Management Accounting Practices and Trends
Added on 2020-01-07
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Management Accounting
TABLE OF CONTENTSIntroduction......................................................................................................................................3Task 1...............................................................................................................................................3A) Functions of management accounting.....................................................................................3B) Different types of management accounting system................................................................5Task 2...............................................................................................................................................51. Marginal costing.......................................................................................................................52. Absorption costing....................................................................................................................6Task 3..............................................................................................................................................7A) Advantage and Disadvantage of different types of budget.....................................................7B) Process of preparing budget....................................................................................................8C) Pricing strategies.....................................................................................................................9Task 4.............................................................................................................................................10A) Balance Score Card...............................................................................................................10Conclusion.....................................................................................................................................11References......................................................................................................................................12
IntroductionA cost accounting system is a system of accounting used by the manufacturers to accountfor manufacturing activities carried by the manufacturer under perpetual inventory system. Thusit can be said as the accounting system designed for the manufacturers to record the flow ofinventory through various stages of production (Gullifer and Payne, 2015). A typical costaccounting system records the inflow and outflow of the materials at each stages of theproduction. Whether it be in work-in-progress it should be properly accounted for. Present reportis based on Imda tech limited which produces mobile charger and other gadgets for retail outletsin UK (Hecht, 2016). Current assignment will discuss the function of management accounting. Itwill explain cost accounting system, inventory management system. It will calculate theAbsorption cost and marginal cost. In addition, report will describe the balance score cardapproach.Task 1A) Functions of management accountingManagement accounting is the domain that is used to do cost related calculations in termsof product and services by the business firms. There is a huge difference between both financialaccounting and management accounting. One of the main difference between both is that in caseof financial accounting and other one is that in former one data related to cost of production interms of individual values are not taken in to consideration. Whereas, in management accountingentire accounting is done on computing cost of product. The other main difference between bothis that in management accounting performance of the firm in terms of cost is measured. On otherhand, in financial management firm overall performance in different areas is measured. Hence, itcan be said that there is difference between financial and management accounting. Management accounting whole process depends on 4 basic function of Management like 1. Planning, 2. organisations, 3. Controlling and 4. Decision Making. Explaining in details function of Management accounting they are:1. Planning: Planning is preparation done in advance before execution to achieve some specificgoal (Horngren and et.al, 2010). It may be short term or long term. A budget planning is type offinancial planning shows how scarce resources to be maximal utilised over specific period of
time. Management accounting is interconnected in financial management and budgetary systemas whole because budgeting control depends on developing of financial reports which helps inproviding information to manager to take decision in financial controlling. Planning reports helpmanager to estimate the effect of alternative options available on firms ability to achieve desirergoal (Kaplan and Atkinson, 2015). If business enterprises target specific profit in one financialyear they they should also determine how they can achieve them.2. Organising: It is process of establishing organisational framework and assigningresponsibility to the people working in organisation for achieving business goals and objective.Organisational structure differs from business to business or an enterprise to enterprises. Inbusiness different department can be assigned to by setting up divisions, departments, sectionsand branches (Quattrone, 2016).3. Controlling: It is a process of monitoring, measuring, evaluating and correcting the actualresults to ensure that a business enterprise goal and planning is achieved or going to be achievedor not (Saladrigues and Tena, 2017). Controlling is accomplished with feedback, feedback isprocess to take corrective measures been taken to evaluate or correct steps while implementingplan.4. Decision Making: Decision making is process of choosing best alternative among variousones. Decision Making is inherent in all three functions of management like Planning, organisingand controlling (Weygandt, Kimmel and Kieso, 2015). A manager cannot plan without decisionmaking and have to choose among different alternative the best one which meet goals as early aspossible. Following are process of decision making:Identifying a problem requiring managerial actions.Specifying the objective or goals to be achieved.Choosing alternative coerce of action.gathering the information about sequence of Each alternatives (Zimmerman and Yahya-Zadeh, 2011).Importance of management accountingManagement accounting is very important for decision making. It assist in determine the selling process of the goods. It examines the cost and try to ignore unnecessary
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