company to utilize its resources more efficiently and effectively.11Inventory management system: inventory management system enables the company touse its inventories efficiently in order to reduce inventory cost to the company. Thissystem shows how Rent-A-Car can properly reduce its use of its inventory along withmaintaining same stock level to fulfil customer's needs and demands. It helps thecompany to control misappropriation of stock. For appropriate using the inventorycompany can use different methods like LIFO, FIFO. Weighted average inventorysystem, etc.Benefitsit helps the company to have control overuse of inventory in the organisation.It enables Rent-A-Car to track its inventory level in the organisation.It also helps the company to increase profitability of Rent-A-Car. 11Job costing system: this system is being used by the company where the job is beingperformed by the company in different process. It enables Rent-A-Car to find out cost ofspecific job to the company. It shows the cost of direct material, direct labour, overheadsetc. direct material and direct labour are those who are used at the time of producing theproduct. Whereas overheads are operating cost to the company.2

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