Management Accounting : Innocent drinks limited
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Added on 2021-02-22
Management Accounting : Innocent drinks limited
Added on 2021-02-22
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MANAGEMENTACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3P1 Explain management accounting and give the essential requirements of different types ofmanagement accounting systems. ..............................................................................................3P2 Explain different methods used for management accounting reporting................................4M1. Advantages of management accounting systems................................................................6D1.Integration of management accounting systems and reporting with the organisationalprocess.........................................................................................................................................7TASK 2............................................................................................................................................7P3. Appropriate techniques to prepare the income statements...................................................7M2. Management accounting techniques to produce the financial reports.................................9D2. Financial reports and their interpretation.............................................................................9TASK 3..........................................................................................................................................10P4. Benefits and drawback of budgetary control's planning tools............................................10M3. Use of planning tools for preparing the budgets................................................................11TASK 4..........................................................................................................................................12P5. Implementation of management accounting system with an aim to resolve the financialissues.........................................................................................................................................12M4. Management accounting in response to resolve the financial issue..................................13D3. Planning tools for responding to financial problem...........................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONThe term management accounting is a type of accounting system that is linked with thepreparing and presenting the report to the management (Gray III, 2015). The aim of thisaccounting is to helping the managers of companies for better decision-making as well as ineffective planning. One of the important thing to know about this accounting system is that it isnot essential for the companies to adopt. This depends on the need of organisation. Tounderstand about the management accounting in better way, one company is selected that isInnocent drinks limited company is selected that is located in the London, UK andmanufacturer of JOJO juice across all age brackets. In the project report, requirement ofmanagement accounting systems as well as methods of reporting mentioned. As well as benefitsand drawbacks of planning tools are discussed, along with importance of managementaccounting systems is included for overcoming the financial issues. TASK 1P1 Explain management accounting and give the essential requirements of different types ofmanagement accounting systems. Management accounting is also known as managerial accounting through whichaccounting data is gathered so that in order to make any decision within a company manager canbetter understand the information which will help controlling management and performancefunctions. Along with this, its main concern is with internal factors of the organisation and it isimportant for managers to prepare and present financial statement of a company. In addition tothis, with the help of management accounting, managers of a company is able to prepare shortterm decisions as well as day to day activities. The important requirement of various types ofmanagement accounting system is as follows:Cost accounting system: It is define as a method of tracking of conversion of rawmaterials into finished goods (Beaubien, 2013). Along with this, it is majorly applied bymanufactures in order to record production activities. This helps in determining the flowof stock from different level of production. In respect of Innocent Drinks, managers adoptthis method in order to maintain record of raw material that is used in preparation ofdrinks such as amount of fruits, liquid and many more. This implies that cost accounting
system is important for a firm to determine various cost that is involved in production ofgoods.Inventory management system: It is define as management system which maintainrecord which is related to stock such as recoding data of stock stored in warehouse,supply of stock and many more. Management of inventory is very important for managerof an organisation so that they can determine about storage as well supply of inventoriesfrequently. In context of Innocent drinks, manager has to maintain record of inventoryeffectively so that it will be easy for them to determine about amount of stock that needto purchase, sales and many other information. Along with this, they can also examinethe stage where they are lacking and improve it quickly.Job costing system: It is a process of analysing the cost and expense that is occurred inproduction of goods and services (Aiken, 2013). In other words, it is a method whichcategorise manufacturing cost into overhead, direct material and direct labour in order todetermine their actual cost. In regards of Innocent drinks, company consist of separatedepartment who is responsible to manage cost and expense of company.Price Optimisation system: It is define as a system which is used in order to maintainprices that occur at time of production. This method helps in deciding the price of variouscommodities at a particular period of time. As per respective company, this method helpsin determining prices of various foods and beverages that are used in production ofdrinks.Therefore, from above types of management accounting system it is easy to examine thatcompany one of these method in order to determine price of their resources. Along with this, italso helps maintaining records of inventories.P2 Explain different methods used for management accounting reportingManagement accounting reporting is define as a report which present data or informationabout business performance (Needles, Powers and Crosson, 2013). Along with this, this report isprepared in every quarter which present availability of finance in a company. This managementaccounting report is mainly adopted by small scale business who prepare their strategies with thehelp of these reports. In addition to this, with aid of management accounting reports, managercan identify area of weakness which occur in a business. There are several methods that areapplied by using management accounting reports are as follows:
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