Management Accounting: Inventory Management and Transfer Pricing Methods

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 2...................................................................................................................................1
a. Discussion of alternative measure which offer discount to customers that helps to reduce
capital requirement of company with minimal reduction of profitability ...................................1
b. Method adopted by organisation to manage and achieve control over inventory that provide
benefit of improve cash flow.......................................................................................................2
Question 3 ....................................................................................................................................4
a. Full cost transfer price..............................................................................................................4
b. Market based transfer price......................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management accounting is an accounting used by managers as it provide information of
various operational activity to take management decisions (Fleischman and McLean, 2020). It
helps in identifying, analysing and communicating information related to management to
managers which helps to attain business goals. Management accounting helps an organisation in
strategic management of enterprise which helps to make important decision in company. It also
helps in proper planning for budget and for analysis. It helps managers to ensure proper control
over activity of business to get desired result. This project report include discussion of two
questions in which one question include method of managing inventory and their benefit for
inflow of cash flow statement. It also include method discount adopted by organisation to control
requirement of working capital without reducing profit. Second question include study of
transfer price methods used in transferring a product.
QUESTION 2
a. Discussion of alternative measure which offer discount to customers that helps to reduce
capital requirement of company with minimal reduction of profitability
Organisation offer various discounts to reduce requirement of working capital in
organisation without reduction of profitability. It will protect enterprise from situation with lack
of liquidity in business. Organisation can adopt various discounts measure which helps them in
improving level of working requirement without reduction for profit which are as follows:
Special discount to new customers: It is one of discount method offer by organisation to
improve working capital requirement (Bestard and Font, 2019). this discount is offer to new
customer who are not ready to buy product and service of customers. Offering discount to
customer is apart of strategy of enterprise. In this, enterprise do not need to ask customer to buy
product instead they share cod of discount to increase sales. It increase working capital of
company and bring liquidity in business to dead with day to day requirement of organisation.
This method target for a specific customer segment which are new customers to aware them with
new product and service. In this method , it is important for organisation to realise customer
about this offer is only for them as it increase important of discount method. It is also important
fr organisation to know about reason behind discount as it make them accept discount offer.
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