Management Accounting Assignment - Morphy Richards
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Added on 2020-07-22
Management Accounting Assignment - Morphy Richards
Added on 2020-07-22
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Section 1...........................................................................................................................................1P 1 Management accounting and requirements of management accounting in the company1P2 Methods of management accounting reporting and benefits of management accountingsystems...................................................................................................................................3P3 Marginal and absorption costing.......................................................................................5Section 2...........................................................................................................................................7P4 Discussing kinds of planning tools....................................................................................7P5 Discussing how management accounting system is used to adapt to respond to financialproblems...............................................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is useful branch of accounting which provides requiredinformation to management to take better decisions in effective way. The present report dealswith Morphy Richards Company which is engaged in manufacturing of electrical appliances inUK and provides quality goods to customers to enhance their level of satisfaction. Importance ofmanagement accounting is highlighted in this report along with various management accountingsystems which provides necessary information to manager so that better decisions can be madewith much ease. Moreover, different planning tools are discussed along with marginal andabsorption costing techniques which are required mainly in manufacturing firm. Furthermore,financial problems are resolved by implementing management accounting systems which arediscussed as well. Thus, the report highlights significance of this branch of accounting for gettingdesired results. Section 1P 1 Management accounting and requirements of management accounting in the companyManagement accounting is essential tool for company as it help management to takeeffective decisions with much ease. Management accounting uses financial information providedby another branch of accounting which is known as financial accounting. The informationprovided by this accounting system help management to draw interpretations about the companyand as such, better understanding of the effectiveness of the company is easily made. Thus,management accounting is effective technique which help organisation to take enhanceddecisions with reference to cost control. Expenditures are carefully analysed and managementtake measures so that it can be reduced up to high extent (Cooper, Ezzamel and Qu, 2017). Management accounting is useful tool for Morphy Richards Company which is engagedin manufacturing of electrical appliances and as such, this system is much useful for it to drawmeaningful information for making effective decisions with much ease. Furthermore, it is quiteessential tool for management as it aids in making decisions by supplying required informationin effectual manner. Applying techniques of absorption, marginal costing provides useful pieceof information to the management for taking decisions. Moreover, it is helpful for controllingperformance of the company by using various techniques such as standard costing, budgetary1
control which help management to have effective control on operational tasks of theorganisation. Management accounting is also helpful for preparing and formulating policies for thebetterment of company so that it may be able to achieve common targets with much ease(MONEM and SAEIDI, 2017). This is done by implementing regression analysis and time seriesanalysis which is helpful for forecasting and as such, objectives can be achieved with much ease.Moreover, this information is useful for making decisions as it interprets financial statements sothat results can be assessed and company may be able to manage upon activities to accomplishdesired outcome. In relation to this, cash flow statement, fund flow statement are usefultechniques aiding management for decision-making in effectual manner. The types ofmanagement accounting systems are as follows-1. Cost accounting systemIt is useful method of management accounting system which deals with ascertaining costsand take measures to control so that expenditures may not exceed revenue of the firm. MorphyRichards Company effectively uses cost accounting in daily operations so that it may be able totake better control over it. Cost accounting plays important role in the company particularly inmanufacturing concern which involves various costs such as fixed, variable, direct, indirect andsemi-variable costs. Thus, it is required by the company to evaluate these expenditures so that itmay not outreach revenue of the firm (What is cost accounting?, 2018). Therefore, it assistsmanagement in taking better and effective decisions to control costs so that overall revenue maybe increased by reducing expenditures incurred on production. 2. Price optimisationPrice optimisation is another useful management system that deals with carrying outmathematical analysis to assess consumer behaviour in effective manner. In simple words, priceof a particular commodity can be easily set with the help of this technique. Morphy RichardsCompany should use the same so that it may be able to assess the behaviour of customerstowards commodity whether they prefer to purchase at a quoted price or not. Thus, customerbehaviour is easily extracted with the help of this management accounting system to derivefruitful results. This is also essential so that customers are not attracted to rivals in any manner.2
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