Management Accounting: Role, Methods, and Integration with Nisa Retail Store

Management Accounting
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Table of Contents
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
LO1.......................................................................................................................................................3
P1 Explaining the management accounting & give the essential requirement of different MA
system...............................................................................................................................................3
Essential requirement of different MA system.................................................................................4
P2 Presenting distinctive methods for the managerial accounting reporting...................................5
M1 Evaluating the benefits of MA systems and their applications in Nisa Retail store..................5
D1 Critically examine how MA systems and MA reporting can be integrated with Nisa’s
processes...........................................................................................................................................6
TASK 2.................................................................................................................................................7
LO2.......................................................................................................................................................7
P3 Cost calculation to prepare an income statement under marginal and absorption costing..........7
M2 Apply a range of management accounting technique & produce financial reporting document
..........................................................................................................................................................9
D2 Producing financial reports to apply and interpret data for different activities........................10
TASK 3...............................................................................................................................................10
LO3.....................................................................................................................................................10
P4 advantage and disadvantage of different types of planning tools..............................................11
M2 Analysis of use of planning tools and application for forecasting budget...............................12
D3 Evaluation of planning tools that could be used for solving financial problem.......................12
LO4.....................................................................................................................................................13
P5 Compare how Nisa can adopt MA systems to respond financial consequences.......................13
M4 Analysing how MA can lead to resolve financial problems and attain sustainable success....13
CONCLUSION..................................................................................................................................14
REFERENCES...................................................................................................................................15
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INTRODUCTION
Managerial accounting is the procedure of measuring, examining and interpreting the
performance of an organization which aimed at assisting top executives within the firm to make
right decisions. It is different from the financial accounting which purpose is to produce financial
reports like income statement, balance sheet and cash flow statement to measure the profitability,
financial health and cash position. However, MA can be defined as a process of managing business
operational metric and covers various aspects such as cost determination, examining managerial
reports, forecasting through budgets, variance analysis by finding deviations of actual results with
the targets and many others for making on-time decisions to arrive the defined target goals. The
present project report focuses Nisa Retail Limited which is small grocery wholesaler located in UK.
It is a private limited organization whose aim is to deliver best quality of retail services and
competitive food at affordable charges. The proposed assignment will critically examine the role of
managerial accounting information as a decision-making tool for Nisa’s success. Moreover, the
report will also present an in-depth evaluation of MA systems with the advantages and
disadvantages and cost determination through marginal and absorption costing for reaching for the
qualitative decisions.
TASK 1
LO1
P1 Explaining the management accounting & give the essential requirement of different MA system
To: General Manager, Nisa Retail Store Ltd
From: Management Accounting officer
Date: 7th April 2017
Subject: Management accounting (MA) and Management Accounting system (MAS)
Introduction
This report will introduce the management accounting role and importance for the Nisa
retail stores along with the various types of MAS that it can use for the objective of making goal-
oriented decisions.
Management accounting: It consists of preparation, delivering and analysis of the financial
& statistical information to the executives, managers and directors, so that, they can handle short-
term managerial decisions, devise planning & manage business performance. In Nisa retail store, it
is the accountability of the managers to administrate, supervise, monitor and control their
departmental functioning (Bhimani and et.al., 2013). MA provides them relevant or needed
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accounting information which assist them in strategy formulation & implementation as well. Now-
a-days, in the competitive challenging world, many-times, managers have to make big decisions
promptly, which cause difficulty for them in analysing and interpreting the data, therefore, they use
MAS to get the required data quickly and examine it for making suitable decisions for the growth.
Cost accounting system: It is essential for the company to estimate their product and
services cost accurately (Saladrigues and Tena, 2017). As its name, the system enables Nisa retail’s
managers to identify the right cost of their retail goods, identifying its trend, inventory &
profitability analysis and making decisions for the cost-control.
Job costing system: It refers to the process of accumulating various cost information that
belonged to a particular job (Fullerton, Kennedy and Widener, 2013). It is mainly helpful to provide
cost information to the consumers for their order placed. It allows Nisa retail store to quote their
goods prices after adding a reasonable return.
Inventory management system: This software enable corporation to track their inventory
levels for the ordering and delivering purpose to satisfy their consumer base. With the help of
managing stock to a right level, Nisa can place order on-time for having adequate inventories in the
warehouse to maintain their stock level.
Price optimisation: This MA system helps retailers to identify that how their clients will
respond at distinctive prices of the goods and services, so that, managers can set right prices to
maximize their operational return (Quattrone, 2016). More importantly, in retail sector, it seems
essential for the marketers to figure out the impact of change in their goods prices on the market
demand in order to fix an optimum price.
Essential requirement of different MA system
Relevant information: Every departmental manager of Nisa retail store i.e. finance,
purchase, sales, marketing, production need relevant information about their cost, revenues and
operational efficiency for performance measurement and interpretation and thereby make
rationalized plans and decisions (Romano, 2015).
Reliability and accurate information: CAS, IAS, JCS and other management accounting
systems must provide reliable & accurate data to the managers. It is because; manipulated data may
mislead the decisions and bring serious harm.
Time-updated: MA systems must render up-to-date information so that comparative
analysis can be made over the years to devise better policies and plans for the organizational
progress.
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