Various Methods Management Accounting
Added on 2021-01-03
18 Pages5253 Words99 Views
FinanceLeadership Management
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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Management accounting and essentials requirements of various type of managementaccounting systems.................................................................................................................3P2 Various methods used for management accounting reporting..........................................6TASK 2............................................................................................................................................7P3 Calculate cost using marginal and absorption costing......................................................7TASK 3..........................................................................................................................................10P4 Advantages and disadvantages of different types of planning tools...............................10TASK 4..........................................................................................................................................13P5: Comparison with other organization to overcome financial issues...............................13Conclusion.....................................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagement accounting is a technique that assist a firm to be efficient to have betterplanning and control over a company. It can be defined a a practical science for value creationand accounting resources within firm to ensure their optimum utilization.It supports topmanagement to gain insight of their business operations so that it can streamline its activities andmaximum output with minimum waste generation (Bebbington, Unerman and O'Dwyer, 2014) .Oak cash and carry is a small retail company having total staff of 50 members with its base inUK. It deals in products like groceries and general merchandise. The report will analysis variousmethods of management accounting along with appropriate techniques of cost analysis forpreparing income statement. Further it will explain advantages and disadvantages of variousplanning tools and will compare ways in which firms are using management accounting to dealwith its financial problems.TASK 1P1 Management accounting and essentials requirements of various type of managementaccounting systemsAccounting is one of the most comprehensive and methodological process that throwslight on financial transactions related to a company or business. Management accounting refersto the procedure of identifying, analysing, interpreting and communicating financial informationin order to assist manger to take various business related decisions (What is managementaccounting system, 2018.). It helps management to timely and accurately preparing financialreports on timely basis making it easy for senior management team to efficiently handle day today business operations as per standards that ultimately reflects in company's growth and success(Bennett and James, 2017). Oak cash and carry make use of both internal and external sourcesfor data collection and then analyse and communicate it at different levels of company. It mainlyinvolves collecting information that relates to various financial aspect of Oak cash and carry suchas variations in its stock, raw material, shares and in its financial position. Managementaccounting in context to Oak cash and carry helps firm to achieve its objective of attaininggrowth and sustainability by minimizing its cost and expenditures on its various businessactivities. Also it provides a number of benefits to firm like:
Management accounting involves preparation of budgets to monitor and control variousbusiness related expenditures that are likeable to be incurred in near future. Thesebudgets thus helps in reducing over all costs by providing in depth analysis most essentialand other extra or postponable cash expenses.One of the important function of management accounting is to be accurate and authenticin finance forecast related to consumers demand , potential sales volumes, effects of pricemodification in economic market etc. Thus, this information assist Oak cash and carry tomanufacture right quantity and quality of products and services that are as per therequirements and demand of consumers.Financial information that is provided by management accounting helps owners andmangers of Oak cash and carry to review and grab prevailing market opportunitiesthrough qualitative analysis in order to make authentic and relevant business decisionsThus, management accounting assist Oak cash and carry to avoid and overcome many problems,to mange and ensure its financial security, determining its status and thus to drive businessoverall strategy and management (Bovens, Goodin and Schillemans, 2014). Mentioned below isthe importance of management accounting:Qualitative data: For achieving control over business and for effectively execution ofall business operations , it is critical that data that has been collected should be authenticand relevant. Thus, management accounting assist Oak cash and carry to get most reliableinformation by in depth studying all internal and external factors so as to get effectivesolutions of all business related issues. Analysing rate of return: Oak cash and carry before embarking heavy investment onany project thoroughly estimates its expected rate of return. Also, in case of choosingbetween two or more investment opportunities, for determining company's break even,cash flows etc. company make use of management accounting.Enable to gain understanding of performance variances: Management accountingmake use of various analytical tools and techniques that reveals Oak cash and carryperformance variances. It is measured by comparing expected and actually achievedtargets (Brewer, Sorensen and Stout, 2014).
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