Management Accounting System Analysis
Added on 2020-10-22
17 Pages5025 Words153 Views
Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Activity 1................................................................................................................................3Management accounting and different types of management accounting systems................3Various methods used for management reporting..................................................................5Evaluation of the benefits if management accounting systems..............................................6Critically evaluation of management accounting systems.....................................................6Activity 2................................................................................................................................7Management accounting techniques and financial reporting documents...............................9Financial reports which used for interpreting various business activities............................10Advantages and disadvantages of different types of planning tools which is used by budgetarycontrol...................................................................................................................................10Usage of several planning tools for designing and forecasting budgets..............................11Analysis of how in responding to financial problems, management accounting can leadorganisation to sustainable success......................................................................................11Comparison of how organisations are adapting management accounting systems to respond tofinancial problem..................................................................................................................13Evaluation of how planning tools for accounting help to solve problems...........................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................17
INTRODUCTIONManagement accounting refers to the process of analysing business costs and operationsto framed and prepare internal financial report, records and account to aid managers decisionmaking process in achieving business goals. Basically, it can refer to the process of presentationof accounting information in order to formulate the policies and procedure that can be adoptedby the management and assist its day to day activities (Ax and Greve, 2017). It is beneficial formanagement of the firm because it help in preform all its functions including planning,organising, staffing, directing and controlling. Management accounting is a periodic report whichis designed by the management department of the company after a specific time period so thatthey can have proper information about the cost and can manage various accounts. Thisassignment is related to Heron Bros. Ltd. which is an engineering firm and incorporated in 1982.This organisation operate its business in building and civil engineering contractors based inNorthern Ireland, UK. This report will discussed about the different type of management accounting, benefits ofmanagement accounting system and various methods of management accounting reporting.Further will discussed about the advantages and disadvantages of different types of planningtools that are used in budgetary control. MAIN BODYActivity 1Part AManagement accounting and different types of management accounting systemsManagement accountingIt is also know as marginal and cost accoutring and is the process of identifying,measuring, analysing, interpreting and communicating information for the pursuit of anorganisation's objectives. Basically, it the combination of two words as management andaccounting. It refers that management accounting is a type of accounting that is related to themanagement of internal part of business (Bennett and James, 2017). There are different types ofmanagement accounting system, some of them are as following:Inventory management system- It is a type of management accounting system andconsider the process and procedure which oversee the monitoring and maintenance of stocked
products while the products are firms assets, raw materials and suppliers and can be finishedgoods that are ready to sent to vendors or customers. It is one of the most important managementaccounting system because it help in tracking the status of goods and services. In Heron Bros, thefirm use and implies this system for tracking products and services and checking the financialproducts like mortgage loan's clarification and others (Bobryshev and et. al., 2015). It isconcerned with supervision and management of stock and non capitalized assets of theenterprise. With the help of this management accounting system, the management of thecompany can reduce cost and achieve appropriate inventory management. Job costing system- It refers to a type of costing which is applied in industries, whereproduction cost is usually measured by the number of completed jobs. It monitor production costsystematically by dividing them in overhead, direct material and direct labour costs andestimating them at their actual value. In Heron Bros, job costing are used to make control on theuse of raw materials, labour hours and equipment by allocating the cost of each customer orderseparately. The management department of the firm can applies this system at that time when theproducts are identical to keep track of order expenses.Price optimization system- It another type of management accounting system which isapplied by the organisation to take control the prices of resources. It is method which can usedby the management department of the find in context of declining the price of various differentproducts at a time. With the help of this method, it can be monitored that how demand willfluctuate at different standards of prices. In Heron Bros, by adopting this method, the companycan monitoring pricing structures fro promotional pricing, discount pricing, initial pricing andothers. It is important for the company because with the help of it, the firm can links its businessvolume with profits and increase profits by maintaining the same standards of customerretention.Cost accounting system- It refers to a framework which is implied by companies tocalculate the cost of their goods and services for profitability analysis, cost control and inventoryvaluation. The main objective of this method is to capture an organisation's manufacturing costsby analysing the input of each step of production. There are two cost accounting systems like joborder costing and process costing (Chenhall and Moers, 2015). Job order costing analysemanufacturing cost partly for each job whereas cost accounting system accumulates productioncost separately for each process. In Heron Bros, the management department of the company can
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