MANAGEMENT ACCOUNTING.

MANAGEMENT ACCOUNTING

Table of contents
Introduction......................................................................................................................................2
Task 1...............................................................................................................................................2
Task 2...............................................................................................................................................8
Task 3.............................................................................................................................................13
Conclusion:....................................................................................................................................15
Reference list.................................................................................................................................16
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Introduction
In this study, attempts has been made to illustrate on the various aspect of a management
accountant in Assael Architecture Ltd. Efforts have been made in the study to present a detailed
discussion in the form of a report. The report is to be presented to the General Manager of the
organization so that he is able to critically analyze the functions of the management accountant.
In order to provide a precise understanding about the research subject, an organization Assael
Architecture Ltd has been selected. This study primarily deals with various management
accounting techniques that are applied in an organization, the cost reporting system that is best
suited for the organization and show a relation between the traditional cost accounting system. In
addition to that, attempts have been made in the study to discuss on the factors that acts as
drivers to the management accounting process of an organization.
Task 1
Introduction
It is evident that with the advent of globalization, the complexity in the business process has
tended to increase to a significant level. Subsequently, it has raised the level of competition in
the market. In this regards, organizations especially those catering to the manufacturing sector
faces several challenges in proper maintenance of records related to the production process. This
has necessitated organizations to adopt management accounting process. It not only helps the,
management of the organization in guiding at each step of the process but also provide them with
facts and evidences based on which, effective decisions are taken. In addition to that, it enhances
the level of efficiency of the management. In this part of the study, efforts have been made to
discuss on the various aspect of management accounting system to an organization including its
significance and importance.
Management accounting: Its significance and types
The management accounting process unlike the financial accounting system caters to the internal
control of an organization. It is a process of identification of the organizational goals and
objectives, make a critical analysis of the same and communication about the findings to the
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management such that they are able to make effective decision. Earliest this branch of
accounting was known as cost accounting method. Usually, it is seen that the management
accounting process tends to involve use of various information related to the cost implications
incurred internally by the organization. The information aids the managers to critically analyze
the key areas of Assael Architecture Ltd and accordingly formulate action plan for future
operations of the organization (Bodie, 2013).
Usually, it is noted that, the management accounting process are classified into four different
types. They include Lean accounting system, Traditional accounting system, Throughput
accounting system and Transfer pricing. The explanation of the various types of management
accounting system is given as follows:
● Lean accounting system: It is seen that this accounting method is used in lean
organization and forms an integral part of the managerial system. It helps the managers in
bringing out the full capacity as well as helps in maintaining a consistent level of
performance metrics within the organization. Usually, this form of accounting is used in
organizations in order to tackle many extreme situations that may include issues related
to market strategies or increasing cost implications in the production process. In context
to Assael Architecture Ltd, it can be stated that, this form of accounting is suited and may
be applied in accordance with the convenience of the management (Fullerton et al. 2014).
● Traditional accounting system: Traditional method of accounting or as popularly known
as the cost accounting system is one of the oldest form of accounting system. Notably,
this system of accounting catered to the internal cost incurred by an organization.
However, it is seen that this form of accounting was entirely based on assumptions and
sometimes gave wrong information to the management. In addition to that, it involved
allocation of the indirect cost although it does not reflect any changes in the consumption
of resources. In context to Assael Architecture Ltd, it is noted that, the management of
the organization tends to face certain difficulty in adapting to the new managerial system.
In this context, it can be said that the management of the organization may opt for
traditional cost accounting methods in the initial phases in order to mitigate the identified
issues (DRURY, 2013).
● Throughput accounting system: Notably, this form, of accounting system is used by
organization in order to get a fuller utilization of the allocated resources and put them to
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