Management Accounting Assignment - Aston chemicals
Added on 2020-10-22
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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 system and its applications...................4D1. Management accounting system and its reporting within organisation process..................5TASK 2............................................................................................................................................5P3: Calculation of cost using an appropriate technique..............................................................5M2: Various types of accounting techniques and financial reporting documents......................7D2: Data interpretation................................................................................................................7TASK 3............................................................................................................................................7P4: Advantages and disadvantages of different planning tools used for budgetary control.......7M3: Uses and applications of planning tools for preparing and forecasting budgets.................9TASK 4............................................................................................................................................9P5: Responses of management accounting system to deal with financial problems..................9M4: Management accounting lead to sustainable success in responding to financial problems...................................................................................................................................................11D3: Planning tools respond appropriately to resolve financial problems.................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is a sub division of accounting system which is concerned withpreparation of managerial and cost accounts in order to provide non monetary and statisticalinformation. In order to better understand the concept of management accounting a smallcompany is selected and that is Aston chemicals. This is a private limited company located inEngland, United Kingdom and deals in distributing chemicals in the European Personal Careindustry. The main aim of this project report is to provide an understanding about the concept ofmanagement accounting as a Management Accounting officer (Bisbe and Malagueño, 2012). In this project report various types of management accounting systems are discussedalong with reporting methods. This branch of accounting system often includes costingtechniques which are described along with its numerical solutions. Every business organisationsfaces several financial issues which are addressed in this project report along with its planningtools and techniques which assist in tackling those issues. TASK 1P1. Management accounting and its types of management accounting systemsManagement accounting is a concept which includes process of analysing business costsand operations by the help of internal financial reports and managerial accounts which areprepared by internal managers of an organisation. Aston Chemicals is a small scale companywhich endeavour to seek development and growth due to which they incorporate this concept toincrease efficiency of the organisational operations. The primary benefits of this concept arebetter decision making and attainment of overall organisational goals. Financial informationincluding various accounting statements and reports are analysed and interpreted in this conceptso that it can be understandable in order to make reliable decision for the organisational activities(Budding, Grossi and Tagesson, 2014). Managerial accounting system is a framework which help in perform and manage variousactivities of an organisation such as inventory, costing and many more. There are several typesof management accounting system and some of them which are used by Aston Chemicals arediscussed below:Cost Accounting System: This type of managerial accounting system records and keepstrack of all costs which are incurred in course of organisational operations. Costs which are1
managed and maintained are continuously transacted by mangers despite of the nature ofinventory in which cost is incurred. The main aim of this system is to keep track of all incurredcosts so that future profitability can be ascertained. This system includes preparation of costbudget which includes all costs which are incurred against organisational expenses.Aston Chemicals has a team of professionals which look after their all managerial affairsin order to improve their efficiency. Their managers uses this system to determine their futureprofitability by keeping track of their present cost involvement (Derchi, Burkert and Oyon,2013). Price Optimisation System: According to this managerial accounting system, prices ofproducts and services should be allotted by keeping all the factors in mind such as willingness ofcustomers to pay, income group of target market and many more. This process is concerned withassigning right price to right product in order to satisfy customer and also to earn a decentamount of profit. Price optimisation helps organisations like Aston Chemicals to use formula ofthis system to identify market demand of their chemical products so that they can determineeffect of all market factor like level of competition and market demand. By considering all thesefactors they allocate appropriate prices to their products.Job cost System: In this system various jobs are identified and analysed which areperformed or needed to be performed in an organisation to achieve their organisational businessgoals. These jobs are assigned a certain amount of cost which are allotted by managers of anorganisation. This system is an expense monitoring process which determines cost of each job oroperation. These job costs are managed by classifying them into categories such as overheadcosts, direct material costs and direct labour costs (Huber and Scheytt, 2013). For example, Aston Chemicals uses this system to determine costs engaged in their everyjob and operation category. By ascertaining these costs, organisation can be benefited as they cannow ascertain in what job high costs are involved and what are its problem areas. Inventory Management System: This system helps an organisation to keeps track ofevery unit in their inventory. Here, inventory refers to the stock which is available in theorganisation including raw material, stock engaged in work in progress and warehoused goods.Aston chemicals uses this system to manage their inventories and track record of every inflowand outflow of stock. This process assist in minimising the risk involved in inventorymanagement and helps to control stock related affairs of an organisation.2
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