Management Accounting Essay - HARRODS Limited

Added on -2020-07-23

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MANAGEMENTACCOUNTING
TABLE OF CONTENTS
INTRODUCTIONSystem of management accounting is most important for the business enterprise as it isused to evaluate the firms financial position and its actual liquidity ion market. It is alsoconsidered as process that involves collection of data and preparation financial statements byusing various management accounting methods and systems of reports that is used to gain anunderstanding about the business growth and improvement (Zimmerman and Yahya-Zadeh,2011). In order to make correct business and strategic decisions companies needs to adoptmanagement accounting system that will provide them better analysis of there actual financialpositions and market position. This report is based on analysis of HARRODS Limited which issmall scale retailer in UK which has a limited number 50 employees at there workplace. Further,management accounting system is prepared for the enterprise in order to keep monthly andweekly report of enterprises of business regarding their financial condition or performance inmarket (Baldvinsdottir, Mitchell and Nørreklit, 2010). Turnover of organization has not beenexceeded from not exceeded from 500000 euros. In this study, various traditional and newmethods accounting has been discussed in order to provide a complete understanding about thebenefits which they will provide to organisation. Further, present study has required to be doneon small business enterprise by using different tools to carry out reporting of system ofmanagement accounting. Moreover, advantage s and disadvantages of different tools used forplanning have been discussed in the report which are used for control the budget.TASK 1P1 Management accounting and needs of various kinds of accounting systems.From: Management accounting officerTo: general manager Company: HARRODS Ltd.Subject: Management accounting system According to Institute of management accountants (IMA) “Management accounting isconsidered as profession that involves the making partnership process of decision-making in1
organization, development of planning and performance management system and providing andexpertise in the method financial reporting and control in order to support management informulations as well as application of organisation's strategy” (Ward, 2012). It is system thatsupports in taking the present operational data and preparation of various important informativereports. It usually consists of internal systems that HARRODS have been used to measure andanalyse its process for the management of business enterprise. The important components ofmanagement accounting are considered as budgets, performance reports, sales, internalmanagement and reports related to income and expenses and also returns on investmentsreports. Moreover, it also includes trend chart, variance and other important financial reports.Various kinds of this important system has been mentioned above:Traditional method: This type of methods have been used by the different accountantsin which the cost which is incurred on production overhead are to be clearly determinedon the product which is manufactured in the enterprise (Renz, 2016). For the completionof calculation it usually involves direct cost, labour charges and other expenses. Further,utilization of this cost accounting method includes the cost driven that primarily resultsin occurrence of expenses like direct material labour and machine hours.Lean method: It is generally considered as change that are needed to HARRODSaccounting, control, calculation and process of manufacturing to support leanmanufacturing and lean thinking. It consists of different ways to measure the work oforganization and their progress in lean. Further, accounting system involves theaccounting, control as well as process used to take decision (Cinquini and Tenucci,2010). There are various important methods that has been used by management to takeinformation about there future financial position in market and adopting variousmeasures in order to get the actual results. It also eliminates the waste within theaccounting process by removing them down to the lowest amount of activities. Thus,here the accountants are needed to lean manufacturing and using the lean thinking to getthe actual information and results.Throughput accounting: Further, this system of accounting comprises classification ofvarious constraints which are used in the production system of enterprise (Vaivio andSirén, 2010). It is usually depended on the principle of simplified system of management2

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