Management Accounting - ABC Limited company

Added on - 21 Feb 2021

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1 (LO1).................................................................................................................................3Explaining management accounting and essential requirements of various systems ofmanagement accounting..............................................................................................................3Explaining various methods used for reporting under management accounting.......................5Evaluating the benefits and the application of the management accounting systems within theorganization.................................................................................................................................5Evaluating the integration between the system and the reporting of the managementaccounting..................................................................................................................................7TASK 2(LO2)..................................................................................................................................7.........................................................................................................................................................9LO 3 Planning tools used in Management Accounting...................................................................9LO 4 Ways in which organisation uses management accounting to respond to financial problems.........................................................................................................................................................12CONCLUSION.............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagement accounting refers to the concepts and the methods that are essential for makingthe planning function effective. These methods are used for selecting the best alternative courseof action for the business and for efficient implementation of the controlling function through theinterpretation and evaluation of performance of the entity. ABC Ltd company in respect ofenhancing their stability in the market they came across with the planning activities whichrepresents the proper accounting format (Otley, 2016).Cash is the major aspect for the companywhich is to be managed in accounting so that it helps company to take risk or brings theirproducts or increasing the productivity in the company.The present report is based on the ABC Ltd company, a medium sized manufacturingindustry deals in producing and providing products and services. Furthermore, the reportincludes the meaning of the management accounting and the reasons for the requirement of themanagement accounting systems. The report also describes the various methods of themanagement accounting reporting and its evaluation with the description of the integrationbetween the systems and the reporting. Profits are evaluated through the application of marginaland absorption costing technique. It also includes the various planning tool which is used bycompany to manage their accounts in accurate way. Lastly ABC Ltd. Uses various ways torespond to their financial problems.TASK 1 (LO1)Explaining management accounting and essential requirements of various systems ofmanagement accounting.Management accounting is the practice of determining, measuring, assessing, interpretingand presenting or communicating the information to the managers of the ABC Ltd for attainingthe goals of the organization effectively and efficiently (Hiebl, 2018). The basic differencebetween the management and the financial accounting is that management accounting helps themanagers in making decisions within the company whereas financial accounting aims atfacilitating information to the external users of the enterprise. There are various systems that areinvolved in management accounting such as-Management accounting systemsEssential requirementCost accounting systemThis system involves the process ofidentifying, recording, categorizing, analyzing,
evaluating and allocating the cost attached tothe processes for developing suitable action incontrolling the costs (Latan and et.al., 2018). Itis required by the firm for estimating theirproduct cost so that profit can be analyzed.Job costing systemIt is known as the expense tracking system thathelps the ABC Ltd in assigning itsmanufacturing cost to each of its product sothat managers can monitor the expenseseffectively. It is essential as it improves thecontrolling over the expenses which in turnboost the profits of the organization.Price optimization systemIt is the system that mathematically analyze thevarying demand of the customers at changingprice levels so that price for the product can befixed accordingly (Horton and de AraujoWanderley, 2018). It is very important tool asit helps the enterprise in fixing the price as perthe demand and purchasing power of thecustomers so that large customers can beattracted towards the product and leads toincrease in sales.Inventory management systemThis system is the combination of thetechnology, procedures and the processes thatenables the managers in maintaining andmonitoring the inventory so that it can beevaluated that whether those products areassets, raw material or the finished productionfor the ABC Ltd (Curry, Hersinger andNilsson, 2019). It is essential as it tracks theinventory from the storing in the warehouse to
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