Management Accounting Assignment - Sollatak Ltd

Added on - 22 Nov 2020

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Management accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and its types of management accounting systems....................1P2 Different methods used for management accounting reporting........................................3M1 Evaluate the benefits of management accounting systems and its applications..............5TASK 2............................................................................................................................................6P3 Preparation of income statements by using cost techniques.............................................6M2 Application of management accounting techniques to produce financial reportingdocuments...............................................................................................................................8D2 Financial resorts and interpretation of data of business activities....................................8TASK 3............................................................................................................................................9P4 Budgetary control and advantages and disadvantages of planning tools used in budgetarycontrol.....................................................................................................................................9M3 Use of different management tools and their application for preparing and forecastingbudget...................................................................................................................................11D3 Evaluation of planning tools to respond financial problems..........................................11TASK 4..........................................................................................................................................11P5 Response of management accounting system to financial problems..............................11M4 In responding to financial problems management accounting can lead organisation tosustainable success...............................................................................................................13CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is technique used in analysis of company's financial position inthe current accounting period by interpreting it's costs and operations (Morden, 2016). Companycan adopt for various management accounting systems tools for effective and efficient workingin business to achieve desired objectives. Management accounting reporting methods is properlyplanned, organised, controlled, monitors by management for enhancing companies performance.Evaluation of different costs and its techniques used in achieving favourable net income with thehelp of marginal and absorption costing and appropriate use of budgetary-control planning toolsconsidering its merits and demerits. Management has to focus on factors responsible for financialproblem.Sollatak Ltd, a technology company deals in power and energy consumption solutions byoffering different electrical equipments in UK market. Main motive of this report is thatcompany wants to provide services related to power with the help of proper utilisation ofresources. The project includes various management accounting systems, reporting techniques,different types of costs for net operating income calculation and use of budgetary control tools,financial techniques for resolving financial issues.TASK 1P1 Management accounting and its types of management accounting systemsManagement accounting is the representation of accounting data in order to changecompanies policies which is to be acquired by the management. It is a process of analysis andinterpretation of management reports which provide accuracy in business financial reports fordaily operations and short term decisions.Types of management accounting systems are:Cost accounting systemPrice optimisation systemInventory management systemJob costing systemCost accounting systems: This structure is used by an organisation in cost estimation oftheir product, so that they study company's profitability, valuation of inventory and cost control.Organisation should estimate accuracy in product cost for profitable operations. They must have1
a knowledge regarding which commodity is profitable or not, and this is judged only whencommodity is estimated correctly. Cost accounting system is analysed on the basis of actual,normal and standard costing.Actual costing:It is based on the actual cost of product incurred like actual cost ofmaterials used, actual labour cost and actual variable overheads which is used indetermination of actual costing of commodity. This is the most essay method of costingwhich doesn't required any pre planned cost but sometimes it takes more time toformulate the valuation of closing stock and cost of goods sold because all actual costsmust be observe and allocated.Normal costing:It is designed to derive product cost based on actual direct costs i.e.actual cost of material and labour as well as standard overhead rate which is applied inproduct's actual usage irrespective of different allocation bases.Standard costing:It is based on predetermined materials, direct labour andmanufacturing overheads costs. This costing method is used for valuation ofmanufacturer's inventories and cost of goods sold.Price optimisation system:It is a process of identifying maximum price which thecustomer is willing to pay (Mistry, Sharma, Low, 2014). It calculated the variation in demand atdifferent level of prices and combined it with recommended prices of costs & levels of inventorywhich will maximise profits. This system is used as a solution which allows for priceimprovement and will recommends change in price the helps organisation to achieve specifiedobjectives.Inventory management system:It is framework used in managing inventory on dailybases by tracking stock levels, orders and their sales. This system is mainly used inmanufacturing industries for creating bill of materials, inventory tracking, work order, productidentification and other inventory related details. This system is also used to avoid excessiveproduct stock which impact on loss of revenue. Below are the methods of inventory managementsystems:FIFO system:First in first out method is used for valuation of inventory on the bases offlow of goods that means goods which is purchased first are to be sold at first. This showsactual flow of goods.2
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