Management Accounting Assignment - ABC Ltd.

Added on - 22 Nov 2020

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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION............................................................................................................................3TASK 1............................................................................................................................................3Management Accounting & need of different management accounting system.........................3Methods used for management accounting reporting.................................................................4Importance of management accounting systems and their use...................................................5Critical Evaluation of Management accounting system & reports..............................................5TASK 2............................................................................................................................................6TASK 3............................................................................................................................................7Pros & Cons of planning tools used in budgetary control...........................................................7Use of planning tool in preparation & forecasting of budget......................................................9TASK 4............................................................................................................................................9Adoption of management accounting system for resolving financial problems.........................9Use of Planning tools in resolving financial problems..............................................................11CONCLUSION..............................................................................................................................12REFERENCES...............................................................................................................................14
INTRODUCTIONManagement Accounting is a process used by companies to for managing & maintainingvarious types of cost incurred in business. This report explains meaning of managementaccounting. Further, this report includes types of management accounting systems andadvantage & disadvantage of accounting systems. Furthermore, this report elaborate benefits ofmanagement accounting system (Shields and Shelleman, 2016). Moreover, this report includestechniques of management accounting and explains those techniques with the help of practical.Further, this report highlights advantage & disadvantage of different planning tools used inbudgetary control. At last, this report elaborate use of management accounting system inresolving financial problems.TASK 1Management Accounting & need of different management accounting systemManagement AccountingIts is an accounting process in which various cost incurred during business operations areevaluated with the purpose of taking business decisions and preparing financial reports oforganisations(Holopainen, Niskanen and Rissanen, 2019). Management accountant of ABC Ltd.also uses management accounting for making strategic decisions and for resolving problemsoccurring in manufacturing process. Use of this accounting process by company enable it inachieving its goals & objectives. It also minimises & manages cost of manufacturing which inturn enhances profits of ABC Ltd(Laux and Stocken, 2018).Management Accounting SystemThis system is used by organisations for evaluating & analysing assorted types of costwhich is essential in manufacturing of products & services of business(Spraakman and et.al.,2015). There are many types of management accounting systems available and used bycompanies. They all are required for different purpose, which are discussed below-Cost Accounting System-It is a type of managerial accounting system which are usedby accountant of ABC Ltd. to find out cost of its products & services. Thus, it is also known asProduct costing system(Dai and Vasarhelyi, 2017). This system is required to use by companyas it helps in assessing profits included in a particular product because firm can set its profitmargin only after estimating cost of goods & services. Cost accounting system is also essential in
valuation of inventoryandit also helps business in purchasing stock at a price which minimisescost or in accordance with estimated cost. Further, this system is also used by ABC Ltd. formanaging cost of its products.There are two types of cost accounting system, Job Order Costing & Process Costing. JobOrder Costing is required for estimating cost incurred in manufacturing of each job while ProcessCosting is important in estimating cost of each process(Ahmad and Mohamed Zabri, 2015).Inventory Management System-ABC Ltd. use a software to manage all of its sales,inventory level such as closing & opening stock and orders received for its products. Thus, it is aa system software and it is also required to generate bills, for preparation of other orderdocuments(Szychta and Dobroszek, 2016). By using this system software companiesproductivity is increased as it has it is having sufficient inventory which can be used any time.Use of this system is also required as it reduces unnecessary wastage of raw material and withthis firm can track as how much inventory is placed at what place. Thus, this system is alsoessential to used by companies as it enhances their performance & sales volume which in turnmaximises profits of ABC Ltd.Price Optimising System-Price Optimising is a system in which company does astatistical analysis to set a price for its final products & services. Company analyse response ofconsumers on different prices and on that basis decide final price of its products & services. Thismanagement accounting system is required to use by ABC Ltd as it helps in maintainingprofitability level of company and it is also beneficial in retailing customers. Use of this systemis also required in achieving goals of company by offering goods & services at an affordableprice(Hoyle, Schaefer Doupnik, 2015).Job Costing System-This system is used for evaluating cost of manufacturing of each ofits product(Shields and Shelleman, 2016). Thus, this system is required to use by ABC Ltd as ithelps company in achieving more profits by minimising cost of manufacturing of each of itsproduct.Different methods of Job Costingare discussed below-Costing Method-A method through which managers of business organisations calculatescost of each of business activities separately is termed as Costing Method.(Kastberg andSiverbo, 2016)
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