Financial Governance and Management Accounting Techniques
Added on 2020-07-23
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Management Accounting
TABLE OF CONTENTSINTRODUCTION......................................................................................................................1P1 Stating management accounting (MA) systems that firm needs to employ....................1P2 Presenting the manner in which managerial reports aid in decision making....................3P3 Evaluation of cost and profit margin on the basis of different techniques such asabsorption and marginal.........................................................................................................5P4 Assessing tools that can be used by management accountant for planning......................8P5 Stating tools of MA that helps business organization in responding monetary problems..............................................................................................................................................11CONCLUSION........................................................................................................................14REFERENCES.........................................................................................................................15
INTRODUCTIONIn the current times, every business unit, whether small or large sized, places highlevel of emphasis on undertaking management accounting tools and techniques. Tools andtechniques of management accounting assist manager in preparing financial reports. Bymaking evaluation of managerial accounting reports manager of the firm can take effectualday to day and short term decisions. For this project report, Balti Palace restaurant has beenselected that offer dinning services to the customers at suitable prices. In this, current reportwill provide deeper insight about management accounting system and reporting aspects.Further, it also entails the manner in which marginal and absorption costing helps in doingmonetary evaluation. Various planning tools associated with the system of managementaccounting will also be evaluated. In addition to this, manner in which managerial accountingsystem helps in responding monetary issues will also be analyzed.P1 Stating management accounting (MA) systems that firm needs to employTo Management Team Balti PalaceDate: 21st January 2018Subject : Management accounting systems Introduction: In this, report will provide insight about the extent to which MA and its toolsas well as systems are essential for restaurant unit. Along with this, report also presentsbenefits and drawbacks which are associated with different types of management accountingsystems. Main Body:Management accounting and its significanceMA is the process of preparing reports, related to internal operations, that provideinformation about performance and helps in devising suitable plan. In the current times,management accounting system is used by business unit’s at large level. By using the toolsand provision of management accounting restaurant unit can make appropriate forecastregarding future aspects (Management accounting and its importance, 2018). Besides this,MA also helps in analyzing the rate of return and enables to do profit planning. Further, fieldof MA assists in making appropriate estimation of cash flows and understanding performancevariances. All such aspects clearly shows that management accounting tools & techniques aidin the growth and success of firm significantly. Systems of management accounting and their essential requirements within the firmCost accounting: It is the process of recording, classifying, analyzing, summarizingand evaluating alternative course of action. In the context of concerned restaurantunit, requirement of cost accounting system is significant which in turn advises
appropriate course of action to management on the basis of efficiency and capability(Edmonds and et.al., 2016). In addition to this, data regarding cost incurred pertainingto carrying out an activity also helps firm in arriving at suitable decision regardingprice. AdvantagesDisadvantagesCost accounting system helps ineliminating wastage, losses andinefficiencies Under such system, new methodsare followed which in turn leadscost reduction.Facilitates price fixation and helpsin doing marginal analysis of cost. Costing records serve informationabout past, whereas managementteam is concerning about future. Further, costs are usually absorbedon the basis of pre determined ratewhich in turn leads the issue ofunder or over absorption ofoverhead (Advantages andDisadvantages of CostAccounting, 2018). Inventory management: Such system helps firm in assessing stock level that needs tobe managed within the firm. Restaurant unit is required to consider suitable inventorymanagement and valuation tools such as EOQ, JIT, LIFO, FIFO etc which in turnleads cost reduction (Kim and Schmidgall, 2017). Moreover, ordering and holdingcost enhance the level of overall expenses significantly.AdvantagesDisadvantagesReduction in cost Maximization of profit margin For developing skills of personnelin relation to dealing withinventory software firm needs toconduct training and developmentsession. Price optimization: By using such system, restaurant unit can analyze the manner inwhich customers are reacting at varied price level (Olesen and Cheng, 2017). Hence,setting suitable prices on the basis of such system restaurant unit can deal with thecompetitive environment or situation prominently. AdvantagesDisadvantagesHelps in enhancing customer baseLeads high productivity andmargin Complex in nature Conclusion: At the end of this report, it can be mentioned that management accountingsystems help in managing funds and operations in the best possible way. Along with this, itcan summarized from evaluation through undertaking cost accounting, inventorymanagement and price optimization firm can control operations more effectually. Management Accountant P2 Presenting the manner in which managerial reports aid in decision making To Management Team Balti PalaceDate: 21st January 2018
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