(PDF) Management Accounting Assignment - Airdri
Added on 2021-01-02
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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting system and essential requirements of its types.........................1P2 Management accounting reporting and its methods..........................................................2M1 Benefits and applications of management accounting system.........................................4D1 Integration of management accounting system and its reporting.....................................4TASK 2............................................................................................................................................4P3 Calculation of cost using an appropriate technique..........................................................4M2 Various types of accounting techniques..........................................................................7D2: Data interpretation...........................................................................................................7TASK 3............................................................................................................................................7P4: Advantages and disadvantages of Budgetary control planning tools...............................7M3: Analysis of different planning tools and their application for preparing and forecastingbudgets..................................................................................................................................10TASK 4..........................................................................................................................................10P5: Comparison between organisations management accounting system to resolve financialproblems...............................................................................................................................10M4 Analysing financial problem that can lead organisations to sustainable success..........11D3: Evaluation of financial planning tools for responding financial issues.........................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONManagement accounting is the process of inspecting all the activities happen in andaround an enterprise while considering the requirements of the enterprise. It helps managers totake decisions within the organisation by providing them accurate information of business andposition in the market. It produces reports and records of internal environment of the business,and these reports are normally private and for insider use only. It is a decision making tool that ishelpful in passing judgement about the organisation. It has an important place in the business andwidely imposed by managers to achieve predetermined goals and amended control over thebusiness (Arjaliès and Mundy, 2013).Airdri is hand dryer manufacture company in Witney, England, UK. It was the first handdryer manufacturer in the world to obtain the Quite Mark TM from the noise abatement society.It uses management accounting to get broad knowledge of the customer's needs and preferencesto provide them best product. It is the world leader in the hand dryer development companies.The dryers supplied by Airdri consumes low energy and these dryers are environment friendly.By providing best products to the customers it is becoming the first choice of the customers inUK. In this report different planning tools are used to determine cost, profits and risks of theorganisation, and those tools are used to resolve financial problems. Management accountingsystem and its reporting help to analyse the market position of organisation.TASK 1P1 Management accounting system and essential requirements of its typesManagement accounting system elaborated Airdri's financial system and develops reportsfor internal and confidential use by managers. It is used to form strategies to run business in acost efficient way. These reports include budgeting, break even charts, product cost analysis, andforecasting of recent trends for the business. Airdri's outstanding management system help tocontrol the business activities and to make such policies that are helpful in the resolution offinancial problems. Types of management accounting system are described below:Inventory Management system – It allows Airdri to control and handle inventoryactivities from the time goods get into a ware house until they move outside. It is the assemblageof technology and operations that administer the observation and maintenance of products. Inthis system inventory control, purchasing, inventory optimization, back ordering etc.1
responsibilities are beard by the management. This system in very important for the managementto keep a record of inventory and to minimize the waste of inventory in improper activities. Price optimization system – It refers to the system where price of the product dependsupon the demand of the customer. If Airdri set prices too high for the customers then customerswon't be able to purchase the product, but it focuses on the customer's demand and this behaviouris helpful to set a positive image in the mind of customers. This system is used by company todetermine customer’s behaviour that how they will react to the price change. It is also helpful forthe company to set those price that help to meet the objectives of company (Coad, Jack andKholeif, 2015).Cost accounting system – It is used by Airdri to keep a track record of all the costsinvolved in the production of each unit of product. It helps the management to form strategies,planning, controlling, staffing and other functions of decision making process. It providesinformation to the management to implement such functions that can help to increaseprofitability and productivity of the business. It helps to evaluate the business's running statusand effectiveness of product among the customers (Bromwich and Scapens, 2016). Job costing system – It is used by Airdri to accumulate direct material, direct labour andoverheads involved in the production of the particular product. It may have to be tailored to theneeds of the customers. This system assures that revenues are related to the expenses recovers inthe same time period. With the help of this system, managers can keep trail of the cost of eachactivity, keep data which is frequently more applicable to the dealings of the business. It is usedto measure the cost which is involved in the production of a particular product.Job order costing – It is the most common cost accounting system used by Airdri. Itdistributes cost to the products based upon the production bulks. It is used to identify thecost related to a specific bulk of the products, and used for the small size of the group ofthe products in Airdri.Process costing – In Airdri it is used to divide cost to product based upon the division inwhich the cost occurs. It is used when identical units are almost aggregate produced. It isenforced when there is vast production of related products.P2 Management accounting reporting and its methodsManagement accounting reporting is the clear picture of how Airdri is performing in themarket. It provides an atomistic prospect of the business. It is used for estimating, decision2
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