Management Accounting and Its Methods - Assignment
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Added on 2020-10-22
Management Accounting and Its Methods - Assignment
Added on 2020-10-22
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Table of ContentsINTRODUCTION...........................................................................................................................1LO 1.................................................................................................................................................1P 1 management accounting system and the essential requirements of the different types ofmanagement accounting system..................................................................................................1P 2 Different method used for management accounting reporting..............................................3LO 2.................................................................................................................................................4Income statement using marginal costing and absorption costing for the month May and June.......................................................................................................................................................4Interpretation of the above income statements to the managers of the organization...................6LO 3.................................................................................................................................................7P 4 Explaining different planning tools used for budgetary control system................................7.........................................................................................................................................................9LO 4.................................................................................................................................................9P5 Comparing the different management accounting systems and their response to thefinancial problems. ......................................................................................................................9CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting system can be defined as process in each financial informationabout the company are being provided to the managers so that they could take appropriatedecisions for the company and could develop the most effective strategies for the business andenhance help the company in enhancing its financial condition of the overall businessorganization. Ecotricity is the middle-sized manufacturing company of UK. It was founded in theyear 1996 and currently sales products relating to wind and solar energy. The present studyshows a report of junior management accountant that shows a brief explanation about the overallmanagement accounting system and requirement of various types of management accountingsystem and different methods of management accounting reporting along with a criticalevaluation of management accounting system and its reporting. Present study also shows difference between absorption and marginal costing techniquesby showing preparation of income statement using these systems. Furthermore, the assignmentprovides information about different planning tools of budgetary control system and acomparison of adoption of management accounting system for the purpose of responding tonumerous financial problems. LO 1P 1 management accounting system and the essential requirements of the different types ofmanagement accounting systemManagement accounting system is the internal system which an organization used tomeasure and evaluate their process for effective management of the organization (Nielsen andet.al., 2015). Financial information helps to communicate the financial information to its userwho requires the financial information for their use, purpose and decision making. it is basicallythe process of preparing the management accounting reports which provide accurate, reliable andappropriate financial information regarding the disorganization and which can finallycommunicate to its users(Stakeholders).An effective management accounting system reachesinto the all departments of the organization and in addition using of financial data managerialaccounting can also include non-financial information such as cash in hand, current sale report,1
number of sales calls per day, current inventory level of raw materials and finished products Asall of these information acts as a basis for identifying the key performance indicator of differentparts of the business.There are different types of management accounting system which are essential for theorganization to undertake according to the requirements of the organization and to take usefulinformation for its users which are used by them for their further purpose of decision making.Ecotricity needs to evaluate their requirements and accordingly they have to adopt the differentmanagement accounting systems. Different types of management accounting system areclassified as :Cost accounting systemIt is also called as product costing system or costing system which is the framework usedby the firms to estimate their costs of their products and services for analyzing the profitability,inventory valuation and for effectively controlling the costs, the cost accounting is used forestimating the cost the company needs to consider so that arrangement of the fund can be donefor smooth and effective operation of the business.Inventory management systemInventory management system is basically software system which is used for tracking theinventory levels, orders, sale and deliveries, this is also used in the manufacturing industries forcreating a work order, bills of materials, other produced related activities and documents.There are basically two types of inventory management system which is used in the Ecotricityare Bar code systems and radio frequency identification systems which are used to support theoverall inventory control process effectively and effectively (George, 2016).Job costing systemJob costing systemis also called as Job order costing which is used for assigning andaccumulating the manufacturing costs of an individual unit of the output. This system is usedwhen the various items produced in the organization are sufficiently different from each otherion some respect and each has as significant costs than this method is used to identify theindividual cost which helps origination to ascertain the cost, sales price and profit margin of thebusiness organization.price optimizing system 2
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