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(PDF) Introduction to Management Accounting

   

Added on  2020-10-22

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Management Accounting
(PDF) Introduction to Management Accounting_1

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1LO1..................................................................................................................................................1P1. Explaining management accounting and important requirement of the system ofmanagement accounting..............................................................................................................1P2. Explaining various methods of the management accounting used for the reporting ofmanagement accounting..............................................................................................................2M1&D1. Evaluating the advantages and disadvantages of the management accountingsystems and their application in the organization. .....................................................................4TASK 2............................................................................................................................................8LO2. ................................................................................................................................................8P3&M2&D2. Calculation of the cost using the adequate techniques and the preparation of theincome statement using marginal and absorption costing method..............................................8TASK 1..........................................................................................................................................11LO3. ..............................................................................................................................................11P4. Explaining the pros and cons of different planning tools of budgetary control..................11M3. Analysing the application and use of planning tools for framing and forecasting thebudget........................................................................................................................................13CONCLUSION .............................................................................................................................14REFERENCES..............................................................................................................................15
(PDF) Introduction to Management Accounting_2

INTRODUCTIONManagement accounting also called as the cost accounting and is a system of presentationand collection of the appropriate economic information in relation to the organization forcontrolling, planning and making decisions. It includes the concepts and the methods that arenecessary for conducting effective planning and for choosing the best alternative action forfacilitating control over eh performance of the business and the workers. The present study isbased on Carfulan group which is medium sized manufacturing company deals in metal andceramic material. Furthermore, the report describes about the management accounting and itssystems. It also explains the different planning tools and their advantages and disadvantages.TASK 1LO1.P1. Explaining management accounting and important requirement of the system of managementaccounting.Management accounting is a wider concept and one of the major branch of accounting.Management accounting phrase includes two words that is management and the accounting. Itmeans accounting in terms of the management. It is the process of developing the reports and theaccounts of the management that states the precise financial and the statistical information that isneeded by the managers for making the routine and day-to-day decisions (Maas, Schalteggerand Crutzen, 2016). It demonstrates the re-orientation of the accounting function to define theactivity structure of the management. Management accounting develops the monthly and theweekly reports for the internal staff of the organization which involve department managers andexecutive officer. These reports provide the information relating to the availability of the cash,revenue from the sales, details of in hand orders, accounts receivable, accounts payable,outstanding debts, requirement of raw material etc. It also includes the trend charts and thevariance analysis. A management accounting system is said to be effective when it offers timelyinformation with superior quality to the managers and other persons who need it. Managementaccounting systems are the confidential reports for the internal management that helps themanagers in efficient and effective decision making. Essential requirements of the management accounting systems are as follows- 1
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Different systems of the management accounting plays a crucial and essential role in variousaspects of the management. It aids the Carfulan in determining its aim through the informationprovided by these systems and also helps in finding out the various routes with which the goalscan be achieved. An effective plan can be prepared by using the management accounting systemso that task can be performed as per the strategies and the procedures set (Hopper and Bui,2016). Cost control device of the management accounting assist the Carfulan in optimum use oftheir resources with reduction in the cost of the production per unit so that larger profits can begenerated. This helps in providing reasonable and affordable services with quality to theircustomers. These systems enable in making judgments regarding the selection of the plan and thepolicy that best suited and useful for the organization. Through the system of managementaccounting performance can be measured and helps in finding out any deviation so that timelyaction can be taken by the managers which in turn facilitate achievement of the objectives inaccordance with the standards set (Chenhall, and Moers, 2015). With the help of these systems,efficiency and effectiveness of the business and the management increasing and the targets canbe met on time. Thus, management accounting system is very important for smooth functioningof the operations of the ABC.P2. Explaining various methods of the management accounting used for the reporting ofmanagement accounting.There are several types of management accounting system that used by the Carfulan for gettinginformation relating to the different aspects of the management. The basic managementaccounting systems includes cost accounting, job-costing, inventory management and priceoptimization system. Cost accounting system- This system is used for ascertaining the cost of the products sothat profits can be analyzed and inventory valuation can be evaluated (Granlund and Lukka,2017). Cost accounting system helps facilitates control over the cost so that high income can begained in a competitive market. Specifically this system is classified into two costing approachthat are job order costing and process costing. Job order costing approach is the system in which2
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