Management Accounting : Sample Assignmen
Added on -2021-02-21
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1ACTIVITY 1...................................................................................................................................1Part A...............................................................................................................................................1Meaning of management accounting...........................................................................................1Different types of management accounting system.....................................................................2Methods used for management accounting reporting..................................................................3Benefits of management accounting system and its applicability in business............................4Integration of management accounting system and reporting.....................................................5Part B...............................................................................................................................................6ANNEXURE A...............................................................................................................................61.Elegant furniture Ltd makes and sells two products- Dinning table and chair.........................6ANNEXURE B..............................................................................................................................135. Calculation of break even point.............................................................................................13ACTIVITY 2.................................................................................................................................14Part A Different types of planning tools....................................................................................14ANNEXURE C..............................................................................................................................16Part B Application of management accounting.........................................................................17CONCLUSION..............................................................................................................................18REFERENCES..............................................................................................................................20
INTRODUCTIONManagement accounting is the process of evaluating cost of the business that will beneeded for the preparation of management report, records and managing all the work in thecompany. It also helps in taking decision and for the purpose of achieving goals in the business.This will help in doing planning, identifying the problems that is occurred in business andstrategic decision will be made that will help in achieving objectives of business in the future. Itperforms various functions like determines profitability, forecasting for the future, valuation ofstock, determining variance between cost incurred in the business etc. (Kaplan and Atkinson,2015).Management accounting consists of both monetary and non-monetary information. Present report will be based upon Atkins company. It is a British multinationalengineering company. It was founded by Sir William Atkins in 1938. It is the largest engineeringand the world's 11th largest global design firm. Report will include the meaning of management accounting and its different types thatwill help in managing systems of accounting. It also includes methods that will be used inmanagement accounting. This will furthermore, include benefits of accounting system and itsapplicability in the business. In addition to it emphasize on integration of management systemand management reporting that will enhance organizational process. ACTIVITY 1Part AMeaning of management accounting Management accounting refers to the approach that is used in the business for providingfinancial information and effective utilization of resources that will help in taking decision forthe company. It is used by the internal employees that will help them in planning for the future.(Otley, 2016). The main objective of it is to analysing the data and then take better decision fordevelopment and controlling of business activities. In this management data is being provided to the internal members that will facilitating inenhancing efficiency of doing work. This information will be help in formulating policies andprocedures and controlling the operations of company. There is no structure followed formeasuring performance of business. As decision making is the primary objective that will help infuture growth in business. It will help in identifying problems that is related to the business. Forimplementing accounting system this requires lot of expenditure that will be related to1
purchasing of software for doing calculation There are no laws that will applicable in themanagement accounting. (Maas, Schaltegger and Crutzen, 2016). Data available is historical innature so for analysing information research is being done that will help in evaluatingperformance of the company. In this internal members of the company is responsible for takingstrategic decision in the company . All the work is done on internal basis as there is no involvement of outsider intobusiness.. It is providing qualitative information regarding performance and operations of thefirm. There are different techniques that will help in taking better decision for the company.Different control techniques that is used for utilization of proper resources and reducing wastageof resources that will also help in saving the cost of company (Cooper, Ezzamel and Qu, 2017).Proper reporting is done as it will have to provide to the manager for taking effective decision forthe company. It is important to provide information that is available regarding information tomanager that will help in taking effective decision for the company. Therefore, managementaccounting plays an important role in the company for enhancing decision making process forfuture. Different types of management accounting system Management accounting refers to the process that is related to the internal activities thatis performed in business that will help in taking decision for the future. Cost Accounting system:- It is the process of determining cost that is incurred on manufacturingproducts for the purpose of evaluate profitability, valuation of stock and controlling cost for thefuture. The main objective is to evaluate the cost and methods that will lead to control cost in thecompany. Scope is to providing information regarding cost that will help in control and cut downthe cost that will bring more accuracy in the operations. It helps in removing activities that willnot provide profit to business (Granlund and Lukka, 2017). This consist of two main systemssuch as job order costing and process costing. Its limitation is there is no proper procedure that isbeing followed for controlling cost. In Atkins it is used to determine cost that will be incurred incompany and by applying different methods it can be controlled in future course. Inventory management system:- This system will emphasize on determining the availability ofstock in the company and also helps in managing inventory that is available in business for thefuture use. Different software is being used for tracking the availability of proper inventorythrough barcode or mobile devices. Inventory can be classified as Transit, buffer, anticipation,2
decoupling or cycle inventory. Two systems that is used in calculating inventory are periodic andperpetual system. It performs various functions such as creating purchase order, receiving,adjusting and disposing inventory, Creating orders for sales or printing barcode labels on theproduct (Nitzl, 2016). In addition, it helps in improving accuracy and workflow in the business.In Atkins this system will be used for making proper inventory management and for trackingproper availability of stock in the company. Job Costing System:- It is related to collecting information regarding the cost that is incurred ona particular product or service. Information is required for submitting it to customers in casewhen the cost is reimbursed from the company. These informations include direct material,direct labour and overhead cost that is incurred while manufacturing product. In this system it isto be depend on the cost that is related to job is being determine in this system. In manufacturingbusiness this system is mainly used for collecting information regarding product that is providedby Atkins to its customers (Shields, 2015). The main objective is to evaluate cost as well asprofit that will be occurred by each job in the company. Atkins will use this system fordetermining different type of cost that will incurred in the business. Price optimising system:- This system will help in evaluating the difference between demandand price that will be change simultaneously at different price level, then it will be combineddata with information that is related to cost and level of inventory with the available price thatwill help in improving profits (van Helden and Uddin, 2016). In this system, there are threepricing elements included such as pricing strategy, value of the product and the tactics that willrequired for evaluating profitability of the company. This system will help in determining initial,promotional and discount pricing of the company. This system will be used by Atkins indetermining the gap between demand and price that will help in getting idea regarding customerpreference in buying a particular product. Methods used for management accounting reporting Management accounting report refers to the term that is used for recording managerialactivities that is performed in the business. Budget Report:- This reportwill help in analysing performance of Atkins and the manager willhelp in analysing cost and the methods that will be used in controlling the cost of company.These reports are used by every company for analysing performance at the end of year. 3
Accounts Receivable:- This report will be used for evaluating cash flow from business andwhen the bill is given on credit basis to its customers. In Atkins this will be used as bill that isgiven to customers on credit. This report will provide goods and services on credit basis. Job Cost Reports:- This report shows expenses that will be invested by small business in theirdifferent projects. By estimating different perspective that will be used for carrying out job costin Atkins company. This will be used for evaluating expenses that will incurred on certainprojects. Inventory and manufacturing:- This will emphasize in managing inventory so that it willmatch need and want of the consumers in the marketplace. In Atkins inventory will be stored inwarehouse for the use of future purpose in business. Reports will be prepared that shows wastethat will be incurred in Atkins. Performance reports:- These reports help indetermining performance of both company andemployees. In Atkins performance will be analysed by different aspects that will be used to fordetermining different features of Atkins. Benefits of management accounting system and its applicability in businessIncreasing efficiency:-It will emphasize in taking strategic decision. This will help in increasingefficiency of employees in the company. In this different management system is compared formeasuring performance of the company. Employees are motivated by offering them rewards andincentives so that their performance will be increase in the future. This will help in increasingefficiency by doing productive work in Atkins so that employees will give their best in fulfillingobjectives of the company. Maximizing profitability:- For gaining organizational profit different tool is being used forcontrolling budget for the company and by reducing operation cost and expenditure that will leadto increase profit for the future. Proper budgetary tool in being used that will minimize variouscost that is incurred and helps in achieving objective of the company. This will benefit companyas as increase in profitability will help in increasing growth for the future. Control on cash flow:- As management accounting will help in proper utilization of cash aswhere to do expenditure and not to do (Tucker and Schaltegger, 2016). It controls misuse ofmoney in the firm that will beneficial for the future. It is important to control useless cash flowthat will have greater impact on company's operation. If cash can be controlled in business thatwill help in controlling cost for the future in business. 4
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